Enquiries by Central Authority under GST cannot be restricted due to pendency of proceedings before the State Authority

Last updated: 12 August 2021

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The Madras High Court has ruled that the pendency of proceedings before a State Authority does not prevent the Central Authority from issuing summons and conducting investigations under the GST Act. The court clarified that simply because a State authority has started proceedings, it does not automatically restrict the Central authorities. While the High Court cannot delve into the detailed intricacies of a case, it granted the petitioner liberty to respond to the summons and present evidence.

Court :
Madras High Court

Brief :
In KuppanGounder P.G. Natarajan v. Directorate General of GST Intelligence and others [TS-400-HC(MAD)-2021-GST decided on July 29, 2021], KuppanGounder P.G. Natarajan ('the Petitioner';) filed a writ petition challenging the summons issued by the Directorate General of GST Intelligence ('the Respondents';)u/s 70 of the Central Goods and Services Tax Act, 2017 ('CGST Act';) on the ground that summons by the Revenue were issued while proceedings from a notice on intimation of discrepancies in the return were already initiated by the State Authorities, thereby going against Section 6(2)(b) of the CGST Act.

Citation :
TS-400-HC(MAD)-2021-GST decided on July 29, 2021

In KuppanGounder P.G. Natarajan v. Directorate General of GST Intelligence and others [TS-400-HC(MAD)-2021-GST decided on July 29, 2021], KuppanGounder P.G. Natarajan ('the Petitioner';) filed a writ petition challenging the summons issued by the Directorate General of GST Intelligence ('the Respondents';)u/s 70 of the Central Goods and Services Tax Act, 2017 ('CGST Act';) on the ground that summons by the Revenue were issued while proceedings from a notice on intimation of discrepancies in the return were already initiated by the State Authorities, thereby going against Section 6(2)(b) of the CGST Act.

The Hon’ble High Court of Madras noted that it needs to be established that subject matter is one and the same and that mere pendency of proceedings before the State authorities is not a ground to restrain the Central authorities from issuing summons and conduct investigation regarding certain allegations.

Furthe robserved that a detailed adjudication cannot be conducted by the High Court in a writ proceeding to analyse the business intricacies, tax paid etc., as it would lead to errors and omissions. The same should be scrutinised by the Department itself.

Granting the Petitioner, the liberty to defend his case by responding to the summons and producing all relevant documents, evidences, statements, etc., and the respondents to investigate the matter in accordance with the procedure, the court thereby dismissed the writ petition.

FAQ :

Yes, the Madras High Court has ruled that the pendency of proceedings before a State Authority does not restrict the Central authorities from issuing summons and conducting investigations.

The petitioner argued that the summons issued by the Directorate General of GST Intelligence were invalid because proceedings had already been initiated by State Authorities, citing Section 6(2)(b) of the CGST Act.

No, the court observed that mere pendency of proceedings before the State authorities is not a ground to restrain the Central authorities from issuing summons and conducting investigations.

The High Court noted that it cannot conduct a detailed adjudication in a writ proceeding to analyse business intricacies and tax paid, as this should be scrutinised by the Department itself.

The writ petition was dismissed, with the petitioner granted the liberty to respond to the summons and provide all relevant documents and evidence.

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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