Mohammed Kamran Vs Senior Intelligence Officer (Karnataka High Court)
Conclusion: Where State GST authorities have already initiated investigation into the same transactions, commencement of parallel proceedings by DGGI on identical allegations was impermissible and liable to be quashed.
Held: State GST authorities initiated proceedings against assessee by issuing summons under section 70 of the CGST/KGST Act alleging discrepancies in GST compliance and calling for production of books of account and other records. Assessee responded to the summons and furnished substantial documentary evidence during the ongoing investigation. While the State investigation was still pending, the Directorate General of GST Intelligence (DGGI) commenced an independent investigation on the basis of intelligence alleging fraudulent availment and passing of fake Input Tax Credit (ITC), conducted simultaneous searches and thereafter initiated criminal proceedings culminating in the assessee’s arrest. Assessee contended that once the State GST authorities had assumed jurisdiction and commenced investigation into the very same transactions, initiation of another investigation by DGGI on identical allegations amounted to parallel proceedings prohibited by the statutory scheme of the GST enactments. Such simultaneous investigations resulted in overlapping jurisdiction, abuse of process and violation of the principle embodied in section 6 of the CGST Act regulating exercise of concurrent jurisdiction by Central and State tax authorities. Revenue submitted that DGGI received independent intelligence indicating a large-scale fake ITC racket involving several interconnected entities. The investigation undertaken by DGGI was based upon independent material generated through Business Intelligence and Fraud Analytics, analysis of GST returns, common IP addresses, e-way bills and cancelled registrations revealing an organised syndicate involving fraudulent availment and passing of fake ITC exceeding ₹100 crore. Therefore, DGGI was fully competent to investigate offences under sections 69 and 132 of the CGST Act. High Court held that the statutory framework did not contemplate simultaneous investigations by two different authorities into the same cause of action once jurisdiction had already been assumed by one competent authority. Section 6 of the CGST Act seeks to avoid multiplicity of proceedings and conflicting investigations. Since the State authorities had already initiated proceedings and the subject matter substantially overlapped with the investigation commenced by DGGI, initiation of parallel criminal proceedings without any statutory justification was unsustainable.
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