Indo Worldwide Tobacco Ltd Vs Vivek Prasad (Delhi Excessive Courtroom)
[Cont.Cas(C) 751/2021 & Cm No.35806/2021 dated January 11, 2022] dismissed the applicability of Round in a petition difficult the conduct of alleged parallel investigation by numerous jurisdictional authorities and affirmed the investigations performed numerous jurisdictional authorities of the Income Division into entities having widespread nexus. Held that, Round can’t be prolonged to cowl all and myriad conditions which will come up within the administration and the functioning of the GST construction.
Details:
M/S. Indo Worldwide Tobacco Ltd. and M/S. SSM Exports (“the Petitioners”) are engaged within the manufacturing and provide of tobacco merchandise. These writ petitions have been filed, being aggrieved of a number of search operations, summons being issued and cancellation of GST registration by the Income Division (“the Respondent”) for alleged availment and utilization of inadmissible Enter Tax Credit score (“ITC”) and to problem the conduct of alleged parallel investigation by officers of CGST, Directorate Common of Items and Providers Tax Intelligence (“DGGI”) Ahmedabad and Delhi Unit, Joint Commissioner (AE), CGST and many others. (“numerous jurisdictional authorities”).
The Petitioner contended that issuance of such a number of summons by a number of companies is violative of the mandate of Part 6(2)(b) of the Central Items and Providers Tax Act, 2017 (“the CGST Act”) and as additionally the Round No. D.O.F.No. CBEC/20/43/01/2017-GST (Pt.) dated October 5, 2018 (“the Round”) clarifying initiation of intelligence based mostly enforcement motion.
Subject:
Whether or not parallel investigation by numerous jurisdictional authorities will be performed at similar time in opposition to the Petitioners?
Held:
The Hon’ble Delhi Excessive Courtroom in Cont.Cas(C) 751/2021 & Cm No.35806/2021 dated January 11, 2022 held as below:
Famous that, the CBIC vide Notification No. 14/2017 – Central Tax dated July 01, 2017 has appointed the Officers within the DGGI, Director Common of Items and Service Tax (“DGGST”), and Director Common of Audit (“DG Audit”) because the Central Tax Officers and conferred on them the powers prolonged all through the territory of India, and who’re empowered to train all-India jurisdiction and people who benefit from the restricted territorial jurisdiction.
Noticed that, to realize the purpose of harmonized items and providers tax construction and within the spirit of co-operative federalism, Part 6(1) of the CGST Act and pari materia provisions within the State Items and Providers Tax Act, 2017 (“the SGST Act”) present for cross-empowerment of the Central Tax Officers and the State Tax Officers.
Additional famous that, Part 6 of the CGST Act is clearly guided by the article of offering a standard nationwide market of products and providers and to eradicate the subjection of the taxpayers to a number of jurisdictions. It goals to offer safety to the taxpayers in opposition to being subjected to a number of companies for a similar set of transactions, on the similar time empowering the Officers below the CGST Act or the SGST Act or the Union Territory Items and Providers Tax Act, 2017 (“the UTGST Act”) to cross a complete order and take motion, holding in view and increasing to the opposite Acts. There ought to, due to this fact, be just one order insofar because the tax entity is worried.
Noticed that, the investigations had been initiated by numerous jurisdictional authorities in opposition to the Petitioners that had been allegedly discovered within the investigations and the identical have been transferred to officers of the Respondent to be introduced below one umbrella.
Acknowledged that, in the middle of investigating of a tax entity, a scenario might come up the place the investigation might should be carried out from entities which aren’t inside the territorial jurisdiction of the Officer appointed or with the restricted territorial jurisdiction. It can’t be stated that in each such case, the ‘correct officer’ having restricted territorial jurisdiction should switch the investigation to the ‘correct officer’ having pan India jurisdiction. It will rely upon the information of every case as as to whether such switch is warranted or not. To put down the indefeatable rule on this regard is probably not possible or advisable, and definitely not acceptable.
Opined that, neither Part 6 of the CGST Act nor the Round is meant to nor will be given an overarching impact to cowl all of the conditions which will come up within the implementation of the CGST Act and the SGST Act.
Held that, the Round can’t be prolonged to cowl all and myriad conditions which will come up within the administration and the functioning of the GST construction, and clearly has a restricted software, which is of guaranteeing that there is no such thing as a overlapping train of jurisdiction by the Central and the State Tax Officers, to convey concord between the Centre and the State within the implementation of the GST regime, with the 2 not hustle for jurisdiction over a taxpayer. It’s, nevertheless, not supposed to reply a scenario the place as a result of complexity or vastness of the inquiry or proceedings or involvement.
