State Authorities Cannot Issue SCN if Central Proceedings Are Ongoing Under GST

Baazar Style Retail Limited & Anr. Vs Deputy Commissioner of State Tax (Calcutta High Court)

The Hon’ble Calcutta High Court in the case of Bazaar Style Retail Limited v. Deputy Commissioner of State Tax [WPA No. 16185 of 2024 dated August 19, 2024] set aside the Order and SCN issued by State Authority when SCN has already been issued by the Central Authorities by relying upon the provision of Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 (“the WBGST Act”).

Facts:

Bazaar Style Retail Limited (“the Petitioner”) filed a writ petition challenging Show Cause Notice dated December 27, 2023 (“State SCN”) issued under Section 73 of the WBGST Act, and adjudication order dated April 27, 2024 (“the Impugned Order”) under Section 73(9) of the WBGST Act, alleging that the Central Authority has previously issued the order in respect of the selfsame tax period and subject matter, initiated a proceeding by issuing the show cum demand notice dated September 30, 2022 (“Central SCN”).

The Petitioner contended that Section 6(2)(b) of the WBGST Act has to be taken into consideration that the despite the Central SCN has already been issued, by the Central Authorities, the State SCN and the Impugned Order was issued by the state authorities.

Held:

The Hon’ble Calcutta High Court in the case of W.P.A. NO. 16185 OF 2024, taking into consideration the submissions made by the Petitioner, opined that the State SCN issued and the Impugned Order passed by the State Authority is not sustainable and is liable to be set aside.

Relevant Provisions:

Section 6(2)(b) of the WBGST Act:

Section 6: Authorisation of officers of central tax as proper officer in certain circumstances.

(2) Subject to the conditions specified in the notification issued under sub-section (1),-

(b) where a proper officer under the Central Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. The present writ petition has been filed, inter alia, challenging the show cause notice issued in Form GST DRC – 01 dated 27^th December 2023 for the tax period from April 2018 to March 2019 under Section 73 of the WBGST Act 2017 (hereinafter referred to as the “said Act”) and the adjudication order passed under Section 73(9) of the said Act dated 27^th April 2024, including the demand issued in Form GST DRC – 07 of even date, on the ground that the Central authorities had previously, in respect of the self same tax period and subject matter, initiated a proceeding by issuing a show cause- cum- demand notice dated 30^th September 2022 and that the petitioners have duly participated in the said proceeding.

2. Having heard the learned advocates appearing for the respective parties and taking note of the provisions of Section 6(2)(b) of the said Act and since a show cause-cum-demand notice has already been issued on 30^th September 2022 in respect of the period from March 2019 to May 2019 by the Central authorities and since, the show cause notice issued by the State authorities on 27^th December 2023 in Form GST DRC – 01 is covering the same subject matter though partially, and the show cause notice dated 27^th December 2023 and the order dated 27^th April 2024 having been issued in a composite manner, I am of the view that the show cause notice dated 27^th December 2023, inter alia, including the order dated 27^th April 2024 and the demand made in Form GST DRC – 07 of even dated by the State authorities under the said Act, cannot be sustained and the same are hereby set aside and quashed.

3. The aforesaid order shall not, however, stand in the way of the State authorities from proceeding against the petitioners in respect of the period which is covered in the show cause-cum-demand notice dated 27^th December, 2023 provided the same does not concern the same subject matter as covered by the show cause – cum – demand noticed dated 30^th September, 2022 issued by the Central authorities.

4. With the above observations and directions, the writ petition being WPA 16185 of 2024 is accordingly disposed of.

5. There shall be no order as to costs.

6. All parties shall act on the basis of the server copy of this order duly downloaded from this Court’s official website.

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(Author can be reached at info@a2ztaxcorp.com)