State GST Dept. Cannot Act if Central GST Dept. Has Initiated Proceedings on Same Matter

Baazar Style Retail Limited & Anr. Vs Deputy Commissioner of State Tax (Calcutta High Court)

State GST Department not empowered to initiate proceedings when Central GST Department has already initiated the proceedings on same subject matter

Summary: In the case of Baazar Style Retail Ltd. v. Deputy Commissioner of State Tax (W.P.A. No. 16185 of 2024), the Calcutta High Court addressed the issue of whether the State GST Department is empowered to initiate proceedings when the Central GST Department has already taken action on the same subject matter. The petitioner, Baazar Style Retail Ltd., challenged a show-cause notice and subsequent order issued by the State GST Department regarding the financial year 2018-2019, arguing that the Central GST Department had already initiated proceedings on the same subject matter. The petitioner had participated in the proceedings initiated by the Central GST Department, which included a show-cause-cum-demand notice issued on September 30, 2022.

The Court examined Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 (WBGST Act), which stipulates that once proceedings have been initiated by either the Central or State GST authorities on the same subject matter, no further proceedings shall be initiated by the other department. The Court found that since the Central GST Department had already issued a show-cause notice and initiated proceedings, the State GST Department’s actions, including the show-cause notice dated December 27, 2023, and the subsequent order dated April 27, 2024, were not maintainable. The Court set aside the notice and order issued by the State GST Department, thus quashing the proceedings initiated by them.

However, the Court clarified that this judgment would not prevent the State authorities from initiating proceedings on any part of the subject matter not already covered by the Central GST notice. The writ petition was disposed of with these directions, and the Court did not impose any costs on the parties involved.

State GST Department not empowered to initiate proceedings when Central GST Department has already initiated the proceedings on same subject matter

The Hon’ble Calcutta High Court in the case of Baazar Style Retail Ltd. v. Deputy Commissioner of State Tax [W.P.A. No. 16185 of 2024 dated August 19, 2024] set aside the order and notice issued by the State GST Department when proceedings have already been initiated by the Central GST Department by relying upon the provision of Section 6(2)(b) of the West Bengal Goods and Services Tax Act, 2017 (“the WBGST Act”).

Facts:

Baazar Style Retail Ltd. (“the Petitioner”) filed a writ petition wherein the Show cause Notice dated December 27, 2023 (“the Impugned Notice”) issued for the period of FY 2018-2019 issued under Section 73 of the WBGST Act along with order dated April 27, 2024 (“the Impugned Order”) passed under Section 73(9) of the WBGST Act, by the State Revenue Department (“the Respondent”) was challenged on the ground that the Central GST Department had previously initiated the proceeding on the same subject matter by issuance of show cause-cum-demand notice in which the Petitioner has duly participated.

Issue:

Whether State GST Department empowered to initiate proceedings when Central GST Department has already initiated the proceedings on same subject matter?

Held:

The Hon’ble Calcutta High Court in the case of W.P.A No. 16185 of 2024 held as under:

• Observed that, Section 6(2)(b) of the WBGST Act has to be taken into consideration which clearly states that “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”
• Noted that, in the present case, the SCN has already been issued by the Central GST Department before the initiation of proceedings by the Respondent by issuance of the Impugned Notice and Order.
• Opined that, the Impugned Notice and Order therefore, are not maintainable taking into consideration the aforesaid provisions.
• Held that, the Impugned Notice and Orders are set aide, and writ petition is disposed of.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. The present writ petition has been filed, inter alia, challenging the show cause notice issued in Form GST DRC – 01 dated 27^th December 2023 for the tax period from April 2018 to March 2019 under Section 73 of the WBGST Act 2017 (hereinafter referred to as the “said Act”) and the adjudication order passed under Section 73(9) of the said Act dated 27^th April 2024, including the demand issued in Form GST DRC – 07 of even date, on the ground that the Central authorities had previously, in respect of the self same tax period and subject matter, initiated a proceeding by issuing a show cause- cum- demand notice dated 30^th September 2022 and that the petitioners have duly participated in the said proceeding.

2. Having heard the learned advocates appearing for the respective parties and taking note of the provisions of Section 6(2)(b) of the said Act and since a show cause-cum-demand notice has already been issued on 30^th September 2022 in respect of the period from March 2019 to May 2019 by the Central authorities and since, the show cause notice issued by the State authorities on 27^th December 2023 in Form GST DRC – 01 is covering the same subject matter though partially, and the show cause notice dated 27^th December 2023 and the order dated 27^th April 2024 having been issued in a composite manner, I am of the view that the show cause notice dated 27^th December 2023, inter alia, including the order dated 27^th April 2024 and the demand made in Form GST DRC – 07 of even dated by the State authorities under the said Act, cannot be sustained and the same are hereby set aside and quashed.

3. The aforesaid order shall not, however, stand in the way of the State authorities from proceeding against the petitioners in respect of the period which is covered in the show cause-cum-demand notice dated 27^th December, 2023 provided the same does not concern the same subject matter as covered by the show cause – cum – demand noticed dated 30^th September, 2022 issued by the Central authorities.

4. With the above observations and directions, the writ petition being WPA 16185 of 2024 is accordingly disposed of.

5. There shall be no order as to costs.

6. All parties shall act on the basis of the server copy of this order duly downloaded from this Court’s official website.

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