2021 (2) TMI 689 - HC - GST

Summon Order - seeking to take instruction as to the basic documents required by the Inquiry Officer, who is holding an inquiry u/s 70 - petitioners allege that they are co-operating with the CGST Authorities in the inquiry yet, they are being harassed being summoned to New Delhi and kept waiting for hours amidst the pandemic - HELD THAT - Considering this nature of dispute an enquiry proceedings is conducted by the CGST Authorities by issuing summons under Section 70 of the 2017 Act. It appears that in the enquiry the classification of the transaction has to be first ascertained. In order to ascertain this the documents and records of the petitioner no.1 is required initially. The corroborating evidence or statement from the officers of the petitioner no.1 is then required. After ascertaining the rate of the tax applicable in terms of the classification, the quantum has to be ascertained on the basis of the value of the transaction undertaken. For this, the books of the petitioner no.1 are required initially and after scrutiny if any discrepancies are found the corroborative statements and evidence is required. CGST Authorities have already issued two summons, one dated 7th December, 2020 and the other dated 7th January, 2021. In Annexure A to the summons dated 7th December, 2020 a list of documents required to be produced by the petitioners on 16th December, 2020 is mentioned - The petitioners are, therefor, directed to produce the documents mentioned in Annexure A to the summons dated 7th January, 2021 on 29th January, 2021 at 11.00 a.m. at the place notified in the summons through a proper officer. The officer holding the enquiry shall receive the documents after preliminary scrutiny thereof and should release the person producing such documents immediately thereafter without detaining him for recording any evidence. The officer shall make a full study of the documents so produced on 29th January, 2021 and shall communicate to the petitioner as to whether any further documents are required to be produced - Petitioners shall be bound to produce such documents which may further be asked for, provided the same are in their possession on the date and time that may be specified by the Inquiry Officer. Let the writ petition be adjourned till March 15, 2021 with liberty to the parties to mention in case of any difficulty.

Summary

Issues:
1. Inquiry under Section 70 of the Central Goods and Services Tax Act, 2017 regarding a classification dispute.
2. Disagreement between petitioners and authorities on the applicable tax rate.
3. Requirement of documents and evidence for the inquiry process.
4. Direction to produce documents and cooperate with the inquiry officer.
5. Modification of procedure due to the pandemic situation.

Analysis:
1. The judgment pertains to an inquiry under Section 70 of the Central Goods and Services Tax Act, 2017, focusing on a classification dispute between the petitioners and the authorities. The transaction in question involves a composite supply related to the Public Distribution System (PDS) from the State Government, falling under Section 2(30) of the CGST Act.

2. The disagreement arises from the interpretation of the applicable tax rate. The petitioners and the State Goods and Services Tax (SGST) Authorities argue that the transaction qualifies for a 5% tax rate under specific notifications. In contrast, the Central Goods and Services Tax Authorities advocate for an 18% tax rate based on a different classification criterion.

3. To resolve this dispute, an inquiry process is initiated by the CGST Authorities, necessitating the submission of documents and records by the petitioners. The inquiry aims to ascertain the classification of the transaction, determine the applicable tax rate, and assess the quantum based on the transaction value. The petitioners have already participated in the inquiry by producing documents as per the summons issued.

4. The judgment directs the petitioners to produce additional documents listed in the summons dated 7th January, 2021, on 29th January, 2021, emphasizing their cooperation with the inquiry officer. The officer is instructed to scrutinize the documents, communicate further document requirements if necessary, and refrain from detaining individuals for recording evidence at this stage.

5. Due to the prevailing pandemic situation, the procedure is modified to prioritize the safety and convenience of the involved parties. Personal presence of petitioner officials is deferred until the document production stage is completed, and multiple individuals are discouraged from being present simultaneously. The writ petition is adjourned until March 15, 2021, with the option for parties to seek relief in case of difficulties.

This comprehensive analysis of the judgment highlights the key issues, the legal arguments presented, and the procedural directions issued by the court in resolving the classification dispute under the CGST Act.