Pendency of proceedings before the State authorities cannot prevent the Central authorities from issuing summons

Pendency of proceedings before the State authorities cannot prevent the Central authorities from issuing summons

Madras HC held that mere pendency of proceedings before the State authorities cannot prevent the Central authorities from issuing summons regarding certain allegations.

Issue

Writ Petition filed Madras High Court under r Article 226 of the Constitution of India, challenging the summons issued by the Senior Intelligence officer/respondent under Section 70 of the Central Goods and Services Tax Act, 2017. 

Petitioner raising the issue under Section 6(2) (b) of the Income Tax Act, asking “where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.”  

Facts

• The impugned summon states that the respondent is making an enquiry in connection with the petitioner’s company M/s.KPN Travels India Limited & Others under the Central Goods and Services Tax Act, 2017. The petitioner was directed to give evidences or produce documents or things of the following description in his possession or under his control. 
• Respondent stated that the writ petitioner has already filed four writ petitions and hindering entire investigation process repeatedly, he is not co-operating for the continuance and completion of the investigation process in respect of IGST. 

Findings

This Court is of the opinion that the petitioner has approached this Court on every stage, which would reveal that he is attempting to drag the proceedings, instead of defending his case by producing documents and evidence and establishing his case or otherwise. Thus, such conduct of filing writ petition after writ petition, challenging the summons and proceedings intermittently cannot be appreciated by this Court. 

Summon was issued under Section 70 of the Act on 20.01.2021 and subsequently, the investigations are in progress. The very purpose and object of Section 6(2) (b) of the Act is to ensure that on the same subject, the parallel proceedings are to be avoided. Once on a particular subject, the State authority has initiated action under the State Goods and Services Tax Act, then alone, the proper answer under the Central Goods and Services Tax Act are restrained to wait till the finalization of the proceedings initiated by the State authorities. However, in all circumstances, and in respect of various other proceedings, the benefit cannot be claimed by the assessees. 

Judgment  

Madras High Court held that mere pendency of proceedings before the State authorities is not a ground to prevent the Central authorities from issuing summons and conducting an investigation regarding certain allegations. Therefore, all these factors require an adjudication before the competent authority and if the summons are kept in suspension at this stage, the same would paralyze the entire proceedings, which is not only desirable, but would cause prejudice to the interest of the Revenue in the present case.  

The petitioner is at liberty to respond to the summons by producing all relevant documents, evidences, statements, etc., and defend his case in the manner known to law. The respondent is also at liberty to proceed with the investigation by following the procedures as contemplated under the Statute and Rules. 

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