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06 June 2021

Simultaneous investigation cannot be carried on by Central and State Goods and Service Tax Authorities concerning the same period – Orissa High Court.

A search was conducted on the business premises of a petitioner, Sonam Berlia of Orrisa who was dealing in the trading of iron and scrap by the Director General of Goods and Service Tax Intelligence (DGGSTI), Bhubaneshwar Zone unit under section 67 of the CGST Act, 2017.Thereby, all the documents of the petitioner were seized by the them and summons were issued under Section 70 of the CGST Act.

Simultaneously, a show cause notice was also issued to the petitioner on 23rd July, 2019 by additional CT and GST Officer, Sambalpur-I Circle stating that the tax is not paid or shortly paid or the ITC is wrongly availed as provided in section 74 of OGST Act and was asked to pay Rs. 3,78,68,262 in relation to OGST, CGST, Interest, Penalty.

To which the petitioner submitted on 7th September, 2019 that her documents have been seized by the DGGSTI and summons were issued. She further state that she was duly cooperating with them from time to time.

She requests state authority to keep the investigation at hold till the conclusion of proceedings initiated by DGGSTI.

On the matter, the division bench headed by Chief Justice Dr. S. Muralidhar and Justice B.P. Routray noticed that the period of enquiry is overlapping as the DGGSTI enquiry was undertaken from July, 2017 to September, 2018 and the state authority was enquiring for the month of April,2018.

Mr. RP Kar, the counsel for the petitioner questioned the SCN dated 23rd July, 2019 and order dated 5th November, 2019 issued by the State Authority.

The Court Quashed the SCN dated 23rd July, 2019 and order dated 5th November issued by the Sate Authority and also stated that no action will be taken against the petitioner till the enquiry of Central Authority (DGGSTI) comes to an end.

The same was backed by a circular dated 5th October, 2018 issued by CBEC which states that if the officer of the Central tax authority initiates intelligence/enforcement action against a taxpayer, administratively assigned to a state tax authority, then the Central tax authority officers themselves have to further undertake the investigation and take the case to its logical conclusion and ‘would not transfer the said case to its state tax counterpart.