Additional held that, there is no such thing as a prohibition to such switch below the CGST Act and allowed a number of investigations initiated in opposition to the Petitioners on the similar time by numerous jurisdictional authorities to be transferred to DGGI, Ahmedabad, with the intention to convey all of them below one umbrella.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The above two writ petition(s), being W.P.(C) 2420 of 2021 and W.P.(C) 4036 of 2021, increase a standard query of legislation and are premised on the Round, bearing D.O. F. No. CBEC/20/43/01/2017-GST (Pt.), dated 05.10.2018, issued by the Central Board of Excise and Customs, New Delhi (hereinafter known as the „CBEC‟), and are due to this fact, being thought-about and disposed of by this widespread judgment.
2. In W.P.(C) 2420 of 2021, it’s the case of the petitioner that it’s engaged within the manufacturing and provide of tobacco merchandise. It obtained GST Registration on 21.10.2019 from the jurisdictional Workplace located at Gautam Buddh Nagar, Uttar Pradesh, because the petitioner’s agency was registered and had its principal place of job inside the jurisdiction of the stated Commissionerate.
3. The petitioner commenced its business operations within the month of December 2019.
4. On 19.03.2020, a search was carried out on the petitioner’s premises by the CGST Officers from Gautam Buddh Nagar. The petitioner alleges that no shortcomings had been observed within the stated search operation. Thereafter, a Present Trigger Discover dated 20.04.2020 was issued by the Assistant Commissioner, Central Tax Division-I, Gautam Buddh Nagar, Uttar Pradesh, calling upon the petitioner to point out trigger why its refund declare, filed for the month of February 2020 below Part 54 of the Central Items and Providers Tax Act, 2017 (hereinafter known as the „CGST Act’), be not rejected and the alleged inadmissible credit score amounting to ₹18,26,78,282/- (Rupees eighteen crore twenty-six lakh seventy-eight thousand 2 hundred eighty-two) be not recovered from the petitioner.
5. The Assistant Commissioner, Gautam Buddh Nagar, additional, vide its order dated 11.05.2020 handed below Part 83 of the CGST Act referred to as upon the ICICI Financial institution, the place the petitioner maintained its checking account, to produce the KYC paperwork together with the small print of the banking transactions. It was additional directed that the checking account of the petitioner shall stay provisionally hooked up and no debit shall be allowed to be made out of the stated account with out prior permission of the Division.
6. Thereafter, summons dated 05.06.2020 below Part 70 of the CGST Act was issued to the petitioner calling upon the petitioner to provide numerous paperwork.
7. The petitioner claims that as its refund was not launched and the checking account of the petitioner remained hooked up regardless of numerous representations, the petitioner filed two writ petitions, being Civil Writ Petition No(s). 461 of 2020 and 462 of 2020, earlier than the Hon’ble Excessive Courtroom of Allahabad, whereby discover was issued within the petitions and pleadings therein had been directed to be accomplished. Nonetheless, in the course of the pendency of the above petitions, one other search was carried out on the premises of the petitioner by the Officers of the CGST, Gautam Buddh Nagar, on 07.10.2020. On 24.11.2020, yet one more summons below Part 70 of the CGST Act had been issued to the petitioner, once more calling upon the petitioner to provide sure paperwork.
8. The petitioner claims that on 01.12.2020, the Directorate Common of the Items & Providers Tax Intelligence (hereinafter known as the ‘DGGI’), Regional Workplace, Kanpur, carried out yet one more search operation on the premises of the petitioner. The stated search operation was authorised by the Joint Director, DGGI, Lucknow Zonal Unit, Lucknow.
9. Thereafter, on 14.01.2021, the Officers of the DGGI, Delhi Zone Unit (briefly, ‘DZU’), performed a search on the premises of the petitioner pursuant to the authorisation granted by the Extra Director, DGGI, DZU, on 13.01.2021. Summons dated 16.01.2021 had been additionally issued by the Senior Intelligence Officer, DGGI, DZU, to the proprietor of the petitioner.
10. The CGST Commissionerate, Gautam Buddh Nagar, additionally issued summons on 01.02.2021 to the petitioner.
11. On 04.02.2021, the DGGI, Ghaziabad, additionally searched the premises of the petitioner.
12. The premises of the petitioner was once more searched on 13.02.2021 by the DGGI, Ahmedabad Zonal Unit (briefly, „AZU’).
13. Being aggrieved of such a number of search operations and summons being issued, the petitioner has filed the current writ petition.
W.P.(C) 4036/2021
14. In W.P.(C) 4036 of 2021, the petitioner contends that it’s a proprietorship agency and is engaged within the manufacturing of flavouring compound below the model „SSM Tremendous Robust’; „SSM Tremendous’; „QM-1000′; „QM-500′; flavoured tobacco extract below the model „Azeem’; flavoured tobacco below the model „TBH-300′; „TBH-341′; „Revelry-25′; and „Frolic-25′. The petitioner’s agency is registered with the GST Division, South Delhi Commissionerate.
