Sapphire Foods Indi Ltd. Vs Union of India and Ors. (Punjab and Haryana High Court)
Punjab and Haryana High Court has dismissed a writ petition filed by Sapphire Foods India Ltd., finding the company’s challenge against tax authorities to be based on a misinterpretation of orders issued by the respondents. The court clarified that dropping proceedings by one tax officer does not preclude examination by another authority handling a specific aspect of the case.
The case originated when Sapphire Foods received a show cause notice from the Commercial Tax Officer, Ward 8, Chandigarh, under Section 21 of the UTGST Act, 2017, concerning alleged non-payment of GST. In response to this notice, Sapphire Foods informed the Commercial Tax Officer that the Directorate General of Goods and Service Tax Intelligence (DGGI) had also issued a show cause notice on September 29, 2023, under Section 74 of the CGST/TNGST/IGST Acts, covering related issues, including TRAN-1 verification.
Following the petitioner’s submission about the parallel DGGI proceedings, the Commercial Tax Officer in Chandigarh conveyed to Sapphire Foods that they were dropping the proceedings initiated under Section 73/74 of the Act by their office, but specifically for the aspects other than TRAN-1 verification. The officer’s letter stated, “After scrutiny of the documentation as provided by you online as well offline, it has been ascertained that all requisite information, as demanded, has been furnished. The proceedings initiated vide the said notice are hereby concluded except TRAN-1 verification issue.” The letter explicitly noted that the TRAN-1 verification had been taken up by the DGGI.
Sapphire Foods then approached the High Court, arguing that the Commercial Tax Officer could not have kept the proceedings open specifically regarding the TRAN-1 verification issue after concluding the rest of their proceedings.
The High Court, after examining the submissions and the communication from the Commercial Tax Officer, found the petitioner’s argument to be “wholly misconceived.” The court noted that the petitioner’s primary objection regarding parallel proceedings had, in fact, been accepted by the Commercial Tax Officer. The local officer had consciously dropped their own proceedings under Section 73/74 concerning other matters raised in their notice.
However, the court emphasised that the Commercial Tax Officer explicitly carving out the TRAN-1 verification issue was precisely because that specific aspect was being handled by the DGGI, as noted in their separate show cause notice dated September 29, 2023. The court found that this action by the Commercial Tax Officer was the correct response to the petitioner’s concern about duplicity in proceedings – the local officer withdrew from the areas covered by the DGGI.
The court stated that the Commercial Tax Officer dropping proceedings on other aspects did not imply that Sapphire Foods was exempt from the examination and verification being conducted by the DGGI under the authority of their own show cause notice. The court viewed the petitioner’s attempt to argue that the TRAN-1 verification proceedings could not remain open (despite being handled by DGGI) as an “attempt to mislead the Court.”
Finding no merit in the petition and concluding it was based on a misinterpretation of the tax authorities’ actions, the High Court dismissed the writ petition.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
