DGGI Can Initiate Proceedings for Clandestine Supply Even if SGST Dept. Already Investigating Transaction With One Supplier | HC

Case Details: Satyam Castings (P.) Ltd. v. Deputy Director, DGGI - [2024] 162 taxmann.com 400 (Orissa)

Judiciary and Counsel Details

• • Chakradhari Sharan Singh, C.J. & S.K. Sahoo, J.
  • U.C. Behura, Advocate, for the Petitioner.
  • T.K. Satapathy, Sr. Standing Counsel (CGST) & Sunil Mishra, Standing Counsel, (CT and GST), for the Respondent.

Facts of the Case

The petitioner was a registered dealer under the CGST Act, 2017. The DGGI conducted investigation at petitioner’s premises, seized records and issued summons under Section 70. It filed writ petition and contended that the DGGI could not have conducted a parallel proceeding and investigation for same tax period since State GST Authorities were already proceeding against petitioner for investigation of tax period 01-07-2017 to 18-04-2022.

High Court Held

The Honorable High Court noted that there is no ambiguity in language of Section 6(2)(b) of CGST Act, which bars initiation of proceeding by a proper officer under CGST Act where a proper officer under SGST Act has initiated proceeding on a subject matter. However, if subject matter of proceeding is entirely different, there is no bar to maintainability of proceeding. The words “subject matter” can be equated with words “cause of action”.

In the present case, the DGGI was investigating clandestine supply by assessee only whereas investigation by SGST officer was with reference to receipt of materials from one supplier and if subject matter of proceeding was entirely different, there would be no bar to maintainability of proceeding. Therefore, it was not possible to give definite opinion that impugned show cause notice issued by DGGI was barred or not by virtue of operation of Section 6(2)(b) of CGST Act.

Further, a show cause-cum-demand notice had already been issued. Thus, it was held that it would be open for petitioner to take the said plea before the appropriate forum in appropriate proceeding and petition was dismissed.

List of Cases Reviewed

• • Anurag Suri v. DG GSTI & Ors., [W.P.(C) No.158 of 2020, dated 23-3-2021] distinguished.
  • Vallabh Das v. Madan Lal and Ors., A.I.R. 1970 SC 987 relied on.

List of Cases Referred to

• • M/s. Indo International Tobacco Ltd. and others v. Additional DGGI and others TMI 1223 (para 15)
  • Mitambini Mishra v. Union of India [2022] 141 taxmann.com 469/94 GST 137/66 GSTL 165 (Orissa) (para 16).