Parallel proceedings cannot be initiated by Central/State GST Authorities on same subject matter

VGN Projects Estates Private Limited Vs Assistant Commissioner (State Taxes) (Madras High Court)

Parallel proceedings cannot be initiated by Central/State GST Authorities on same subject matter

The Hon’ble Madras High Court in the case of M/s. VGN Projects Estates Private Limited v. Assistant Commissioner (State Taxes) and others [W.P.No.2391 of 2023 and W.M.P.No.2481 of 2023, dated January 30, 2023] has directed the assessee to file a reply to the Show Cause Notice (“SCN”) issued by the State Tax Authority, wherein, parallel proceedings had been initiated by the State Tax Authorities on a similar matter which is already pending before the Central Tax Authority. Held that, if the defects are similar in the SCNs then it shall be omitted and no proceedings to be initiated against the assessee w.r.t. the defects, which are already the subject matter of consideration by the Central Tax Authority.

Facts:

M/s. VGN Projects Estates Private Limited (“the Petitioner”) has challenged the SCN dated October 21, 2022 (“the Impugned SCN”) issued by the State Tax Authority on the ground that the same has been issued in violation of Section 6(2)(b) of the Tamil Nadu Goods and Services Act, 2017 (“the TNGST Act”).

The Petitioner contended that, a similar SCN was issued by the Central Tax Authority under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) on July 29, 2022 to the Petitioner, involving the very same defects and therefore, as per the provisions of Section 6(2)(b) of the TNGST Act when the proper officer under the CGST Act has already initiated the proceedings against the Petitioner, no proceedings shall be initiated by the proper officer under the provisions of the TNGST Act on the very same subject matter.

Being aggrieved this writ petition has been filed.

However, the Revenue Department (“the Respondent”) contended that, if the Petitioner submits the reply to the Impugned SCN, then accordingly those similar defects for which the SCN has been issued by the Central Tax Authority will be omitted and action shall be initiated in respect of the balance defects alone.

Issue:

Whether fresh proceedings can be initiated against the Petitioner under the TNGST Act with regard to the very same subject matter on which the SCN has been issued by the Central Tax Authority?

Held:

The Hon’ble Madras High Court in W.P.No.2391 of 2023 and W.M.P.No.2481 of 2023 held as under:

• Stated that, the only limited relief that can be granted to the Petitioner is to permit them to file a detailed reply to the impugned SCN to the Respondents, to enable the Respondent to consider the Petitioner’s grievance stating all their objections raised including the objection with regard to Section 6(2)(b) of the TNGST Act.
• Directed the Petitioner to submit a reply to the Impugned SCN within a period of 3 weeks.
• Stated that on receipt of such reply, the Respondent shall pass final orders on merits and in accordance with law.

Relevant Provisions:

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

“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 MADRAS HIGH COURT

The petitioner has challenged the impugned show cause notice in Form GST DRC-01 (Ref. No.ZD331022029519P) dated 21.10.2022 on the ground that the same has been issued in violation of Section 6(2)(b) of the TNGST Act, 2017.

2. According to the petitioner, a similar show cause notice was issued by the Central Authority under CGST Act, 2017 on 29.07.2022 against the petitioner, involving the very same defects and therefore, as per the provisions of Section 6(2)(b) of the Tamil Nadu Goods and Service Tax Act, 2017 when the proper officer under the CGST Act has already initiated any proceedings against the petitioner on the very same subject matter, no proceedings shall be initiated by the proper officer under the provisions of the TNGST Act, 2017.

3. Heard Ms.Radhika Chandra, learned counsel for the petitioner. Ms.Amirtha Dinakaran, learned Government Advocate accepts notice on behalf of respondent No.1 and Mr.V.Sundareswaran, learned Senior Panel Counsel accepts notice on behalf of respondent No.2.

4. Learned Government Advocate appearing for the respondent No.1 has placed before this Court the written instructions received by her from the Office of the Assistant Commissioner (ST), Nungambakkam Assessment Circle, Chennai – 600 031 dated 28.01.2023. As per the written instructions a detailed reply has not been sent by the petitioner to the impugned show cause notice. In the written instructions, it is also stated that if the petitioner submits the same then accordingly those similar defects for which notice has been issued by the Central Authority will be omitted and action shall be initiated in respect of the balance defects alone.

5. Learned counsel for the petitioner would however submit that the defects pointed out in the show cause notice issued by the Central Authority and the defects pointed out under the impugned show cause notice by the State Authority are one and the same and therefore, as per the provisions of Section 6(2)(b) of the TNGST Act, 2017, no fresh proceedings can be initiated against the petitioner under the said Act with regard to the very same subject matter.

6. Section 6(2)(b) of the TNGST Act, 2017 reads as follows:

“6(2)(b) where a proper officer under the Central Goods and Service 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.”

Admittedly, a challenge has been made only to the show cause notice.

7. The respondents have also stated in their written instructions that once a detailed reply is sent by the petitioner stating their objections with regard to the impugned show cause notice, the same will be considered by them on merits. They have also categorically stated in their written instructions that if the defects are similar to the one mentioned in the show cause notice issued by the Central Authority, the said defects will be omitted and no proceedings will be initiated against the petitioner with regard to the defects which are already the subject matter of consideration by the Central Authority.

8. While that be so, this Court is of the considered view that necessarily the petitioner will have to submit a detailed reply to the impugned show cause notice to the respondents to enable the respondents to consider the petitioner’s grievance that no fresh proceedings can be initiated against them under the TNGST Act, 2017, in view of the fact that the Central Authority has already initiated action against the petitioner for the very same subject matter under the show cause notices dated 29.07.2022 and 31.12.2022. When the respondents have undertaken before this Court that they shall consider the grievance of the petitioner as raised in this Writ
Petition, the question of entertaining this Writ Petition at this stage and granting relief to the petitioner will not arise.

9. The only limited relief that can be granted to the petitioner is to permit them to file a detailed reply to the impugned show cause notice, stating all their objections that have been raised in this Writ Petition including the objection with regard to Section 6(2)(b) of the TNGST Act, 2017 and on receipt of the said reply, a direction can be issued to the respondents to consider the said reply on merits and in accordance with law within a time frame to be fixed by this Court.

10. For the foregoing reasons, this Writ Petition is disposed of by directing the petitioner to submit a reply to the impugned show cause notice within a period of three weeks from the date of receipt of a copy of this order and on receipt of the said reply, the first respondent shall pass final orders on merits and in accordance with law, after giving due consideration to the objections raised by the petitioner in the reply, within a period of four weeks thereafter. No Costs. Consequently, the connected Writ Miscellaneous Petition is closed.

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