TMI Blog2022 (1) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... and the SGST Act, have to pass comprehensive order, both under the CGST Act as also the SGST Act. Circular dated 05.10.2018 has no application to the peculiar facts in the present set of writ petitions. In the course of investigating of a tax entity, a situation may arise where the investigation may have to be carried out from entities which are not within the territorial jurisdiction of the Officer appointed under the Notification dated 19.06.2017 and/or such State Notifications appointing an Officer with the limited territorial jurisdiction. It cannot be said that in every such case, the proper officer having limited territorial jurisdiction must transfer the investigation to the proper officer having pan India jurisdiction - it would depend on the facts of each case as to whether such transfer is warranted or not. To lay down the indefeatable rule in this regard may not be feasible or advisable, and certainly not acceptable. The investigations were initiated by various jurisdictional authorities against different entities - Section 6(2)(b) of the CGST Act has limited application and therefore, is not applicable to the facts of the present petitions. Similarly, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Nagar, further, vide its order dated 11.05.2020 passed under Section 83 of the CGST Act called upon the ICICI Bank, where the petitioner maintained its bank account, to supply the KYC documents along with the details of the banking transactions. It was further directed that the bank account of the petitioner shall remain provisionally attached and no debit shall be allowed to be made from the said account without prior permission of the Department. 6. Thereafter, summons dated 05.06.2020 under Section 70 of the CGST Act was issued to the petitioner calling upon the petitioner to produce various documents. 7. The petitioner claims that as its refund was not released and the bank account of the petitioner remained attached in spite of various representations, the petitioner filed two writ petitions, being Civil Writ Petition No(s). 461 of 2020 and 462 of 2020, before the Hon ble High Court of Allahabad, wherein notice was issued in the petitions and pleadings therein were directed to be completed. However, during the pendency of the above petitions, another search was carried out at the premises of the petitioner by the Officers of the CGST, Gautam Buddh Nagar, on 07.10.2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of the petitioner to appear before it on 30.09.2019. As the petitioner could not appear on the said date, another summons dated 15.10.2019 were issued by the DGGI, AZU, to the proprietor of the petitioner to appear before it on 31.10.2019. 17. The summons dated 28.11.2019 were then issued by the CGST Office, Delhi West, calling upon the Head (Manufacturing Processing) of the petitioner to appear on 04.11.2019, which was not possible, the date already having passed. 18. Yet another summons dated 14.02.2020 were issued by the Superintendent Central Tax, New Delhi, to the proprietor of the petitioner to appear before it on 20.02.2020. 19. On 18.12.2020, the DGGI, AZU, again issued summons to the petitioner to appear before it on 07.01.2021. 20. The petitioner s firm registration was also cancelled on 01.03.2021. 21. Aggrieved of such repeated summons being issued by multiple agencies, the petitioner has filed the present writ petition. PETITIONER(S) SUBMISSIONS: 22. Mr. S. Ganesh, the learned senior counsel appearing for the petitioner in W.P.(C) 2420 of 2021 and Mrs. Anjali J. Manish, the learned counsel appearing for the petitioner in W.P.(C) 4036 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government has already initiated proceedings, then the CGST Officers cannot exercise any power on the same subject matter, which is intelligence-based enforcement action on the entire taxpayers base irrespective of the administrative assignment of the taxpayer to any authority, and to the entire value-chain of the particular taxpayer. 25. The learned senior counsel for the petitioner further submits that the Gautam Buddh Nagar Commissionerate had issued four Show Cause Notices to the petitioner raising numerous issues. It has raised issues with respect to the suppliers who are outside Gautam Buddh Nagar. One of the Show Cause Notices has even been adjudicated. He submits that in view of Section 6(2)(b) of the CGST Act and the Circular dated 05.10.2018, it would only be the Gautam Buddh Nagar Commissionerate who would be empowered to complete the entire process of investigation, issuance of Show Cause Notice, adjudication, recovery, filing of the appeal, et cetera. He submits that there would, in fact, be a prohibition against the GST Intelligence Officers of AZU from carrying out this entire process in view of the Circular dated 05.10.2018. 