15. On 04.09.2019, the Officers from the Anti-Evasion, CGST, Delhi East and South Commissionerate, carried out the search operation on the premises of the petitioner. The search warrant dated 04.09.2019 had been issued by the Joint Commissioner (AE), CGST, Delhi East Commissionerate.
16. On 27.09.2021, yet one more search operation was carried out on the premises of the petitioner by the Extra Assistant Director, DGGI, AZU, below the authorisation dated 25.09.2019 issued by the Joint Director, DGGI, AZU. On 27.09.2019, summons had been additionally issued by the DGGI, AZU, to the proprietor of the petitioner to look earlier than it on 30.09.2019. Because the petitioner couldn’t seem on the stated date, one other summons dated 15.10.2019 had been issued by the DGGI, AZU, to the proprietor of the petitioner to look earlier than it on 31.10.2019.
17. The summons dated 28.11.2019 had been then issued by the CGST Workplace, Delhi West, calling upon the Head (Manufacturing & Processing) of the petitioner to look on 04.11.2019, which was not attainable, the date already having handed.
18.. One more summons dated 14.02.2020 had been issued by the Superintendent Central Tax, New Delhi, to the proprietor of the petitioner to look earlier than it on 20.02.2020.
19. On 18.12.2020, the DGGI, AZU, once more issued summons to the petitioner to look earlier than it on 07.01.2021.
20. The petitioner‟s agency registration was additionally cancelled on 01.03.2021.
21. Aggrieved of such repeated summons being issued by a number of companies, the petitioner has filed the current writ petition.
PETITIONER(S) SUBMISSIONS:
22. Mr. S. Ganesh, the realized senior counsel showing for the petitioner in W.P.(C) 2420 of 2021 and Mrs. Anjali J. Manish, the realized counsel showing for the petitioner in W.P.(C) 4036 of 2021, submit that issuance of such a number of summons to the petitioner(s) by a number of companies is violative of the mandate of Part 6(2)(b) of the CGST Act and as additionally the Round dated 05.10.2018 issued by the CBEC. They submit that the jurisdictional Commissionerate(s) of the petitioners, being located at Gautam Buddh Nagar and South Delhi, respectively, having initiated proceedings in opposition to the petitioners, no different Officer of the CGST has jurisdiction to proceed in opposition to the petitioners. They submit that it’s only the jurisdictional Commissionerate that has the jurisdiction to hold out your entire strategy of investigation, together with the issuance of Present Trigger Notices, adjudications, restoration, et cetera. On this regard, they place reliance on the judgment/order of the Excessive Courtroom of Gujarat, in Bhawani Textiles v. Extra Director Common, 2020 (35) G.S.T.L. 36 (Guj.); and judgment/order dated 27.12.2019, titled Sureshbhai Gadhecha Proprietor of M/s Anmol Merchants v. State of Gujarat, handed in R/Particular Civil Software No. 23279 of 2019.
23. They submit that the Round dated 05.10.2018, having been issued below Part 168 of the CGST Act, is binding on the Division. In help of their submissions, they place reliance on the next judgments:
a. Simplex Castings Ltd. Commissioner of Customs, Vishakhapatnam; (2003) 5 SCC 528;
b. Commissioner of Customs Indian Oil Company Ltd. & Anr., (2004) 3 SCC 488;
c. Collector of Central Excise, Vadodara Dhiren Chemical Industries, (2002) 10 SCC 64;
d. UCO Financial institution, Calcutta Commissioner of Earnings Tax, W.B, (1999) 4 SCC 599; and
e. Catholic Syrian Financial institution Ltd. Commissioner of Earnings Tax, Thrissur, (2012) 3 SCC 784.
24. The realized senior counsel for the petitioners submits that the CGST Act doesn’t, anyplace, check with „investigation‟ or to the Officers who’re authorised or empowered to hold out a specific investigation. The powers below the CGST Act are conferred solely on „correct officer‟ outlined below Part 2(91) of the CGST Act. Putting reliance on Part 6(1) of the CGST, he submits that the Officers appointed by the State Authorities are additionally „correct officers‟ for the aim of the CGST Act and, due to this fact, train all powers below the CGST Act as properly. He submits that Part 6(2) of the CGST Act makes it clear that if the SGST Officer of the State Authorities has already initiated proceedings, then the CGST Officers can not train any energy on the identical material, which is intelligence-based enforcement motion on your entire taxpayers‟ base no matter the executive task of the taxpayer to any authority, and to your entire value-chain of the actual taxpayer.
25. The realized senior counsel for the petitioner additional submits that the Gautam Buddh Nagar Commissionerate had issued 4 Present Trigger Notices to the petitioner elevating quite a few points. It has raised points with respect to the suppliers who’re outdoors Gautam Buddh Nagar. One of many Present Trigger Notices has even been adjudicated. He submits that in view of Part 6(2)(b) of the CGST Act and the Round dated 05.10.2018, it could solely be the Gautam Buddh Nagar Commissionerate who can be empowered to finish your entire strategy of investigation, issuance of Present Trigger Discover, adjudication, restoration, submitting of the enchantment, et cetera. He submits that there would, the truth is, be a prohibition in opposition to the GST Intelligence Officers of AZU from finishing up this complete course of in view of the Round dated 05.10.2018.
