M/S Baibhaw Construction Private ... vs The Union Of India
2023 Latest Caselaw 5218 Patna

         IN THE HIGH COURT OF JUDICATURE AT PATNA
                    Civil Writ Jurisdiction Case No.2668 of 2023
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M/S Baibhaw Construction Private Limited Through its Director namely Ranjan Kumar, aged about 41 years, Gender- Male, Son of Braj Kishor Singh, Resident of Kali Sthan Ward No.- 13, P.S.- Town, District- Gopalganj.

... ... Petitioner/s Versus

1. The Union of India through the Commissioner, Central GST (Goods and Service Tax) and central excise, Patna- 1.

2. The Commissioner, Central GST (Goods and Service Tax) and Central Excise, Patna- 1.

3. The Additional Director General, Directorate General of GST Intelligence, Patna Zonal Unit.

4. The Senior Intelligence Officer, Directorate General of GST Intelligence, Patna Zonal Unit.

5. The Superintendent (Adjudication), Central GST and Central Excise Tax, Zonal Unit, Patna-1.

6. The Assistant Commissioner of State Tax, Gopalganj Circle, Gopalganj, Bihar.

... ... Respondent/s ====================================================== Appearance :

For the Petitioner/s : Mr. Vinay Ranjan, Advocate For the Respondent/s : Mr. Vivek Prasad (GP-7) Ms. Supraya, AC to GP-7 Ms. Roona, AC to GP-7 Mr. Sanjay Kumar, AC to GP-7 Ms. Manisha Singh, AC to GP-7 For the UOI : Dr. K. N. Singh, ASG Mr. Anshuman Singh, Sr. SC, CGST & CX Mr. Shivaditya Dhari Sinha, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE RAJIV ROY ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

Date : 10-10-2023

The petitioner herein an assessee under the Bihar

Goods and Services Tax Act, 2017 (for brevity 'BGST Act') is

aggrieved with the notices issued by two different Tax

Authorities, which has resulted in simultaneous proceedings for Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

the identical assessment years. The petitioner's contention is

only that the first of such inquiry be directed to be proceeded

with and summons issued by the other, directed to be stayed till

the conclusion of the first of such initiated proceedings,

especially since the inquiry is conducted by a 'Proper Officer' as

authorized under the Act, who is entitled to proceed under both

the State and Central Goods and Services Tax enactments. The

petitioner specifically refers to Section 6 of the BGST Act.

2. The learned Government Advocate and learned

ASG seeks for continuation of the proceedings initiated by the

various authorities.

3. A 'Proper Officer' is defined under Section

2(91) of the GST enactments, who is the Commissioner or the

Officer of the Central, State or Union Territory Tax assigned to

perform functions under the respective enactments. Sections 3

and 4 of the respective enactments provide for class of Officers

appointed by the appropriate Government to exercise the powers

and discharge the duties conferred upon them under that Act.

By a notification under the CGST Act, an Officer under the

Directorate General of Goods and Services Tax or under the

Intelligence and Audit Directorates can be appointed as 'Proper

Officer' having territorial jurisdiction, either limited or over Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

various areas and even across the country. Likewise the SGST

Act also empowers the State Government to issue notifications

empowering the State Tax Officers to have limited jurisdiction

in certain areas of the State and overall jurisdiction throughout

the territory of the particular State. Hence, there could be

instances where a Central and State Tax Authority has

simultaneous jurisdiction over a particular area. The assessees

are also assigned to either the Central or the State Tax Authority

randomly, for administrative purposes, which assignment does

not interdict either of the said Officers from initiating an inquiry

against the particular assessee inter alia in intelligence based

enforcement actions.

4. Section 6 of the Central and State GST

enactments achieves the goal of harmonizing the cross

enforcement of the Central Tax Officers and State Tax Officers.

Section 6 of the CGST Act provides for the Officers under the

State GST and Union Territory GST enactments to be authorized

as the 'Proper Officer' for the purpose of the CGST Act.

