LI Network
Published on: 01 September 2023 at 16:05 IST
The Delhi High Court, while granting permission for the Directorate General of GST Intelligence (DGGI), Jaipur, to proceed with its inquiry into the petitioner company (M/s. Hanuman Enterprises), clarified that the provisions of Section 6(2)(b) of the Central Goods and Services Tax Act (CGST Act) do not apply to situations where no concrete investigation has been conducted.
After reviewing the submissions made by the Delhi State Authority and the DGGI, the Division Bench consisting of Justice Vibhu Bakhru and Justice Amit Mahajan noted that “even though certain actions were taken that had an impact on the petitioner – including the blocking of Input Tax Credit (ITC) and provisional attachment of bank accounts – no authority actually conducted an investigation into the petitioner company’s operations. Given this perspective, the provisions of Section 6(2)(b) of the CGST Act are not relevant.”
The case revolved around the petitioner’s plea to quash investigations initiated by various investigative agencies against them.
The petitioner contended that, in accordance with Section 6(2)(b) of the CGST Act, the DGGI, Jaipur, was barred from probing them for the same period, as they had already been investigated by another agency, the Delhi Commissionerate (Delhi State Authority).
The petitioner’s legal representative cited a circular issued on October 5, 2018, by the Government of India’s Ministry of Finance, asserting that once an investigation commences by state authorities, it must be concluded, and it is inappropriate for DGGI, Jaipur, to launch a new investigation concerning the petitioner.
In contrast, the Delhi State Authorities clarified that they had not initiated any investigation. The counsel representing DGGI, Chennai, also clarified that they had not investigated the petitioner. Instead, their focus was on a different entity called M/s Balaji Enterprises, and no investigation was conducted into the transactions of the petitioner company.
Upon evaluating the arguments, the Bench pointed out that while some actions were taken that affected the petitioner, such as the freezing of ITC and the provisional attachment of bank accounts, no actual investigation was conducted into the operations of the petitioner company.
Furthermore, the Bench noted that the petitioner’s reliance on the circular issued on October 5, 2018, was misplaced.
The Bench further highlighted that the circular aimed to clarify that there was no requirement for an agency with jurisdiction to transfer an investigation to the authority to which the taxpayer had been administratively assigned.
The circular emphasized that the initiating authority, whether central or state, was authorized to carry out intelligence-based enforcement action until its logical conclusion, the Bench added. Consequently, the High Court concluded that there was no valid reason to prevent the DGGI, Jaipur, from conducting an investigation regarding the petitioner company.