26. Mrs. Anjali J. Manish, the realized counsel showing for the petitioner in W.P.(C) 4036 of 2021 adopts the above arguments of Mr. Ganesh.
RESPONDENTS SUBMISSIONS:
27. Alternatively, Mr. N. Venkataraman, the realized Extra Solicitor Common of India, inserting reliance on the judgment dated 13.09.2021 of the Supreme Courtroom in Union of India VKC Footsteps India Pvt. Ltd., 2021 SCC OnLine SC 706, submits that the GST is a watershed second within the evolution of cooperative federalism. Its success is dependent upon concord as its supply and basis. He submits that the CGST Act; the Built-in Items and Providers Tax Act, 2017 (hereinafter known as the „IGST Act‟); the varied States‟ Items and Providers Act (hereinafter known as the „SGST Act‟); and the Union Territory Items and Providers Tax Act, 2017 (hereinafter known as the „UTGST Act‟) have all been handed as a digital duplicate of one another for finishing up a uniform harmonised sample. He submits that Part 6 of the CGST Act carries ahead the identical intention, with the „correct officer‟ issuing an order below one Act being empowered to problem an order below the opposite Act as properly.
28. He submits that by way of Part(s) 3 and 5 of the CGST Act and the SGST Act, the Central Authorities and the State Governments have issued notifications empowering the ‘correct officers’. By the Notification No. 02 of 2017 dated 19.06.2017, issued by the CBEC, numerous Central Tax Officers have been appointed vesting them with jurisdiction on specified territories. They due to this fact, train restricted territorial jurisdiction. Whereas, vide Notification No. 14 of 2017 dated 01.07.2017, the CBEC has appointed the Central Tax Officers with All India jurisdiction. Equally, the State Tax Officers have been appointed by the respective State Governments giving restricted territorial jurisdictions to the State Tax Officers or vesting them with jurisdiction over the entire State. For instance, he has referred to the Notification dated 23.06.2017, issued by the Authorities of Maharashtra, individually empowering the State Tax Officers with restricted territorial jurisdictions and people having jurisdiction over the entire State.
29. Putting reliance on the above Notifications, the realized ASG submits that the all-India jurisdiction will be exercised solely by a ‘correct officer’ appointed as a Central Tax Officer below Notification No. 14 of 2017 and nobody else. He submits that, due to this fact, as soon as the proceedings have a PAN India affect and involvement of multiple Commissionerate, it’s only the Central Tax Officers having all-India jurisdiction, by way of the Notification No. 14 of 2017, who’re empowered to hold out the investigation.
30. Referring to Part 6(2)(b) of the CGST Act, the realized ASG, submits that the identical may have the total play if the proceedings don’t transgress the territorial jurisdiction, whereas in a case the place the subject material is of all-India jurisdiction, then solely the Officers appointed below Notification No. 14 of 2017 dated 01.07.2017 can train energy below Part 6(2)(b) of the CGST Act and the remaining should maintain away as they don’t possess all-India jurisdiction. On this regard, he locations reliance on the judgment of this Courtroom, in Nationwide Constructing Building Firm Ltd. Union of India & Ors., 2018 SCC OnLine Del 12397.
31. On information, in W.P.(C) 2420 of 2021, the realized ASG has positioned reliance on the next chart from the widespread additional-affidavit filed by respondent no(s). 1, 3, 4, 5 to 7 and 9, which is reproduced herein-below:
| S. No. | Identify of authority
who performed search |
Date of
search |
Scope of investigation |
| 1. | State GST, Gautam Buddha Nagar, Uttar Pradesh | 31.01.2020 | A number of discrepancies observed throughout survey on 31.01.2020 and accordingly Present Trigger Discover in Kind DRC-01 dated 03.04.2021 protecting a interval of Jan‘20 to Mar‘20 was issued.
(Annexed as Annexure-‘B’) |
| 2. | CGST, Gautam Buddha Nagar Commissionerate
|
19.03.2020
|
Reference obtained from Chief Commissioner Workplace Meerut indicated contravention of provisions of Notification No. 04/2017 (Price) dated 28.06.2017 by sure corporations together with M/s Mridul Tobie Inc. and in the course of the search it was revealed that they’re claiming refund of collected ITC/cess on account of export.