Likewise, the State and Union Territory GST enactments also

provide for the officers appointed under the Central GST Act to

be authorized to function as 'Proper Officer' under the State &

Union Territory GST enactment. Section 6(2)(a) provides that a Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

'Proper Officer' authorized, either under the State or the Central

GST enactments will be authorized to issue orders under both

the enactments. If either of the Officers initiates such

proceeding, then the jurisdictional officer under the other

enactment shall not initiate a proceeding on the same subject

matter, is the mandate of clause (b) of Section 6(2). Meaning

thereby that if a State GST Officer commences a proceeding

under the State or Central GST Act against any of the assesses

within it's jurisdiction, who have been, for administrative

purposes assigned to the 'Proper Officer' under the Central GST

Act, he shall be entitled to continue such proceedings and the

'Proper Officer' under the CGST Act shall not proceed on the

same subject matter and vice versa. A proceeding initiated by

the 'Proper Officer' under one of the enactments shall be

intimated to the 'Proper Officer' under the other enactment. This

applies equally to the Union Territories also.

5. At this point of time, the circular of the CBEC

is relevant which is extracted below:-

"D.O.F. No. CBEC/ 20/43/01/2017-GST (Pt.) Dated 5th October, 2018 Dear Colleague, It has been brought to the notice of the Board that there is ambiguity regarding initiation of enforcement action by the Central tax officers in case of taxpayer assigned to the State tax authority and vice versa.

Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

2. In this regard, GST Council in its 9th meeting held on 16-1-2017 had discussed and made recommendations regarding administrative division of taxpayers and concomitant issues. The recommendation in relation to cross-empowerment of both tax authorities for enforcement of intelligence based action is recorded at para 28 of Agenda note no. 3 in the minutes of the meeting which reads as follows :-

"viii. Both the Central and State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain"

3. It is accordingly clarified that the officers of both Central tax and State tax are authorized to initiate intelligence based enforcement action on the entire taxpayer's base irrespective of the administrative assignment of the taxpayer to any authority. The authority which initiates such action is empowered to complete the entire process of investigation, issuance of SCN, adjudication, recovery, filing of appeal etc. arising out of such action.

4. In other words, if an officer of the Central tax authority initiates intelligence based enforcement action against a taxpayer administratively assigned to State tax authority, the officers of Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case to its logical conclusions.

5. Similar position would remain in case of intelligence based enforcement action initiated by officers of State tax authorities against a taxpayer administratively assigned to the Central tax authority.

6. It is also informed that GSTN is already making changes in the IT system in this regard.

With best Wishes Your Sincerely, (Mahender Singh) The clarification issued by the CBEC is that when one of such

Officers authorized to be the 'Proper Officer' has initiated

intelligence based enforcement action, then the said Officer is

entitled to complete the entire process of investigation, without Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

any obligation to transfer it to the 'Proper Officer' authorized

under the other enactment, even if the particular assessee is

assigned, for administrative purposes, to the other Officer.

6. The assessee herein, had been issued with a

notice dated 04.02.2022 for conducting audit by the Assistant

Commissioner of State Tax, Gopalganj Circle, Gopalganj. The

notice which is produced as Annexure-1 refers to the financial

year 2017-18 and directed the production of accounts, records

and documents for the purpose of carrying on the audit. The

petitioner submits that he had produced the entire details before

the State Officer when he was issued with another notice dated

07.09.2022, Annexure-2, by the Senior Intelligence Officer,

Directorate General of GST Intelligence, Patna Zonal Unit,

Patna; which was dated 07.09.2022. This was a notice under

Section 70 of the CGST Act which directed the attendance of

the petitioner and production of documents as specified in

Annexure-A of the notice, which refers to the financial years

2017-18 to 2021-22. The assessee was then confronted with yet

another notice dated 30.09.2022 under Section 73/Section 74 of

the CGST Act from the very same Officer of the Directorate,

who issued Annexure-2. The petitioner's contention is that the

first of such notices and the inquiry initiated has to reach its Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

logical conclusion and hence, the State Tax Authoritiy has to

proceed as per Annexure-1 and the Central Tax Authority has to

stay it's hands till the inquiry initiated by the State Tax

Authority is over.

