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TMI Blog2022 (1) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... he 'CBEC'), and are therefore, being considered and disposed of by this common judgment. W.P.(C) 2420/2021 2. In W.P.(C) 2420 of 2021, it is the case of the petitioner that it is engaged in the manufacturing and supply of tobacco products. It obtained GST Registration on 21.10.2019 from the jurisdictional Office situated at Gautam Buddh Nagar, Uttar Pradesh, as the petitioner's firm was registered and had its principal place of business within the jurisdiction of the said Commissionerate. 3. The petitioner commenced its commercial operations in the month of December 2019. 4. On 19.03.2020, a search was carried out at the petitioner's premises by the CGST Officers from Gautam Buddh Nagar. The petitioner alleges that no shortcomings were noticed in the said search operation. Thereafter, a Show Cause Notice dated 20.04.2020 was issued by the Assistant Commissioner, Central Tax Division-I, Gautam Buddh Nagar, Uttar Pradesh, calling upon the petitioner to show cause why its refund claim, filed for the month of February 2020 under Section 54 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the 'CGST Act'), be not rejected and the alleged inadmissible credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DGGI, Ghaziabad, also searched the premises of the petitioner. 12. The premises of the petitioner was again searched on 13.02.2021 by the DGGI, Ahmedabad Zonal Unit (in short, 'AZU'). 13. Being aggrieved of such multiple search operations and summons being issued, the petitioner has filed the present writ petition. W.P.(C) 4036/2021 14. In W.P.(C) 4036 of 2021, the petitioner contends that it is a proprietorship firm and is engaged in the manufacturing of flavouring compound under the brand 'SSM Super Strong'; 'SSM Super'; 'QM1000'; 'QM-500'; flavoured tobacco extract under the brand 'Azeem'; flavoured tobacco under the brand 'TBH-300'; 'TBH-341'; 'Revelry25'; and 'Frolic-25'. The petitioner's firm is registered with the GST Department, South Delhi Commissionerate. 15. On 04.09.2019, the Officers from the Anti-Evasion, CGST, Delhi East and South Commissionerate, carried out the search operation at the premises of the petitioner. The search warrant dated 04.09.2019 had been issued by the Joint Commissioner (AE), CGST, Delhi East Commissionerate. 16. On 27.09.2021, yet another search operation was carried out at the premises of the petitioner by the Additional Assistant Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3279 of 2019. 23. They submit that the Circular dated 05.10.2018, having been issued under Section 168 of the CGST Act, is binding on the Department. In support of their submissions, they place reliance on the following judgments: a. Simplex Castings Ltd. v. Commissioner of Customs, Vishakhapatnam; (2003) 5 SCC 528; b. Commissioner of Customs v. Indian Oil Corporation Ltd. & Anr., (2004) 3 SCC 488; c. Collector of Central Excise, Vadodara v. Dhiren Chemical Industries, (2002) 10 SCC 64; d. UCO Bank, Calcutta v. Commissioner of Income Tax, W.B, (1999) 4 SCC 599; and e. Catholic Syrian Bank Ltd. v. Commissioner of Income Tax, Thrissur, (2012) 3 SCC 784. 24. The learned senior counsel for the petitioners submits that the CGST Act does not, anywhere, refer to 'investigation' or to the Officers who are authorised or empowered to carry out a particular investigation. The powers under the CGST Act are conferred only on 'proper officer' defined under Section 2(91) of the CGST Act. Placing reliance on Section 6(1) of the CGST, he submits that the Officers appointed by the State Government are also 'proper officers' for the purpose of the CGST Act and, therefore, exercise all pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t being empowered to issue an order under the other Act as well. 28. He submits that in terms of Section(s) 3 and 5 of the CGST Act and the SGST Act, the Central Government and the State Governments have issued notifications empowering the 'proper officers'. By the Notification No. 02 of 2017 dated 19.06.2017, issued by the CBEC, various Central Tax Officers have been appointed vesting them with jurisdiction on specified territories. They therefore, exercise limited territorial jurisdiction. Whereas, vide Notification No. 14 of 2017 dated 01.07.2017, the CBEC has appointed the Central Tax Officers with All India jurisdiction. Similarly, the State Tax Officers have been appointed by the respective State Governments giving limited territorial jurisdictions to the State Tax Officers or vesting them with jurisdiction over the whole State. As an example, he has referred to the Notification dated 23.06.2017, issued by the Government of Maharashtra, separately empowering the State Tax Officers with limited territorial jurisdictions and those having jurisdiction over the whole State. 29. Placing reliance on the above Notifications, the learned ASG submits that the all-India jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch fake supplies. Accordingly, investigation against them were initiated for the specific issue of filing of fraudulent refund claims. 3. CGST, Gautam Buddha Nagar Commissionerate 07.10.2020 M/s Commodities IntertradeGSTIN 9AFTPB2263G1ZE had applied for refund of Rs. 96,12,360/- against export of services which was deviating from their normal trade business, before the CGST, Noida Commissionerate. The service was shown to have been procured from M/s Mridul Tobie Inc by M/s Commodities Inter-trade. Accordingly, the CGST Noida commissionerate has requested the GBN Commissionerate to verify the facts in this regard. In pursuance to the same the CGST GBN Commissionerate conducted the search at the premises of M/s Mridul Tobie Inc. It is pertinent to mention that later on M/s Commodities Intertrade has reversed the entire ITC amount of Rs. 96,12,360/- vide DRC -03 dated 27.01.2021. Thus, this search was conducted at the premises of M/s Mridul Tobie Inc only with reference 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 Z ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction in "Smoking Mixture" is highly rewarding for availment of ITC unlawfully. The evidences available on record indicated a deeprooted conspiracy by some persons who were the masterminds behind this modus operandi to defraud the public exchequer. Investigations