In this case, petitioner has sought relief by way of setting aside the Order passed by State authorities in contravention of Section 6(2) of CGST Act.
Initially central tax authority (DGGI) conducted investigation by searching the premises and recording of statements (summons proceedings). The said investigation was related to purchase made from a non-existent supplier. It was the argument of the petitioner that the Order passed by State authority is based on the information received from central authority (DGGI). The State authorities had initiated scrutiny of returns under section 61 of Bihar GST Act and confirmed the demand by passing an Order.
It was submitted that State authorities have violated the directions issued vide Circular No. D.O. F.No. CBEC/20/43/01/2017-GST (Pt.) dated 5 October, 2018 by initiating action based on the information provided by Central authority. In light of the said circular, central tax officer is empowered to complete the entire process of investigation i.e. issuance of SCN, adjudication and recovery etc. Also, placing reliance upon Section 6(2)(b) of CGST Act, it was submitted that if the central authority has already initiated proceeding on a subject matter, no proceeding can be initiated by proper officer under BGST Act.
During pendency of writ petition, central authorities have passed an Order. In the said proceeding, they had identified another vendor who found to be non-existent. The said order has not been challenged in this writ and bought through supplementary affidavit.
In view of the above background, HC held as below:
- The challenge to Order passed by State authorities fails since there was no pendency of proceedings on the same subject matter with central agency. The said order is passed upon scrutiny of returns in terms of Section 61 of BGST Act. Considering the arguments presented by the State officer that ASMT-10 was uploaded online and even after issuing 2 reminders, reply in ASMT-11 was not filed and the said facts were not contested by petitioner, HC held that there is proper compliance with principle of natural justice.
- HC observed that the service of demand-cum-SCN under Section 74(1) by State authorities has neither been questioned nor contested. Also, HC observed that there is no violation of principle of natural justice as appropriate opportunity for personal hearing was duly provided. Therefore, HC did not find any jurisdictional error on the part of State authority in passing the Order. Hence, writ petition was not entertained.
- With respect to proceeding initiated by central authorities wherein another vendor was found to be non-existent, the same was found to be in line with circular dated 5 Oct 2018 since the deputy director DGGI issued a demand-cum-show cause notice.
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