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TMI BlogOverlapping Jurisdiction Between Central and State Tax OfficersX X X X Extracts X X X X X X X X Extracts X X X X ..... Overlapping Jurisdiction Between Central and State Tax Officers X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the present case. The petitioner, engaged in manufacturing and supplying tobacco products, obtained Goods & Services Tax ('GST') registration and began operations in December 2019. A search was conducted at the petitioner's premises by CGST officers in March 2020, following which a Show Cause Notice ('SCN') was issued for the rejection of a refund claim and recovery of inadmissible credit. The petitioner's bank account was provisionally attached in May 2020, and subsequent summons were issued for document production. Despite representations, multiple searches were conducted by CGST and DGGI officers from October 2020 to February 2021, leading the petitioner to file the present writ petition challenging these actions. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that issuance of such multiple summons to the petitioner(s) by multiple agencies is violative of the mandate of Section 6(2)(b) of the CGST Act and the Circular dated 05.10.2018 issued by the CBEC. It was further contended that Section 6(2) of the CGST Act makes it clear that if the SGST Officer has already initiated proceedings, then the CGST Officers cannot exercise any power on the same subject matter. The hon'ble High Court examined the structure of tax administration under the GST system, highlighting the powers and responsibilities of the 'proper officer' under the CGST, SGST, and IGST Acts. It noted that the Central Government and State Governments have the authority to appoint officers with either limited territor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial jurisdiction as well as with pan-India jurisdiction. This results in a situation where a taxpayer may be subject to both Central Tax Officers and State Tax Officers in the same jurisdiction, with each having their respective powers. Analysis of Section 6 of CGST Act and CBEC Circular The hon'ble High Court analyzed that Section 6 of the CGST Act aims to create a unified national market by preventing taxpayers from being subjected to multiple jurisdictions for the same transactions. It ensures that only one order is issued for a taxpayer's matters, whether under the CGST, SGST, or UTGST Acts. Specifically, Section 6(2)(b) prohibits the Central Tax Officer from initiating proceedings on the same subject matter if the State or UTGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer has already begun proceedings. Further the Circular D.O.F. No. CBEC/20/43/01/2017-GST (Pt.) dated 5th October 2018 clarifies that Section 6 of the CGST Act applies to "intelligence-based enforcement actions", allowing both Central and State Tax Officers to initiate such actions across the entire taxpayer base, regardless of administrative assignment of taxpayer to any authority. The officer who starts the action has the authority to complete the entire process, including investigation, issuing notices, adjudication, and recovery, without needing to transfer the case to the other authority, even if the taxpayer is administratively assigned to a different authority. The hon'ble High Court held that Section 6 of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the Circular dated 05.10.2018 are not intended to apply universally to all situations within the GST framework. They are specifically meant to prevent overlapping jurisdiction between Central and State Tax Officers. The court noted that these provisions do not address complex cases where an intelligence-based enforcement action involves multiple taxpayers or extends beyond an officer's territorial jurisdiction. Strict enforcement of Section 6 of the CGST Act and the Circular in such scenarios could lead to incomplete investigations or multiple conflicting actions, which would be against the intent of the law. Thus, Section 6 of the CGST Act intends to prevent overlapping jurisdiction between Central and State Tax Officers but is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not universally applicable to all situations. The provision is meant to address jurisdictional conflicts in typical cases, not complex scenarios like intelligence-based enforcement actions involving multiple taxpayers or spanning beyond an officer's territorial jurisdiction. Strict application of these provisions in such cases could lead to incomplete investigations or conflicting actions, undermining the intent of the law. The court highlighted the need for a flexible and collaborative approach in complex cases to avoid administrative friction. On the other hand, in a recent decision, the Punjab and Haryana High Court has, in M/S ETHOS LIMITED VERSUS THE ADDITIONAL COMMISSIONER, CGST AUDIT AND ANOTHER - 2024 (9) TMI 1298 - PUNJAB AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HARYANA HIGH COURT, held the following: - "From above, it is apparent that once notice has been issued to the petitioner under Section 74(1) of the CGST Act by the State GST Officer of Punjab, no other officer from any other State would be authorized to initiate proceedings and the question regarding evading of tax or availing of wrongful input tax credit or other issues in terms of Section 74 will be examined by the same officer alone." Clearly, this is not the last word on this topic, and one needs to watch this space for further development. Thus, the circular, and corresponding exercise of powers would have to examined in light of the circumstances of each case. It has been the observation of the Hon'ble Delhi High court that the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular cannot be extended to cover all and myriad situations that may arise in the administration and the functioning of the GST structure. X X X X Extracts X X X X X X X X Extracts X X X X
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