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In the matter of ANURAG SURI VERSUS THE DIRECTOR GENERAL OF GOODS AND SERVICES TAX INTELLIGENCE AND OTHERS (W. P. ( C ) No. 158 of 2020), the DGGSTI (“Central GST Authority'') initiated the search at the premises of the petitioner and documents were seized and summon was issued under CGST Act. During the proceeding under CGST Act, State GST Authority also issued the SCN and order for payment of incorrect availment of ITC under Odisha GST Act.

The petitioner challenged the validity of SCN issued by State GST Authority under D.O. dated 5th October, 2018 as the investigation was still pending before DGGSTI. The respondent contended that State GST Authority were not aware about the pendency of matter under CGST Act.

El peticionario impugnó la validez del SCN emitido por la Autoridad Estatal del GST mediante oficio (D.O.) de fecha 5 de octubre de 2018, dado que la investigación seguía pendiente ante la DGGSTI. La parte demandada sostuvo que la Autoridad Estatal del GST no tenía conocimiento de la pendencia del asunto bajo la Ley CGST.

1. Brief facts of the case

1. M/s. Sai Marketing (“Petitioner”) is registered under GST and is engaged in the trading of iron and scraps.
2. The business of petitioner was commandeered/seized by Director General of Goods and Services Tax Intelligence (“DGGSTI”) and search was undertaken under Section 67 of CGST Act, 2017.
3. During the course of search, documents were seized and a summon was issued to the petitioner under section 70 of CGST Act, 2017. The petitioner participated in such proceedings and it is still pending.
4. Further, a separate show cause notice was also issued to the petitioner by Additional CT and GST Officer (“State GST Authority”) under section 74 of Odisha Goods and Service Tax Act (OGST Act) alleging non payment of taxes or short payment of taxes or wrong availment of ITC.
5. Vide show cause notice, The petitioner was asked to pay OGST, CGST, interest, penalty to the tune of ₹ 1,14,15,935.94 by State GST Authority.
6. Petitioner contended before State GST Authority that all documents are seized by DGGSTI and proceedings are still pending there. Therefore, the State Authority should keep their proceedings in abeyance till proceedings of DGGSTI are concluded.
7. Despite the above contention, state GST authority passed an order under section 74 of OGST Act on the basis of wrong availment of ITC and asked him to pay a sum of INR 1,25,57,922.80.
8. Therefore, the Petitioner filed a petition before Orissa High Court challenging validity of SCN and order issued by the state GST Authority.

2. Legal Extracts from the case

2. Extractos legales del caso

A continuación, se reitera el extracto pertinente del oficio (D.O.) de fecha 5 de octubre de 2018, enviado por la Junta Central de Impuestos Especiales y Aduanas (CGST) a todas las autoridades del GST:

«3. En consecuencia, se aclara que los funcionarios tanto del impuesto central como del impuesto estatal están autorizados a iniciar acciones de cumplimiento basadas en inteligencia sobre toda la base de contribuyentes, independientemente de la asignación administrativa del contribuyente a cualquier autoridad. La autoridad que inicie dicha acción está facultada para completar todo el proceso de investigación, emisión del SCN, adjudicación, recuperación, presentación de recursos, etc., derivados de dicha acción.

4. En otras palabras, si un funcionario de la autoridad fiscal central inicia una acción de cumplimiento basada en inteligencia contra un contribuyente asignado administrativamente a la autoridad fiscal estatal, los funcionarios de la autoridad fiscal central no transferirán dicho caso a su contraparte estatal y llevarán el caso por sí mismos hasta sus últimas consecuencias.

3. Argumentos del demandante

5. La misma situación se aplicará en caso de acciones de cumplimiento basadas en inteligencia iniciadas por funcionarios de las autoridades fiscales estatales contra un contribuyente asignado administrativamente a la autoridad fiscal central».

4. Argumentos del demandado

1. Central tax authority contended that state tax authority was not aware of the fact on date of issuance of SCN that Central tax authority has initiated search proceedings against the petitioners.
2. Therefore, the state GST Authority has not violated the provisions of D.O. dated 5th October, 2018.

5. Analysis by Hon’ble High Court and Decision

1. State GST Authority and Central GST Authority have not disputed the provisions of D.O. dated 5th October, 2018.
2. Further, The State GST authority were aware of the fact that investigation is pending with central GST authority as petitioner has himself informed about it during proceedings.
3. Also, period of enquiry covered by the Central GST Authority has been between July 2017 to June 2018. On the other hand, State GST Authority issued the show cause notice for March 2018. Therefore, there is an overlapping of the period.
4. Therefore, Hon’ble High Court quashed the SCN and order issued by the State GST Authority.
5. And it is order that simultaneous investigation by Central and State GST Authorities for same period is not allowed