Accordingly, searches had been performed on the premises of Jeevantara and others, indicated to be pretend corporations. These corporations had been discovered to be issuing pretend/bogus invoices with out provide of products for passing on fraudulent ITC. M/s Mridul Tobie Inc. is likely one of the recipient of such pretend ITC generated from such pretend corporations, who’re discovered to have claimed fraudulent refund of collected ITC on account of such pretend provides. Accordingly, investigation in opposition to them had been initiated for the specificissue of submitting of fraudulent refund claims. |
| 3. | CGST, Gautam Buddha Nagar Commissionerate
|
07.10.2020
|
M/s Commodities Intertrade- GSTIN 9AFTPB2263G1ZE had utilized for refund of Rs. 96,12,360/- in opposition to export of providers which was deviating from their regular commerce enterprise, earlier than the CGST, Noida Commissionerate.
The service was proven to have been procured from M/s Mridul Tobie Inc by M/s Commodities Inter-trade. Accordingly, the CGST Noida commissionerate has requested the GBN Commissionerate to confirm the information on this regard. In pursuance to the similar the CGST GBN Commissionerate performed the search on the premises of M/s Mridul Tobie Inc. It’s pertinent to point out that afterward M/s Commodities Intertrade has reversed your entire ITC quantity of Rs. 96,12,360/- vide DRC -03 dated 27.01.2021. Thus, this search was performed on the premises of M/s Mridul Tobie Inc solely with reference to the refund claimed by M/s Commodities Inter-trade, on the power of the bill issued by M/s Mridul Tobies Inc. |
| 4. | DGGI, Regional Unit, Kanpur (Beneath DGGI, Lucknow Zonal Unit)
|
01.12.2020
|
DGGI, Lucknow Zonal Unit, was investigating case in opposition to Agra based mostly exporter M/s Snuff Exim Pvt. Ltd. for claiming refund of collected ITC obtained by fraudulent means. Throughout the investigation it was discovered that M/s Mridul Tobie Inc was distinguished provider to the stated agency.
Accordingly, follow-up search was performed on the premises of M/s Mridul Tobie Inc. by DGGI, Kanpur Regional Unit as per the instructions of DGGI, Lucknow Zonal Unit. |
| 5. | DGGI, Delhi Zonal Unit | 14.01.2021
|
Search performed on the premises of M/s Shalimar Merchants indicated, it to be a pretend agency. The agency is discovered to be issuing pretend/bogus invoices with out provide of products for passing on fraudulent ITC. M/s Mridul Tobie Inc. is likely one of the recipient of such pretend ITC generated from the stated agency.
Accordingly, investigation in opposition to them had been initiated for the restricted problem of availment of fraudulent ITC of Rs. 5.03 crores on the idea of faux invoices issued by M/s Shalimar Merchants. |
| 6. | DGGI, Regional
Unit, Ghaziabad (Beneath DGGI, Meerut Zonal Unit)
|
04.02.2021
|
DGGI, Agra Regional Unit, was investigating case in opposition to M/s Panchtatva Enterprise which had proven procurement of products from M/s Snuff Exim Pvt. Ltd. and M/s Pandokhar Meals LLP., Noida.
These two corporations had additional proven the procurement of products from M/s Mridul Tobie Inc. Accordingly, follow-up search was performed at the premises of M/s Mridul Tobie Inc by the officers of DGGI, Ghaziabad Regional Unit, below request of DGGI, Agra Regional Unit. |
| 7. | DGGI, Ahmedabad
Zonal Unit
|
13.02.2021
|
Throughout investigation of sure non-existent/non-functional corporations, viz. (1) Garuda Enterprise (GSTN- 06DWAPK4510C1Z6) (2) Shiva Enterprise (GSTN- 07BBHPS6200B1Z1) (3) Tirupati Exports (GSTN- 09CCIPP4229C1ZL) (4) Paria Buying and selling (GSTN07AYGPH3832B1ZV) (5) Balaji Exports (GSTN- 09FDZPP5520H1ZT) (6) Royal Buying and selling, Alwar (GSTN- 08DWAPK4510C1Z2) (7) Mahadev World Commerce, Alwar (GSTN- 08CAJPK8236P1ZX) and many others. had been recognized by the DGGI, Ahmedabad Zonal Unit. It was discovered that ―Smoking combination for pipes and cigarettes‖ was one in all the most important gadgets proven as equipped within the paper transactions by the non-existent entities. The topic items ―Smoking Combination for pipes and cigarettes‖, a tobacco product falling below CTH 24031910, is extremely delicate from tax evasion angle as it’s topic to GST @ 28% and Compensation Cess @ 290% (Whole 318%) and any fictitious paper transaction in ―Smoking Combination‖ is very rewarding for availment of ITC unlawfully. The evidences obtainable on file indicated a deeprooted conspiracy by some individuals who had been the masterminds behind this modus operandi to defraud the public exchequer. Investigations additionally revealed that the petitioner agency M/s Mridul Tobie Inc, Noida is additionally one of many beneficiaries of faux ITC generated within the title of some of the non-existent entities by paper transactions with out corresponding provide of products, together with ―smoking combination for pipes and cigarettes‖. Additional, investigation additionally contains the problem of Overvaluation and Misclassification of the product by M/s Mridul Tobie Inc. Remarks: Throughout search
operation, it was noticed that the items seized by the DGGI,Delhi Zonal Unit below panchanama dated 14.01.2021 weren’t obtainable on the premises. This search was performed by DGGI, Ahmedabad Zonal Unit with the assist of DGGI, Delhi Zonal Unit so the officers of Delhi Zonal Unit had been additionally current in the course of the stated search. |
| 8.