also revealed that the petitioner firm M/s Mridul Tobie Inc, Noida is also one of the beneficiaries of fake ITC generated in the name of some of the non-existent entities by paper transactions without corresponding supply of goods, including "smoking mixture for pipes and cigarettes". Further, investigation also includes the issue of Overvaluation and Misclassification 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to transfer its investigation to the DGGI, AZU. In response to the said request, the investigation being carried out by different CGST formations have been transferred 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 further necessary action. Therefore, at present, DGGI, Lucknow Zonal unit is not pursuing any investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned, 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 on this information, search operations were carried out at various locations, including the petitioner. He further submits that the Deputy Commissioner, CGST Delhi, East Commissionerate, vide letter dated 27.05.2021, has categorically stated that they are not investigating any case against the petitioner. Similarly, the Joint Commissioner, CGST Delhi, South Commissionerate, vide letter dated 31.05.2021, has also informed that no investigation file in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces 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 for the exclusive power of Parliament to enact GST legislation where the supply of goods or services takes place in the course of inter-State trade or commerce; and (iii) Thirdly, Article 246A embodies the constitutional principle of simultaneous levy as distinct from the principle of concurrence. Concurrence, which operated within the fold of the Concurrent List, was regulated by Article 254." 39. The other significant change is brought by the One Hundred and First Amendment to the Constitution is the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence, 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 reason other than fraud or any wilful misstatement or suppression of facts); and Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts) etcetera, have been bestowed by the CGST Act on the 'proper officer'. Similar vesting of power is made in favour of "proper officer" under the SGST Act(s). 44. 'Proper Officer' is defined in Section 2 (91) of the CGST Act, as under: "(91) "proper officer" in relation to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the State Tax Officers. 54. Section 6 of the CGST Act is reproduced herein below: "6. Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances.-- (1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayers 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 initiated any proceedings on a subject matter, the Central Tax Officer shall not initiate proceedings on the same subject matter. Clearly the intent being that as the State Tax Officer is empowered to pass an order even under the CGST Act, there is no occasion for the Central Tax Officer to initiate parallel proceedings on the same subject matter. 61. As stated hereinabove, Section 6 of the CGST Act is intended to give the effect of harmonious convergence of the States and the Union for the same event for taxation. 62. The above intent is further sought to be effectuated by the Circular dated 05.10.2018 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... telligence 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 may be administratively assigned to the other authority- State or Centre as the case maybe, the officer initiating 'intelligence based enforcement action' need not transfer the said case to the authority otherwise having administrative assignment over the taxpayer. 64. The above Circular is one example where Section 6 shall have its full play. In terms of Section 6(1), the State or the Central Tax Officer as the case maybe, is also authorised to act as the 'proper officer' for the purposes of the other Act- CGST or the SGST Act as the case maybe. Therefore, when such officer initiates 'intelligence based enforcement action', he acts and is empowered to so act not only under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the first case, the officer initiating the 'intelligence based enforcement action' cannot travel beyond his territorial jurisdiction. To strictly enforce Section 6 and the abovementioned Circular would therefore, lead to compelling such officer to restrict his investigation and findings and resultant action only to the taxpayer within his territorial jurisdiction, thereby leading to an incomplete and inconclusive investigation/action. In the abovementioned second scenario, as all officers who have initiated 'intelligence based enforcement action' are otherwise having jurisdiction over the taxpayer, strictly enforcing the mandate of Section 6 and the abovementioned Circular, will on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 applicable to the facts in the present set of writ petitions. In fact, the said judgment itself records and clarifies that it has not expressed any opinion on the merits of the case. We quote paragraphs no. 6 and 7 of the said judgment, as under: "6. Thus, it appears that by way of instructions, it is clarified that if an officer of the Central tax authority initiates intelligence based enforcement action against a taxpayer administratively assigned to the State tax authority, the officers of the Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case to its logical conclusions. In the case on hand, there is nothing on record to indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 transferred to DGGI, AZU to be brought under one umbrella. We also find that in the CGST Act there is no prohibition to such transfer. 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 Circular dated 05.10.2018 also has no application to the facts of the present petitions.
RELIEF:
77. In view of the above, we find no merit in the present writ petitions. The same are accordingly dismissed. There shall be no order
CONT. CAS(C) 751/2021
78. Insofar as the Contempt Case (C) 751 of 2021 is concerned, no submissions have been made by either party before us during the course of the hearing. The same is also accordingly dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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