26. Mrs. Anjali J. Manis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14 of 2017 and no one else. He submits that, therefore, once the proceedings have a PAN India influence and involvement of more than one Commissionerate, it is only the Central Tax Officers having all-India jurisdiction, in terms of the Notification No. 14 of 2017, who are empowered to carry out the investigation. 30. Referring to Section 6(2)(b) of the CGST Act, the learned ASG, submits that the same will have the full play if the proceedings do not transgress the territorial jurisdiction, whereas in a case where the subject matter is of all-India jurisdiction, then only the Officers appointed under Notification No. 14 of 2017 dated 01.07.2017 can exercise power under Section 6(2)(b) of the CGST Act and the rest have to keep away as they do not possess all-India jurisdiction. In this regard, he places reliance on the judgment of this Court, in National Building Construction Company Ltd. v. Union of India Ors., 2018 SCC OnLine Del 12397. 31. On facts, in W.P.(C) 2420 of 2021, the learned ASG has placed reliance on the following chart from the common additional-affidavit filed by respondent no(s). 1, 3, 4, 5 to 7 and 9, which is reproduced herein-below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eference to the refund claimed by M/s Commodities Inter-trade, on the strength of the invoice issued by M/s Mridul Tobies Inc. 4. DGGI, Regional Unit, Kanpur (Under DGGI, Lucknow Zonal Unit) 01.12.2020 DGGI, Lucknow Zonal Unit, was investigating case against Agra based exporter M/s Snuff Exim Pvt. Ltd. for claiming refund of accumulated ITC obtained through fraudulent means. During the investigation it was found that M/s Mridul Tobie Inc was prominent supplier to the said firm. Accordingly, follow-up search was conducted at the premises of M/s Mridul Tobie Inc. by DGGI, Kanpur Regional Unit as per the directions of DGGI, Lucknow Zonal Unit. 5. DGGI, Delhi Zonal Unit 14.01.2021 Search conducted at the premises of M/s Shalimar Traders indicated, it to be a fake firm. The firm is found to be issuing fake/bogus invoices without supply of goods for passing on fraudulent ITC. M/s Mridul Tobie Inc. is one of the recipient of such fake ITC generated from the said firm. Accordingly, investigation against them were initiated for the limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of the product by M/s Mridul Tobie Inc. Remarks: During search operation, it was observed that the goods seized by the DGGI, Delhi Zonal Unit under panchanama dated 14.01.2021 were not available at the premises. This search was conducted by DGGI, Ahmedabad Zonal Unit with the help of DGGI, Delhi Zonal Unit so the officers of Delhi Zonal Unit were also present during the said search. 8. M/s Mridul Tobie Inc. 19.02.2021 Filed WP No. 2420 of 2021 9. DGGI, Delhi Zonal Unit 25.02.2021 This second Search was conducted by DGGI, Delhi Zonal unit to verify the fact of non-availability of seized goods in the premises of M/s Mridul Tobie Inc., as noticed and recorded under the panchanama dated 13.02.2021 drawn by the officers of DGGI, Ahmedabad Zonal Unit. During the course of this search, it was confirmed that M/s Mridul Tobie Inc., had infact illicitly disposed off the goods seized under panchnama dated 14.01.2021. And in order to cover up their ill legal act they had replaced the goods with other illicitly procured good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the DGGI, AZU. In this regard, he has referred to the details provided in the form of a table in the additional-affidavit, which is reproduced herein-below: Sr.No. Name of the office Referral Letter No. Date Remarks 1 DGGI, Ahmedabad Zonal Unit DGGI/AZU/Gr- A /12(4)513/2020-21 Annexed as Exhibit-II 01.03.2021 DGGI, Ahmedabad Zonal Unit vide its letter dated 01.03.2021 had requested DGGI, Delhi Zonal Unit and DGGI, Lucknow Zonal Unit to transfer the investigation being conducted by them against M/s Mridul Tobie Inc. 2 DGGI, Lucknow Zonal Unit DGGI/ARU/Gr A /Panch/04/2021 Annexed as Exhibit-III A III B 09.03.2021 30.07.2021 In reply to the letter of DGGI, Ahmedabad Zonal Unit dated 01.03.2021, DGGI Lucknow Zonal Unit vide their letter dated 09.03.2021 30.07.2021 have transferred all the documents related to investigation of M/s Mridul Tobie Inc. To DGGI, Ahmedabad Zonal Unit for taking f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bie Inc., as its buyers and suppliers are located beyond their jurisdictions. Therefore, for the comprehensive investigation against M/s Mridul Tobie Inc. In respect of all the aspects, viz. Availment of ineligible ITC, valuation, business model etc. They have requested DGGI, AHMEDABAD ZONAL UNIT to conduct the investigation against M/s. Mridul Tobie Inc. 33. He submits that insofar as the issue of refund and freezing of the bank accounts is concerned, the CGST, Gautam Buddh Nagar Commissionerate, shall continue with the said proceedings. 