Whether the State tax officer has the jurisdiction to transfer the case to DGGI?

No, the Honorable Punjab & Haryana High Court in the case of M/s Stalwart Alloys India P Limited vs. UOI & Ors (CWP no.1661 of 2022, 7411 of 2023 dated 28.08.2024) allowed the writ petitions stating that the State tax officer shall continue with the proceedings initiated under section 74(1) of the HGST Act, 2017 against the petitioner. The Honorable Court noted that earlier this court had directed the respondents to conduct the proceedings at one place alone. Since the proceedings have already been initiated by the State Authorities, there is no occasion to uphold the action of the DGGI or the action of the state authorities to transfer proceedings to DGGI, Meerut pending before it. Further held that ‘Subject matter’ used in section 6(2)(b) of the Act would mean ‘the nature of proceedings’. The Honorable Court also referenced a circular issued by the Ministry of Finance, clarifying that once an officer initiates enforcement action, they are empowered to complete the entire process without transferring the case to another authority. The court further noted that the concept of joint proceedings does not exist under the GST Act. The court emphasized that in a federal structure; both State and Central authorities must cooperate and not act independently of each other, ensuring that the investigation reaches its logical conclusion. The Honorable Court quashed the orders transferring the proceedings to the DGGI, Meerut, and directed that the State Tax Officer should continue and conclude the proceedings initiated under Section 74(1) of the HGST Act against the petitioner company.

Author’s Comments

As per Section 6(2) (b) of the CGST Act, if a proper officer under the SGST Act or the UTGST 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. In the considered opinion of the author, there is no bar under the law that once a proceeding is initiated for a particular period by the CGST department, no proceedings can be issued by the SGST or UTGST authorities for the same period. The only bar that the statute places is regarding proceedings based on the same cause of action and the same subject matter (in a few circumstances, even for the same cause-of-action, parallel proceedings are permissible).

Issuance of SCN by State authorities cannot mean a ‘proceeding’ is going on. SCN is the conclusion of the investigation and adjudication is to be carried out after the issuance of SCN. If the SCN is issued based on certain investigations for 2017-18, and 2018-19 by the State authorities, there is no bar under the law to restrict CGST officers from conducting inquiry based on the same investigative material and issuing SCNs for different periods. Cross-empowerment is allowed for proceedings carried out under section 67 and Section 6(2)(b) of the Act comes into play only when overlapping SCN is issued for the same subject matter for the same period. Further, there is no bar under the law that restricts the exchange of investigative material between the Central and State authorities.

There is no provision under GST law to transfer adjudication from State Authorities to DGGI (Central authority) but no such restriction exists for transferring investigative material and investigation.

Download judgment

https://drive.google.com/file/d/1h1nWN0rNOV1EumgpxSAudyZDrdRgwYO8/view?usp=sharing