|
M/s Mridul Tobie Inc. | 19.02.2021 | Filed WP No. 2420 of 2021
|
| 9. | DGGI, Delhi Zonal
Unit
|
25.02.2021
|
This second Search was performed by DGGI, Delhi Zonal unit to confirm the actual fact of non-availability of seized items within the premises of M/s Mridul Tobie Inc., as observed and recorded below the panchanama dated 13.02.2021 drawn by the officers of DGGI, Ahmedabad Zonal Unit. Throughout the course of this search, it was confirmed that M/s Mridul Tobie Inc., had infact illicitly disposed off the products seized below panchnama dated 14.01.2021. And with the intention to cowl up their in poor health authorized act that they had changed the products with different illicitly procured items.
Accordingly, the products obtainable as substitute of the seized items had been additionally seized by the DGGI, |
| 10. | DGGI, Ahmedabad
Zonal Unit
|
15.03.2021
|
Search on the residential premise of Shri Vipin Sharma, Proprietor of M/s Mridul Tobie Inc. was performed. Nonetheless, the stated premises was discovered locked and accordingly, the stated premise was sealed below panchanama dated 15.03.2021.
|
| 11. | DGGI, Ahmedabad Zonal Unit
|
16.03.2021
|
On receipt of the request letter from Shri Vipin Sharma, the residence was desealed and searched within the presence of consultant of Shri Vipin Sharma and a number of other incriminating paperwork had been recovered. On completion of the search the keys had been handed over to the stated consultant.
|
| 12. | M/s Mridul Tobie
Inc.
|
16.03.2021
|
Filed CM no. 10506 of 2021 in WP No. 2420 of 2021.
|
| 13. | CGST, Gautam Buddha Nagar Commissionerate
|
17.03.2021
|
Issued the Present Trigger Discover No C.No. IV (9)AE/GBN/51/2018/Pt-V dated 17.03.2021, in respect of seizure effected by DGGI, Delhi Zonal Unit, in pursuance of the Interim Order dated 17.03.2021 handed by Hon‘ble Delhi Excessive Courtroom in CM No. 10506 of 2021. (Annexed as Annexure-‘C’)
|
32. The realized ASG submits that within the current case there seems to be a pretend Enter Tax Credit score (hereinafter known as the „ITC‟) rip-off perpetuated by numerous entities unfold throughout the nation and includes the misuse of ITC of greater than ₹300 crore (Rupees 300 crore). The identical required a radical investigation by a specialised investigating company having all-India jurisdiction. As a number of companies had performed search operations on the premises of the petitioner, the DGGI, AZU, vide letter dated 01.03.2021, had requested all of the involved formations of the DGGI to switch the investigation to the DGGI, AZU. The CGST, Gautam Buddh Nagar Commissionerate was additionally requested, vide letter dated 30.03.2021, to switch its investigation to the DGGI, AZU. In response to the stated request, the investigation being carried out by totally different CGST formations have been transferred to the DGGI, AZU. On this regard, he has referred to the small print offered within the type of a desk within the additional-affidavit, which is reproduced herein-below:
| S. No. | Identify of authority who performed search | Referral Letter No | Date of search | Scope of investigation |
| 1. | DGGI, Ahmedabad Zonal Unit
|
DGGI/AZU/Gr‗A‘/ 12(4)513/2020-21 Annexed as Exhibit-II
|
01.03.2021 | DGGI, Ahmedabad Zonal Unit vide its letter dated 01.03.2021 had requested DGGI, Delhi Zonal Unit and DGGI, Lucknow Zonal Unit to switch the investigation being performed by them in opposition to M/s Mridul Tobie Inc. |
| 2. | DGGI,
Lucknow Zonal Unit
|
DGGI/ARU/Gr‗A‘/Pa
nch/04/2021 Annexed as Exhibit-III A & III B
|
09.03.2021
& 30.07.2021
|
In reply to the letter of DGGI, Ahmedabad Zonal Unit dated 01.03.2021, DGGI Lucknow Zonal Unit vide their letter dated 09.03.2021 & 30.07.2021 have transferred all of the paperwork associated to investigation of M/s Mridul Tobie Inc. To DGGI, Ahmedabad Zonal Unit for taking additional essential motion. Subsequently, at current, DGGI, Lucknow Zonal unit will not be pursuing any investigation in opposition to M/s Mridul Tobie Inc. |
