Inquiry under section 70 Vs Proceedings under section 6(2)(b) of the CGST Act, 2017 to be treated at par or not under the GST law
The article is discussing the case whether the inquiry may be conducted for any person by two different authorities on the same subject-matter under section 70 of the CGST Act whereas according to the provisions contemplated under section 6(2)(b) no proceedings shall be initiated by the proper officer under the CGST Act on the same subject matter if where a proper officer under the SGST Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter.
The matter has been discussed in detailed in the case of G.K.Trading Company v. Union of India by the Hon’ble High Court of Delhi.
Section 70 –
70(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860)
Section 6(2)(b) –
(2) Subject to the conditions specified in the notification issued under sub-section (1),––
(a) ………………………………..;
(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory 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.
The words “subject-matter”, “proceedings” and “inquiry” have not been defined either under the State G.S.T. Act or the Union Territory G.S.T. Act or the C.G.S.T. Act.
The word “inquiry” in section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon the making of the inquiry or conclusion of inquiry. The process of inquiry under section 70 is specific and unified by the very purpose for which provisions of Chapter XIV of the Act confers power upon the proper officer to hold inquiry. The word “inquiry” in section 70 is not synonymous with the word “proceedings”, in section 6(2)(b) of the U.P.G.S.T. Act/C.G.S.T. Act.
Provisions of section 70 has been enacted for collecting evidence in matters involving tax evasion which may also lead to confiscation. After inquiry is completed and materials for tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized, by reason of fraud or wilful misstatement or suppression of facts or otherwise are found, then it may lead to demands and recovery under section 73 or section 74, as the case may be. When action for assessment, demand and penalty etc. including action under section 73 or 74 is taken, that shall amount to proceedings referable to Section 6(2)(b) of the Act but the inquiry under section 70 is not a proceeding referable to Section 6(2)(b) of the Act.
The words “subject-matter” used in Section 6(2)(b) of the Act has not been defined under the Act. In the case of Ballabh Das v. Dr. Madanlal [1970] 1 SCC 761 (para-5), Hon’ble Supreme Court interpreted the words “subject-matter” in the context of Civil Procedure Code where also these words have not been defined. Hon’ble Supreme Court held that: “The expression ‘subject-matter’ has a reference to a right in the property which the plaintiff seeks to enforce. That expression includes the cause of action and the relief claimed. Unless the cause of action and the relief claimed in the second suit are the same as in the first suit it cannot be said that the subject-matter of the second suit is the same as that in the previous suit. …………. ……… Mere identity of some of the issues in the two suits did not bring about an identity of the subject-matter in the two suits.
Section 6(2)(b) of the C.G.S.T. Act prohibits separate initiation of proceedings on the same subject-matter by the proper officer under the C.G.S.T. Act when proceeding on the same subject-matter by the proper officer under the State Act has been initiated, whereas section 70 of the U.P.G.S.T./C.G.S.T. Act merely empowers the proper officer to summon any person in any inquiry. The word “proceedings” used in section 6(2)(b) is qualified by the words “subject-matter” which indicates an adjudication process/proceedings on the same cause of action and for the same dispute which may be proceedings relating to assessment, audit, demands and recovery, and offences and penalties etc. These proceedings are subsequent to inquiry under section 70 of the Act. The words “in any inquiry” used in section 70 of the Act is referable to the provisions of Chapter XIV, i.e. Section 67 (power of inspection, search and seizure), section 68 (inspection of goods in movement), section 69 (power to arrest), section 71 (access to business premises) and Section 72 (officers to assist proper officers). Therefore, proper officer under the U.P.G.S.T. Act or the C.G.S.T. Act may invoke power under section 70 in any inquiry. Prohibition of Section 6(2)(b) of the C.G.S.T. Act shall come into play only when any proceeding on the same subject-matter has already been initiated by a proper officer under the U.P.G.S.T. Act.
The conclusions of the Hon’ble Court are reached as under:
(i) The word “inquiry” in section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon the making of the inquiry or conclusion of inquiry. The process of inquiry under section 70 is specific and unified by the very purpose for which provisions of Chapter XIV of the Act confers power upon the proper officer to hold inquiry. The word “inquiry” in Section 70 is not synonymous with the word “proceedings”, in section 6(2)(b) of the U.P.G.S.T. Act/C.G.S.T. Act.
(ii) The words “any proceeding” on the same “subject-matter” used in section 6(2)(b) of the Act, which is subject to conditions specified in the notification issued under sub-Section (1); means any proceeding on the same cause of action and for the same dispute involving some adjudication proceedings which may include assessment proceedings, proceedings for penalties etc., proceedings for demands and recovery under section 73 and 74 etc.
(iii) Section 6(2)(b) of the C.G.S.T. Act prohibits a proper officer under the Act to initiate any proceeding on a subject- matter where on the same subject-matter proceeding by a proper officer under the U.P.G.S.T. Act has been initiated.
In other case M/s SIDDHI VINAYAK TRADING COMPANY Vs UNION OF INDIA AND 2 OTHERS – 2021-VIL-155-ALH –
The Central Authority issued summon under section 70 of the CGST Act whereas the State Authority initiated proceedings under section 74 of the UPSGST Act against the petitioner. The petitioner objected for two parallel proceedings.
The initiation of the proceeding for imposition of tax and penalty was with the issuance of the notice under Section 74 as contained in Chapter XV of UPGST Act and the inquiry under Section 70 of the Act was independent.
Conclusion
That provisions contemplated under section 6(2)(b) of the CGST Act shall not be applied on summons issued relating to any inquiry under section 70 of the CGST Act. Inquiry shall not be equated with proceedings. Both are differed in the eye of law.
Thus, summons may be issued by the different authorities to the person for any inquiry (might be the same) under section 70 of the CGST Act but proceedings following the inquiry shall not be initiated for the same matter by both authorities i.e. Central and State at the same time.
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