Friday 20 September 2024

HC holds State tax authority cannot transfer GST proceedings once initiated on a particular issue to DGGI

 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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HC holds State tax authority cannot transfer GST proceedings once initiated on a particular issue to DGGI

  This Tax Alert summarizes a recent ruling of the Punjab and Haryana High Court (HC)  on validity of transfer of proceedings under the Good...