| 3. | DGGI, Delhi
Zonal Unit
|
F. No.
DZU/INV/H/GST/06/2 021 dated 16.03.2021 Annexed as Exhibit-IV
|
16.03.2021 | In response to the letter issued by DGGI, Ahmedabad Zonal Unit dated 30.03.2021, Delhi Zonal Unit of DGGI vide their letter dated 16.03.2021 have transferred the investigation in opposition to M/s Mridul Tobie Inc. To DGGI, Ahmedabad Zonal Unit and acknowledged that they won’t pursue additional in the matter both investigation associated to fraudulent availment of ITC or seizure of items or any different matter, together with observe up motion required, if any, within the case of M/s Mridul Tobie Inc. And M/s Shalimar Trades. |
| 4. | DGGI, Ahmedabad Zonal Unit
|
DGGI/AZU/Gr‗A‘/ 12(4)513/2020-21
Annexed as Exhibit-V
|
30.03.2021 | DGGI, Ahmedabad Zonal Unit vide its letter dated 30.03.2021 had proposed to consolidate all the investigations being carried out by the involved Zonal items of DGGI and CGST, Gautam Buddha Nagar Commissionerate at DGGI Ahmedabad Zonal Unit to redress the grievance raised by M/s Mridul Tobie Inc. Within the W.P. 2420 of 2021 filed earlier than the Hon‘ble Excessive Courtroom of Delhi. |
| 5. | DGGI, Meerut Zonal Unit
|
DGGI/MeZU/Misc- Sharing/190/2019-20 dated 30.03.2021 Annexed as Exhibit-VI
|
30.03.2021 | DGGI, Meerut Zonal Unit vide their letter dated 30.03.2021 knowledgeable that they haven’t initiated any separate investigation in opposition to M/s Mridul Tobie Inc.
And the search was performed solely in relation to the request to DGGI, Lucknow Zonal Unit. Presently, no investigation in opposition to M/s Mridul Tobie Inc. Is pending with DGGI, Meerut Zonal Unit. |
| 6. | CGST, Gautam Buddha Nagar Commissionera te
|
C.No. IV(9)AE/GBN/51/201 8/Pt-V dated 01.04.2021 Annexed as Exhibit- VII
|
01.04.2021 | In response to the letter issued by DGGI, Ahmedabad Zonal Unit dated 30.03.2021, CGST, Gautam Buddha Nagar Commissionerate vide their letter dated 01.04.2021 have proven their incapability to conduct investigation in opposition to M/s Mridul Tobie Inc., as its patrons and suppliers are positioned past their jurisdictions.
Subsequently, for the complete investigation in opposition to M/s Mridul Tobie Inc. In respect of all the points, viz. Availment of ineligible ITC, valuation, enterprise mannequin and many others. They’ve requested DGGI, AHMEDABAD ZONAL UNIT to conduct the investigation in opposition to M/s Mridul Tobie Inc. |
33. He submits that insofar as the problem of refund and freezing of the financial institution accounts is worried, the CGST, Gautam Buddh Nagar Commissionerate, shall proceed with the stated proceedings.
34. So far as the W.P.(C) 4036 of 2021 is worried, the realized ASG has drawn our consideration to the brief counter-affidavit filed by the respondent no. 1 – the Commissioner, Delhi West; and the widespread counter-affidavit filed by the respondent no(s). 2, 5 and 6 – the Officers of DGGI, AZU, to contend that the DGGI, AZU, had obtained intelligence that sure entities based mostly in Delhi-NCR area of Home Tariff Space had proven provide of low-value tobacco and tobacco-related merchandise to sure Particular Financial Zone Models in Kandla Particular Financial Zone at extremely overvalued charges in order to avail ineligible refund of the ITC. Primarily based on this data, search operations had been carried out at numerous places, together with the petitioner. He additional submits that the Deputy Commissioner, CGST Delhi, East Commissionerate, vide letter dated 27.05.2021, has categorically acknowledged that they aren’t investigating any case in opposition to the petitioner. Equally, the Joint Commissioner, CGST Delhi, South Commissionerate, vide letter dated 31.05.2021, has additionally knowledgeable that no investigation file in respect of the petitioner is being handled by them. So far as the CGST Delhi, West Commissionerate is worried, its investigation was in opposition to one M/s Pawanputra Exim India. It was not finishing up any unbiased inquiry in opposition to the petitioner. In any case, vide letter dated 13.08.2020, it has transferred its investigation in opposition to M/s Pawanputra Exim to the DGGI, AZU.
35. The realized ASG, on the idea of the above information, submits that in any case, the grievances of the petitioners that a number of companies have carried out search operations and are finishing up investigation in opposition to the petitioners now stand addressed with the centralisation of investigation with DGGI, AZU, and the petitioners can not have any grievance to the identical.
