The Punjab and Haryana High Court has held that the order of the respondent-department in transferring the proceedings to Directorate General of GST Intelligence (DGGI), Meerut is not sustainable in law. orders are not sustainable in law. The proper officer, namely, Excise & Taxation Officer, Shahbad had no jurisdiction to transfer the proceedings to the Central Government.
The bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth has observed that since the proceedings have already been initiated by the State authorities i.e. the Excise and Taxation Officer at Shahbad. The summons and warrants have already been issued and the entire record is available with them. As has come on record, there is no occasion to uphold the action of the DGGI or the action of the State Tax Officer in transferring the proceedings pertaining to the petitioner firm which were pending before it by his letter dated 15.03.2022.
The bench directed the State Tax Officer under the GST Act to proceed and conclude the proceedings in terms of the provisions of the GST Act.
The petitioner/assessee is a manufacturer of Lead alloys, Lead pure in shape of ingots, lead suboxide and red lead in power form and is operating in the State of Haryana.
An enquiry was initiated by the Haryana State Tax Department with regard to wrongful availment of Input Tax Credit (ITC) against the petitioner company and also by multiple DGGI Zonal Units.
The petitioner was aggrieved by multiple enquires. The petitioner preferred writ petitions which was disposed of on 23.01.2020 and the respondents were directed to take a decision in this regard for conducting proceedings by one agency alone for the period of 01.07.2017 to 31.12.2018. The State Government GST Department decided to take up the enquiry proceedings against the petitioner vide order dated 08.07.2020 and the record including ledger account, sales and purchase invoices and proof of payment etc. were requisitioned upto 31.01.2021.
The Director General of Goods and Services Tax Intelligence (DGGI), conducted search and seizure proceedings and a panchnama was also drawn on 19.02.2021. The records/documents have already been seized by the State Government authorities and the visitor officers of the DGGI, Meerut Zonal Unit, verified the facts from the State Taxation Officer, who confirmed having taken all the documents on record relating to the period from July 2019 to January 2021. With reference to the earlier period from 01.07.2017 to 31.12.2018 also the record was seized in the search conducted by the State GST authorities. A notice under Section 74 (1) of the Haryana Goods and Services Tax Act, 2017 was also issued for the tax period from 01.07.2017 to 21.07.2019 to the petitioner. The issue of fraudulent availment of ITC is pending with the State authorities.
Senior Intelligence Officer filed a short written reply. In his reply, he has stated that intelligence was gathered in regard to a racket involved in passing of ITC to various beneficiaries without supply of any underlying goods/ services.
The intelligence searches were conducted at the registered addresses of eight suspicious suppliers, who were supplying goods to the petitioner-company. They were all found to be non-existent/non-operational at their registered place of business. Investigations were further conducted with regard to creation of fake firms and mastermind behind it emerged, namely, Anant Rastogi, who has created and operated the above mentioned fake firms through which inadmissible ITC was passed on to various beneficiaries including M/s Stalwart Alloys India Limited during the period from September 2019 to February 2021.
Finally Anant Rastogi was apprehended and his statement was recorded under Section 70 of the CGST Act, 2017 and he confessed of creating the fake firms to facilitate fraudulent availment and passing of ITC to various beneficiaries including the petitioner-company.
The amount was deposited by the said beneficiaries in the account of the fake/non-existent firms and the amount was returned by him in cash to the involved companies after retention of his own commission. The petitioner-company who stated to be actively involved with Anant Rastogi.
The Principal Director (Intelligence), DGGI, Headquarters has accorded permission to the office of the DGGI, Meerut Zonal Unit to conduct the centralized investigation against the petitioner company for the period after 2019. The petitioner has stated that another search and seizure proceedings were again conducted at the premises of the petitioner company by the DGGI, Meerut Zonal Unit.
The State Tax Officer had transferred the proceedings pertaining to the petitioner company to the DGGI, Meerut Zonal Unit.
