Madras High Court dismisses petition aimed at prolonging GST proceedings

Madras High Court dismisses petition aimed at prolonging GST proceedings

The Court says that any intervention at the stage of summon by the High Court would paralyze the entire GST proceeding

The Madras High Court directed the Petitioner to respond to the summons issued u/S 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) by producing all relevant documents, evidence, statements, etc. and to further defend his case in the manner known to law rather than to prolong the proceedings by filing multiple petitions before the High Court.

The matter titled Kuppan Gounder P.G. Natarajan v Directorate General of GST Intelligence was placed before a single-judge court of Justice S.M. Subramaniam in the High Court of Madras.

The Court did not deal with the facts or merits of this matter since the petition challenged the very summons issued by the Respondent – Senior Intelligence officer u/S 70 of the Central Goods and Services Tax Act, 2017 (CGST Act). The impugned summon stated that the Respondent was making an enquiry in connection with the Petitioner's Company – M/s KPN Travels India Limited & Others under the CGST Act. The Petitioner was, therefore, directed to give evidence or produce documents or things of the following description in his possession or under his control.

The Petitioner submitted that a notice for intimating discrepancies in the return after some scrutiny, was issued by the State authorities to the Petitioner and the proceedings were still in progress. Therefore, the Petitioner contended that another summons issued by the Respondent was without jurisdiction since the Central authorities were bound to wait till the conclusion of the proceedings initiated by the State officials under the State Goods and Services Tax Act.

However, the Respondent contended that the State action regarding the scrutiny proceedings and the impugned summons issued by the Central authorities u/S 70 of the Act regarding IGST, were completely unrelated. The Respondent further contended that the proceedings would need to be kept in abeyance only if the subject matter was one and the same.

The Court considering the nature of summons issued opined that authorities should not be restrained unnecessarily to conduct investigation or proceedings under the Statute and that it was an opportunity for the Petitioner to submit his documents, statements, etc.

The judge observed that Writ Court could not entertain such an adjudication, more specifically, when the summon itself was under challenge on the ground that the same lacks jurisdiction as such an exercise was required to be done by the competent authorities of the department based on the records, documents and evidence or statements available.

It was also contended by the Respondent that the Petitioner had the habit of filing writ petition after writ petition, challenging every summons and prolonging and protracting the investigation.

The Court agreed that the writ petitioner had approached this Court on every stage, which revealed that he was attempting to prolong the proceedings, instead of defending his case by producing documents and evidence and established his case or otherwise.

The scope of Section 6(2)(b) of the Act was considered by the Court, which is as follow:

"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 Court observed that in order to avail the benefit of Section 6(2)(b) of the Act, the subjects proposed to be dealt with by the State authorities as well as the Central authorities must be one and the same and even in such circumstance, it should be established by the aggrieved party before the competent authority by producing the records. According to the judge, the very purpose and object of Section 6(2) (b) of the Act was to ensure that on the same subject, the parallel proceedings are to be avoided, but in respect of various other proceedings, the benefit could be claimed by the assessees. It was established in this matter that the subject matter was not the same.

The judge stated that such an adjudication in detail could not be conducted by the High Court in a writ proceeding under Article 226 of the Constitution of India since the very purpose and object of the Statute was to ensure that the investigation and proceedings were conducted in the manner known to law. It was concluded that any intervention at the stage of summon by the High Court would paralyze the entire proceedings, which was not desirable and mere pendency of proceedings before the State authorities was not a ground to restrain the Central authorities from issuing summons and conducting an investigation regarding certain allegations.

Therefore, the petition was dismissed with liberty to the Petitioner to respond to the summons by producing all relevant documents, evidence, statements, etc., and to further defend his case in the manner known to law.