Introduction: The case of Vivek Narsaria vs State of Jharkhand, W.P. (T) No. 4491 of 2023, decided on 15-1-2024, delves into the priority of proceedings in parallel investigations by different GST departments. This article provides a detailed analysis of the legal implications and the court’s decision.
The Hon’ble High Court held that in case of parallel proceedings whichever department has initiated the proceedings shall take precedence over the other departments and consequently in view of Section 6(2)(b) other investigative departments are obligated to forward all findings and investigations to that authority.
Facts
On 16-3-2023, an inspection was carried out by the Intelligence Bureau of the State Goods & Service Tax, and in terms thereof GST INS-01 has been issued and after the inspection is concluded, the GST Officers fixed the date for furnishing books of accounts. As per the Petitioner an amount of Rs. 34.00 lakhs from the Cash ledger of the Petitioner and Rs. 6.00 lakhs from the proprietorship firm of his wife were made to deposit.
While the proceedings had been initiated by the State Goods & Services Tax Department, the Petitioner was served with a notice dated 10-4-2023 by the Preventive Branch of Central Goods & Services Tax, Ranchi with a direction to reverse the Input Tax Credit along with interest and penalty on account of alleged purchases from the non-existent entity.
While two departments were in seisin of the proceedings, a search was carried out by the DGGI, Intelligence Branch of CGST on 6-6-2023 and various seizures were made and a Panchnama was also drawn to that effect. Followed by the earlier notices of the Preventive Branch dated 10-4-2023, various notices were issued from time to time viz., 7-6-2023; 21-6-2023 including Summons by the Preventive Wing dated 26-6-2023. Simultaneously after the search was carried out by the DGGI Unit, simultaneous Summons were issued vide Summon dated 21-6- 2023; 3-7-2023; 7-7-2023; 11-7-2023 and 13-7-2023.
Again on 24-7-2023, the residential flat of the Petitioner was searched and the statement of Petitioner’s wife and mother namely Mrs. Soni Narsaria and Mrs. Usha Narsaria, were recorded. While the summons issued by the State GST (Preventive Wing) and DGGI was to be attended, the petitioner made certain reversal on different dates vide GST DRC 03, totaling to a sum of Rs. 3.42 Crores.
Under the circumstances, since the petitioner has received summons from 3 Departments of GST, the petitioner has approached this Court, seeking a declaration that the authority who has initiated the proceedings prior in point of time, shall be the only authority to carry out the proceedings. In order to buttress the argument, the petitioner has relied upon Notification No. 39/2017-Central Tax dated 13-10-2017 and the Clarification bearing D.O.F. No CBEC/20/43/01/2017-GST (P.), dated 5-10-2018
Conclusion on decision:
In cases involving parallel investigations by three GST departments, namely the State GST department, the Preventive Wing of Central GST, and the Directorate General of Goods & Services Tax Intelligence, the provisions of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, assume significance. This section, when read in conjunction with the clarification provided in the CBI & C Clarification Letter D.O.F. No CBEC/20/43/01/2017-GST (P.), dated 5-10-2018, and further elaborated in the CBI & C Clarification Letter F. No. CBEC/20/10/07/2019-GST, dated 22-6-2020, signifies that any inquiry or investigation initiated by any department is inherently interrelated.
This interpretation implies that even if proceedings were initiated by the Directorate General of Goods and Services Tax Intelligence (DGGI) on the basis of information received from Noida, the DGGI cannot question the credibility and competence of State GST authorities regarding the investigation into the wrongful or inadmissible availment of input tax credit. This is because officers of the DGGI do not possess any special powers or privileges in comparison to officers of the State GST authorities. In essence, all inquiries or investigations carried out at the behest of any department are considered interrelated under the purview of Section 6(2)(b).
In instances where proceedings were initiated by the State authorities through search and seizure, and considering the chronological precedence of these proceedings, it is imperative that the State authorities continue with the investigations from the same stage. Consequently, both the Preventive Wing of Central GST and the DGGI Wing of Central GST are obligated to forward all the findings and investigations conducted against the petitioner and related transactions to the State authorities. This ensures a seamless continuation of proceedings in a coherent manner.
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