This Tax Alert summarizes a recent ruling of the Punjab and Haryana High Court (HC) on validity of transfer of proceedings under the Goods and Services Tax (GST) law.
The key observations of the HC are:
- As per Section
6(2)(b) of the Haryana Goods and Services Tax Act, 2017 (HGST Act) and the
Central Goods and Services Tax Act, 2017 (CGST Act), once a proper officer
has initiated any proceedings on a subject matter, no proceedings can be
initiated by another officer on the same matter.
- Unlike other
taxation laws, the scheme of the GST law nowhere provides for transferring
the proceedings from one proper officer to another.
- Merely because
Directorate General of Goods and Services Tax Intelligence (DGGI) has
information relating to fraudulent availment of input tax credit by other
firms, who may be related to the assessee, would not be a sufficient
ground to presume that the State GST authority would not be able to
conduct the proceedings or examine the culpability of the assessee.
- The term
"subject matter" refers to the nature of the proceedings. If the
State has already initiated proceedings, DGGI cannot be allowed to
initiate proceedings on the same subject matter even for subsequent
periods.
Basis above, HC quashed the transfer of proceedings by State tax officer to
DGGI and directed him to proceed and conclude the same.
Comments
- Jurisdiction
to initiate proceedings under indirect tax laws have always been a subject
matter of controversy, particularly concurrent proceedings. HC’s
interpretation of the provision of Section 6(2)(b), holding even transfer
of proceedings as impermissible once initiated by State tax officer, is
likely to put to rest the litigation arising on this count and provide
relief to taxpayer from additional compliance burden.
- It is relevant
to note that the term “subject matter” has been broadly interpreted by the
HC and has not been restricted to a particular tax period.
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