34. As far as the W.P.(C) 4036 of 2021 is concerned, the learned ASG has drawn our attention to the short counter-affidavit filed by the respondent no. 1 the Commissioner, Delhi West; and the common counter-affidavit filed by the respondent no(s). 2, 5 and 6 the Officers of DGGI, AZU, to contend that the DGGI, AZU, had received intelligence that certain entities based in Delhi-NCR region of Domestic Tariff Area had shown supply of low-value tobacco and tobacco-related products to certain Special Economic Zone Units in Kandla Special Economic Zone at highly overvalued rates so as to avail ineligible refund of the ITC. Based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation . The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council. 38. The Supreme Court in VKC Footsteps India Pvt. Ltd. (supra) highlighted the changes brought about by Article 246A of the Constitution, in the following words: 34. Article 246A has brought about several changes in the constitutional scheme: (i) Firstly, Article 246A defines the source of power as well as the field of legislation (with respect to goods and services tax) obviating the need to travel to the Seventh Schedule; (ii) Secondly, the provisions of Article 246A are available both to Parliament and the State legislatures, save and except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Union Government is to have a weightage of onethird of the total votes cast, while the votes of all the State Governments together are to have a weightage of two-thirds of the total votes cast. Every decision of the Council is to be taken by a majority of not less than threefourths of the weighted votes of the members present and voting. The principle of harmony does not postulate exact coincidence in all points of comparison or reference. Harmony is a postulate of cooperative federalism and is founded on the principle of mutual coexistence, deference and equality of the coexisting units. 42. Exercising power under Article 246A of the Constitution, the CGST Act, UGST Act and the IGST Act have been promulgated by the Parliament. We are informed that various State Governments have also promulgated the SGST Act, provisions of which are almost pari materia to the CGST Act. 43. Various powers, like under Section 67 (Power of inspection, search and seizure); Section 70 (power to summon persons to give evidence and produce documents); Section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would be a Central Tax Officer having territorial jurisdiction and there would also be a State Tax Officer having territorial jurisdiction. There would also be a Central Tax Officer who would have jurisdiction over such an entity as such officer exercises pan-India jurisdiction 52. We are further informed that for administrative purposes, a taxpayer in a particular area is assigned to the Central Tax Officer or the State Tax Officers exercising jurisdiction over that particular area. For example, in the W.P.(C) 2420 of 2021, the petitioner has been assigned the SGST Commissionerate of Gautam Buddh Nagar, while in W.P.(C) 4036 of 2021, the petitioner has been assigned to SGST Commissionerate, South Delhi. 53. There would, however, also be a Central Tax Officer having territorial jurisdiction over the area where the taxable entity is located. There would also be a transaction having both CGST as also SGST component/implication. 54. To achieve the goal of harmonized goods and service tax structure and in the spirit of cooperative federalism, Section 6(1) of the CGST Act and pari materia provisions in the SGST Act provide for cross-empowerment of the Central Tax Officers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the proper officer under the CGST Act on the same subject matter. 58. We are informed that similar provisions in the reverse are contained in the various SGST Act(s), with the State Tax Officer being required to pass an order under the CGST Act while passing an order under the SGST Act, and being prohibited from initiating any proceedings on the subject matter on which the Central Tax officer has already initiated some proceeding. 59. Section 6 of the CGST Act is clearly guided by the object of providing a common national market of goods and services and to eliminate the subjection of the taxpayers to multiple jurisdictions. It aims to provide protection to the taxpayers against being subjected to multiple agencies for the same set of transactions, at the same time empowering the Officers under the CGST Act or the SGST Act or the UTGST Act to pass a comprehensive order and take action, keeping in view and extending to the other Acts. There should, therefore, be only one order insofar as the tax entity is concerned. 