GST| Initiation Of Enquiry Or Issuance Of Summons U/S. 70 Can’t Be Deemed To Be Initiation Of Proceedings U/S. 6(2)(b): Kerala HC

The Kerala High Court held that the initiation of an enquiry or the issuance of summons under Section 70 of the CGST (Central Goods and Services Tax) or SGST (State Goods and Services Tax) Acts cannot be deemed to be initiation of proceedings under Section 6(2)(b) of the said Acts.

The Court held thus in a batch of writ petitions filed by various entities being associated with each other in business and essentially belonging to the same group of individuals.

A Single Bench of Justice Gopinath P. observed, “On a reading of the provisions, unaided by the authority, I am unable to conclude that the contention of the learned counsel for the petitioners must be accepted. The term 'initiation of any proceedings' is no doubt a reference to the issuance of a notice under the provisions of the CGST/SGST Acts and the initiation of an enquiry or the issuance of summons under Section 70 of the CGST/SGST Acts cannot be deemed to be initiation of proceedings for the purpose of Section 6(2)(b) of the CGST/SGST Acts.”

Advocate Meera V. Menon represented the petitioners while Standing Counsel Sheela Devi, CGC Jagath N., and Senior Government Pleader (SGP) Thushara James represented the respondents.

In this case, the proper officer under the CGST Act had initiated enquiry regarding non-payment of GST and had directed the production of certain records. This was followed by summons issued under Section 70 of the CGST Act, leading to the recording of certain statements. Certain records were also produced before the Central Authority and while matters stood thus, the State Authority initiated proceedings under Section 74 read with Section 122(1) of the CGST/SGST Acts. According to the petitioners, the initiation of proceedings under Section 74 by the State Authority that culminated in order under that provision could not be sustained in law in the light of the provisions contained in Section 6 of the CGST/SGST Acts.

It was the case of the petitioners that a reading of the provisions contained in Section 6 of the CGST/SGST Acts will indicate that where proceedings have been initiated by one authority, such proceedings shall be continued and culminated by that authority. In other words, it was submitted that in the facts of these cases, since proceedings have already been initiated by the Central Authority in the year 2018 and summons had been issued by that authority and statements have been recorded by that authority, the State Authority could not have issued any show cause notice under Section 74 of the CGST/SGST Acts and if at all such notices could have been issued by the Central Authority only.

The High Court after hearing the contentions of the counsel, said, “Having heard the learned counsel for the petitioners, learned Senior Government Pleader and the learned Standing Counsel appearing for the Central Tax Authority, I am of the view that the petitioners are not entitled to any relief in these writ petitions.”

The Court further noted that Sub-section (2) of Section 6 indicates that, where a proper officer under the CGST Act has issued an order under the provisions of the said Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act as the case may be under the intimation to the jurisdictional officer of the State Tax or the Union Territory Tax Authority as the case may be.

“The Section further provides that 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 the CGST Act on the same subject matter”, it added.

Accordingly, the High Court dismissed the writ petitions.

Cause Title- K.T. Saidalavi v. The State Tax Officer & Ors. (Neutral Citation: 2024:KER:70780)

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