7. We have to first notice that the notice issued at

Annexure-1 is for the financial year 2017-18 alone while the

proceedings at Annexure-2 and 3 refers to the financial year

2017-18 to 2021-22. It is also pertinent that Annexure-3 notice

indicates that a summons was issued under Section 70 of the

CGST Act dated 07.07.2021 by the Directorate and in response

to the same, the assessee had also appeared before the said

Authority. Hence, the first of the notices issued is by the Central

Tax Authority.

8. We can usefully refer to the decision of the

Division Bench of the High Court of Delhi in Indo

International Tobacco Ltd. v. Vivek Prasad, (2022) 1 Centax

142 (Del). Therein, a similar issue arose of proceedings having

been initiated by both Central and State Tax Authorities.

However, since a common thread was found, the jurisdictional

authorities themselves had transferred the investigation to the

Directorate General of GST Intelligence to bring the

investigation under one umbrella. It was found that the GST Act Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

does not prohibit such transfer and in that context neither

Section 6(2)(b) nor the circular dated 05.06.2018 has any

application.

9. In the present case, there are, at present,

proceedings initiated by the State Tax Authorities and the

Central Tax Authorities and as we noticed, the first of such

proceedings was initiated by the Central Tax Authority, having

issued summons under Section 70 of the CGST Act. The

proceeding issued by the Central Tax Authority is for the

assessment years 2017-18 to 2021-22 while the State Tax

Authority has initiated audit for the year 2017-18.

10. The learned Government Advocate had

produced before us the judgment of a co-ordinate Bench of this

Court (authored by myself) wherein the simultaneous

proceedings were directed to be continued. Therein, the

summons issued under Section 70 of the CGST Act, 2017 was a

proceeding against another assessee at West Bengal with whom

the noticee is said to have had transactions. The noticee was

directed to produce the details of purchases made from the

assessee, who was proceeded against under the CGST Act. As

far as the State Tax Authority is concerned, it was a proceeding

initiated against the noticee itself. Hence, the proceedings were Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

for assessment of different entities. It was found that there was

nothing wrong in the proceedings being continued

simultaneously.

11. In the present case, however, the proceedings

are with respect to the same assessee and the proceedings

initiated under the SGST Act is for a financial year for which

proceedings have already been initiated by the 'Proper Officer'

under the CGST Act. In such circumstances, going by Section 6,

it is only proper that the State Tax Authority does not continue

the proceeding and keep it in abeyance till the Central Tax

Authority completes the proceedings, first initiated. We, hence,

direct the proceedings to be continued as seen from Annexure-2

and 3, which was initiated by a summons under Section 70 of

the CGST Act, 2017, as early as on 07.07.2021. Even if Section

70 is not considered to be an initiation of proceedings,

Annexure-3 indicates that summons was issued under Section

70 on 07.07.2021 based on an intelligence input; which makes it

an intelligence based enforcement action as covered by the

Circular. The proceedings as initiated against Annexure-1 dated

04.02.2022 by the State Tax Authority, is at the notice stage and

with respect to one of the years on which the Central Tax

Authority has already initiated proceedings. Annexure-1, hence, Patna High Court CWJC No.2668 of 2023 dt.10-10-2023

shall be kept in abeyance. We make it clear that any documents

or materials produced before the State Tax Authority shall be

transmitted to the Central Tax Authority. The petitioner shall

appear before the Central Tax Authority in compliance of

Annexure-3.

12. The writ petition is allowed with the above

directions.

(K. Vinod Chandran, CJ)

( Rajiv Roy, J) sharun/-

AFR/NAFR                AFR
CAV DATE
Uploading Date          16.10.2023
Transmission Date