60. To give effect to the above intent, Section 6(2)(b) of the CGST Act states that where the proper officer under the SGST Act or the UTGST Act has initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igence 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) To All Principal Chief Commissioners/ Chief Commissioner of Central Tax/ Principal Directors General/ Directors General 63. The above Circular is intended to give effect to the mandate of Section 6 of the CGST Act and the pari materia provisions in the State Act(s). It states that the mandate of Section 6 shall apply even to the intelligence based enforcement action . It clarifies that the Central Tax Officers as also the State Tax Officers 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 and that the authority which initiates such action is empowered to complete the entire process of investigation, issuance of Show Cause Notice, adjudication, recover, etcetera. It further clarifies that even though the taxpayer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f jurisdiction by the Central and the State Tax Officers. It is to bring harmony between the Centre and the State in the implementation of the GST regime, with the two not jostling for jurisdiction over a taxpayer. It is, however, not intended to answer a situation where due to complexity or vastness of the inquiry or proceedings or involvement of number of taxpayers or otherwise, one authority willingly cedes jurisdiction to the other which also has jurisdiction over such inquiry/proceedings/taxpayers. 67. Neither Section 6 of the CGST Act nor the SGST Act nor the Circular dated 05.10.2018, therefore, apply to the fact situation presented by the two petitions before us as they do not operate and are not intended to operate in a situation where the intelligence based enforcement action has repercussion or involvement of taxpayers beyond the territorial jurisdictional limit of the officer initiating such an action. It also does not address a situating where two or more Officers, may be Central or State or only Central or State, initiate separate intelligence based enforcement action but having a common thread or involvement of multiple taxpayers, like a case of conspiracy. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigations. It would defeat the very object of Section 6 and the harmonious structure that the GST regime seeks to bring about. 69. In the present set of writ petitions, the respondents have explained that to bring investigation under one umbrella, the DGGI AZU sought transfer of investigations being carried out by different Commissionerate(s) to itself. This was acceded to by each Commissionerate in both the writ petitions. We have not been shown any prohibition in the CGST Act or the SGST Act to such transfer of investigation. Neither it has been contended that the DGGI, AZU, would otherwise lack jurisdiction to carry out an investigation against the petitioners. It is not denied by the petitioners that the DGGI, AZU has a pan-India jurisdiction. DGGI, AZU would, as Central Tax Officer and in compliance with the mandate of Section 6 of the CGST Act and the SGST Act, have to pass comprehensive order, both under the CGST Act as also the SGST Act. 70. We, therefore, find that the Circular dated 05.10.2018 has no application to the peculiar facts in the present set of writ petitions. 71. The judgment of the High Court of Gujarat in Bhawani Textile (supra) is also not appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed as a proper officer under Notification No. 14 of 2017 dated 01.07.2017. We are not agreeable to such an argument without limitation. In the course of investigating of a tax entity, a situation may arise where the investigation may have to be carried out from entities which are not within the territorial jurisdiction of the Officer appointed under the Notification dated 19.06.2017 and/or such State Notifications appointing an Officer with the limited territorial jurisdiction. It cannot be said that in every such case, the proper officer having limited territorial jurisdiction must transfer the investigation to the proper officer having pan India jurisdiction. In our opinion, it would depend on the facts of each case as to whether such transfer is warranted or not. To lay down the indefeatable rule in this regard may not be feasible or advisable, and certainly not acceptable. SUMMARY OF FINDINGS: 76. In the facts of the present case, we find that the investigations were initiated by various jurisdictional authorities against different entities. As contended by the respondents, as common thread were allegedly found in these investigations, the same have been tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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