GST Act does not allow for the transfer of proceedings from one proper officer to another without explicit legal provisions
Facts of the Case: The petitioner is a manufacturer of various lead-based products, operating in Haryana. Multiple enquiries were initiated by the Haryana State Tax Department and DGGI Zonal Units against the petitioner for alleged wrongful availment of Input Tax Credit (ITC). The petitioner challenged these multiple enquiries, leading to a direction from the court for a single agency to conduct the proceedings for the period from 01.07.2017 to 31.12.2018. The State GST Department decided to take up the enquiry.
The DGGI conducted a search and seizure operation on 19.02.2021, verifying with the State Taxation Officer that documents had already been seized by the State Government authorities. A notice under Section 74(1) of the HGST Act, 2017 was issued to the petitioner for the tax period from 01.07.2017 to 21.07.2019. The investigation revealed that the petitioner had allegedly received fraudulent ITC through fake firms operated by one Anant Rastogi, who confessed to creating these firms for passing on fraudulent ITC to various beneficiaries, including the petitioner.
Despite previous searches, the DGGI conducted another search on 19.02.2021 at the petitioner’s premises, while the petitioner also challenged the constitutional validity of Sections 69 and 132 of the CGST Act, 2017. The DGGI, Meerut Zonal Unit, was granted permission to conduct a centralized investigation against the petitioner for the period after 2019. The State Tax Officer transferred the proceedings to the DGGI, leading to the petitioner filing the current writ petition, challenging this transfer as being in violation of Section 6(2)(B) of the HGST Act.
Petitioner's Contention: The petitioner contends that only the State Tax Officer who initiated the proceedings has the jurisdiction to continue them and that the transfer to the DGGI is illegal. They also argue that multiple proceedings cannot continue simultaneously, relying on a circular dated 05.10.2018 and various high court judgments.
Respondent Contention: The respondents argue that the DGGI has the jurisdiction to conduct investigations due to the pan-India nature of the alleged fraudulent activities and that the State GST authority has not conducted any investigation for the period after 2019. They emphasize the DGGI’s broader jurisdiction to handle such cases involving cross-border fraudulent ITC claims.
Held that: The court examined the relevant provisions under the GST Act, including Sections 6(2)(B), 70, and 72, which outline the jurisdiction and powers of officers. The court noted that these proceedings are judicial in nature and cannot be transferred administratively between officers or departments without proper legal provisions. Referred judgments from various high courts that generally support the view that once a State authority has initiated proceedings, they cannot be transferred to the DGGI without proper legal backing. However, a contrary view was noted in a Delhi High Court judgment.
The court found that the GST Act does not allow for the transfer of proceedings from one proper officer to another without explicit legal provisions, and the proceedings initiated by the State Tax Officer should remain under their jurisdiction. The court did not accept the argument that the DGGI’s broader jurisdiction justifies the transfer of the case from the State GST authority to the DGGI.
To read the complete judgment 2024 Taxo.online 1852
