The Himachal Pradesh High court has held that the Director General of Goods and Service Tax Intelligence (DGGI) cannot block Input Tax Credit (ITC) when the proceedings are already initiated by the state GST Department.
The bench of Justice Tarlok Singh Chauhan has observed that the State and Central Governments have been extended the same powers under the CGST and SGST Act and if one of the officers has already initiated proceedings, the same cannot be transferred to another and he alone is to issue process under the Act and take it to its logical end.
Background
The petitioner/assessee is a manufacturer and distributor of iron and steel in the State of Himachal Pradesh. The petitioner had purchased raw material from different sellers and the same had been done after satisfying itself about the genuineness of the suppliers in terms of the conditions as laid down in Section 16 of the GST Act.
The petitioner was issued summons under Section 70 of the HP-GST/CGST Act, 2017 by State of Himachal Pradesh through the Department of State Taxes & Excise and in the summons the petitioner was asked to supply various documents to show the genuineness of the transactions with the suppliers.
Under the notice, the petitioner was asked to give the details of all the suppliers since September, 2021. The tax period for which the information was sought was between 01.04.2019 to 31.12.2023. It was also mentioned in the notice that the inquiry would be a judicial inquiry.
The petitioner submitted all the documents as sought for by the state GST department, on 12.03.2024.
On 16.03.2024, the petitioner was issued summons by the Director General of Goods and Service Tax Intelligence, Rohtak, Haryana, regarding supplies made from the five suppliers.
The petitioner informed that the proceedings had already been initiated by state GST department in accordance with the summons dated 14.02.2024 and the petitioner accordingly on 20.03.2024 sent an e-mail communication to DGGI informing that the proceedings had already been initiated against the suppliers by state GST department and the documents had already been submitted to state GST department.
However, the state GST department without following mandatory procedure or affording an opportunity of hearing or any communication, proceeded to block the Input Tax Credit of the petitioner and the same popped up on the web portal of the petitioner and the petitioner was shocked to see that the Input Tax Credit had been blocked for acts attributable to the suppliers
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Relevant Provisions
Section 6(1) contains a non-obstante clause and also empowers officers appointed under the State Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘SGST Act’) or the Union Territory Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘UGST Act’) to be appointed as a proper officer for the purpose of GST Act.
Section 6 (2) (b) of the GST Act treats the empowered officers under the SGTS/UGST Act at the central level to be at par and does not prescribe for transfer of investigation of the proceedings from State authority to the Central authority or vice-versa.
The object of Section 6(2)(b) of the Act is to avoid multiple proceedings by the Sales Tax Officer and Central Tax Officer on the same subject matter and the Rules of purposive interpretation requires Section 6(2)(b) of the Act to be read in light of this object.
Conclusion
The court allowed the petition and quashed the Blocking of the Credit Ledger popped up on the online web portal and the summons dated 16.03.2024 issued by DGGI.
Case Title: M/s Kundlas Loh Udyog Versus State Of H.P.
Case No.: CMPMO No. 273 of 2024
Date: 17/09/2024
Counsel For Petitioner: Shrawan Dogra, Sr. Advocate with Manik Sethi, Advocate
Counsel For Respondent: Anup Rattan, A.G. with Ramakant Sharma and Sharmila Patial