The petitioner was aggrieved by the transfer of all proceedings to DGGI, Meerut Zonal Unit, by the State Tax Officer, preferred the writ petition.
The petitioner contended that the action was in violation of provisions of Section 6 (2)(B) of the HGST Act and the proper officer in terms of Section 6(2)(b) of the HGST Act was the officer who had initiated the proceedings under Section 74(2) of the Act where after he does have the power to transfer the proceedings to DGGI. The multiple proceedings cannot be allowed to continue and the proper officer would be the State Tax Officer alone who has the jurisdiction to examine the subject matter. After the record having been seized by the State Tax Officer at the instance of DGGI, the record cannot be transferred to the office of DGGI nor can the DGGI usurp the power of the officer under the State GST Act, he being the proper officer.
The petitioner contended that the issue of jurisdiction can be raised at any stage. He further submitted that commencement of investigation in terms of Section 67 of the Central Goods and Services Tax Act, 2017 can be said to be the start of a proceedings to safeguard the government revenue. Therefore, once the proceedings have been started at the State level and notice having also been issued under Section 74 (1) of the HGST Act, it would be only legal for the State authorities to conduct intelligence proceedings and there was no power available to transfer the proceedings to DGGI Meerut Zonal Unit.
The petitioner argued that there was no power to transfer the proceedings between the State and the Centre under the CGST/ HGST, whereas there is an enabling provision available under the Income Tax Act and under the various other taxation Acts, namely, Sections 32C and 35P of the Central Excise Act, 1944; Section 131B of the Customs Act, 1962; Section 25 of the Central Sales Tax Act, 1956; and Section 434 of the Companies Act, 2013. Section 127 of the Income Tax Act, 1961 allows transfer of a case with the permission of the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
The department contended that so far as the period after 2019 is concerned, the State Government has not taken any steps for conducting investigation. It is only for the overlapping periods i.e. 01.07.2017 to 31.03.2018 and 01.10.2018 to 31.12.2018 that the Court had passed an order in the writ petition filed by the petitioner and, therefore, the proceedings are now being conducted by the proper officer under the Haryana GST Act. Since the suspicious suppliers are not falling in the State of Haryana and the statement of Anant Rastogi would have relevance and the petitioner company has been found to be prima facie involved in fraudulent ITC to the tune of Rs. 23.77 crores involving taxable supplies to the tune of Rs. 132.05 crores, it would be in the interest of justice that the enquiry is conducted by the DGGI, Meerut Zonal Unit.
The department contended that After detailed deliberation, it was decided that the State GST authority would be examining the action of the previous year and for the subsequent period the action is to be taken by the Central GST authorities, if they have received any information. No investigation is being conducted by the State GST authorities for the period July 2019 to March 2022 and the DGGI Meerut Zonal Unit or the Central GST authorities ought not be prevented from conducting further proceedings.
The court noted that the proper officer, who has initiated proceedings in the present case, the State Tax Officer, would be empowered to summon persons to give evidence and produce documents, while the other tax statutes provide for transfer of cases from one officer to another. The scheme of the Central Goods and Services Tax Act, 2017 or the Haryana Goods and Services Tax Act, 2017, nowhere provides for transferring the proceedings from one proper officer to another. On the other hand, it debars the same. In the circumstances, neither any authority has the power to transfer the case from its own jurisdiction to another nor any other authority can direct an investigation/proceeding already undergoing before the proper officer in terms of Section 6(2)(b) of the GST Act.
The court while allowing the appeal directed that the Excise & Taxation Officer-cum-proper officer, Shahbad, shall continue with the proceedings initiated under Section 74(1) of the HGST Act against the petitioner-company and shall also examine all the aspects which may have been revealed relating to evasion of tax or availment of ITC after 22.07.2019.
Case Title: M/s Stalwart Alloys India Private Limited Versus Union of India and others
Case No.: CWP No. 1661 of 2022 (O&M)
Date: 28.08.2024
Counsel For Appellant: Sandeep Goyal
Counsel For Respondent: Tanisha Peshawaria
