The Himachal Pradesh High Court in the case of M/S KUNDLAS LOH UDYOG VERSUS STATE OF H.P. & ANR vide CMPMO No. 273 of 2024 dated 17.09.2024, emphasized that only one authority, in this case, respondent No. 1, should have jurisdiction over the matter, thereby avoiding multiple and overlapping investigations. The court's decision ensures that procedural fairness is maintained and that the taxpayer is not subject to redundant actions by different tax authorities.

Facts of the Case: The petitioner, a manufacturer and distributor of iron and steel, was investigated by both State and Central tax authorities concerning their Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime.

The instant petition under Article 227 of the Constitution of India was filed seeking to quash the Blocked Credit Ledger dated 16.05.2024 and summons issued by respondent No. 2, arguing that these actions were without jurisdiction and violated Article 14 of the Constitution.

The petitioner complied with summons from respondent No. 1 (State Tax Authority) and submitted documents regarding purchases from five suppliers.

Respondent No. 2 (Director General of Goods and Service Tax Intelligence) initiated parallel proceedings by issuing summons and blocking the petitioner’s ITC, attributing fraud to the suppliers.

The Petitioner contended that Section 6 of the CGST Act, which deals with the jurisdiction and powers of tax authorities. Specifically, Section 6(2)(b) prohibits the initiation of parallel proceedings by State and Central authorities on the same subject matter.

Held that: 

The court analyzed:

• Section 6 of the CGST Act: The Court referred to Section 6 of the CGST Act, which empowers officers of both Central and State tax authorities to initiate proceedings but prohibits parallel investigations on the same subject matter. Once proceedings have been initiated by one authority (State or Central), the other cannot initiate separate proceedings on the same matter.
• Jurisdiction: The Court emphasized that since respondent No. 1 (State authorities) had already initiated proceedings against the petitioner and the suppliers, respondent No. 2 could not initiate parallel proceedings on the same subject matter.

The Court found that the actions of respondent No. 2 were contrary to the provisions of Section 6(2)(b) of the CGST Act. It allowed the petition, quashing the blocked ITC ledger and the summons issued by respondent No. 2.

This judgment underscores the importance of avoiding parallel proceedings by different tax authorities and respecting the jurisdictional boundaries established under the GST laws.

To read the complete judgment 2024 Taxo.online 2140