FINDINGS OF COURT:
36. We now have thought-about the submissions made by the realized counsels for the respective events.
37. As acknowledged by the Supreme Courtroom in VKC Footsteps India Pvt. Ltd. (supra), the One Hundred and First Modification to the Structure of India, 1950 (hereinafter known as the „Structure‟) is a watershed second within the evolution of cooperative federalism. Its goal is to take away the cascading impact of taxes and supply for a standard nationwide marketplace for items and providers. Article 246A of the Structure has caused a major change within the legislative framework with respect to the ability to make legal guidelines apropos the products and providers. The Parliament and each State Legislature now have the ability to make legal guidelines with respect to the GST imposed by the Union or by the States, topic to the unique energy vested with the Parliament to make legal guidelines with respect to the GST the place the availability of products or providers, or each, takes place in the middle of inter-State commerce or commerce. Article 246A of the Structure is reproduced herein-below:
“Article 246A. Particular provision with respect to items and providers tax.— (1) However something contained in articles 246 and 254, Parliament, and, topic to clause (2), the Legislature of each State, have energy to make legal guidelines with respect to items and providers tax imposed by the Union or by such State.
(2) Parliament has unique energy to make legal guidelines with respect to items and providers tax the place the availability of products, or of providers, or each takes place in the middle of inter-State commerce or commerce.
Clarification.–– The provisions of this text, shall, in respect of products and providers tax referred to in clause (5) of article 279A, take impact from the date beneficial by the Items and Providers Tax Council.”
38. The Supreme Courtroom in VKC Footsteps India Pvt. Ltd. (supra) highlighted the modifications caused by Article 246A of the Structure, within the following phrases:
“34. Article 246A has caused a number of modifications within the constitutional scheme:
Firstly, Article 246A defines the supply of energy in addition to the sector of laws (with respect to items and providers tax) obviating the necessity to journey to the Seventh Schedule;
(ii) Secondly, the provisions of Article 246A can be found each to Parliament and the State legislatures, save and apart from the unique energy of Parliament to enact GST laws the place the availability of products or providers takes place in the middle of inter-State commerce or commerce; and
(iii)Thirdly, Article 246A embodies the constitutional precept of simultaneous levy as distinct from the precept of concurrence. Concurrence, which operated inside the fold of the Concurrent Checklist, was regulated by Article 254.”
39. The opposite important change is introduced by the One Hundred and First Modification to the Structure is the composition of the Items and Providers Tax Council (hereinafter known as the „GST Council‟). Sub-clause (2) of Article 279A of the Structure units out the composition of the GST Council, as below:
“279A. Items and Providers Tax Council.––
xxxxx
(2) The Items and Providers Tax Council shall encompass the next members, particularly:––
(a) the Union Finance Minister… Chairperson;
(b) the Union Minister of State in Cost of Income or Finance… Member;
(c) the Minister in command of Finance or Taxation or some other Minister nominated by every State Authorities… Members.”
40. Sub-clause (6) of Article 279A of the Structure highlights the objects of the Modification, whereby it gives that the GST Council shall be guided by the necessity for a harmonised construction of the GST and the event of a harmonised nationwide marketplace for the products and providers.
41. The Supreme Courtroom in VKC Footsteps India Pvt. Ltd. (supra) captured the article of Article 279A of the Structure, as below:
“39. Article 279A(6) signifies that within the discharge of its capabilities, the GST Council is to be guided by the necessity for a harmonised construction of products and providers tax and the event of a harmonised nationwide marketplace for items and providers. This emphasis on concord is essential to co-operative federalism. It underscores that in a federal association the place the States and Union are converging collectively for the primary time to undertake the identical occasion for taxation, each units of companions should be guided by the over-arching have to protect concord. Concord postulates stability, an acceptance of mutual co-existence. Clauses (7) to (11) of Article 279A include provisions for quorum, process and voting. Clause (9) is a transparent indicator of the absence of supremacy both of the Union of the States. Beneath sub clause (a) of Clause 9, the vote of the Union Authorities is to have a weightage of one-third of the full votes forged, whereas the votes of all of the State Governments collectively are to have a weightage of two-thirds of the full votes forged. Each determination of the Council is to be taken by a majority of not lower than three-fourths of the weighted votes of the members current and voting. The precept of concord doesn’t postulate precise coincidence in all factors of comparability or reference. Concord is a postulate of cooperative federalism and is based on the precept of mutual coexistence, deference and equality of the coexisting items.”
42. Exercising energy below Article 246A of the Structure, the CGST Act, UGST Act and the IGST Act have been promulgated by the Parliament. We’re knowledgeable that numerous State Governments have additionally promulgated the SGST Act, provisions of that are virtually pari materia to the CGST Act.
43. Varied powers, like below Part 67 (Energy of inspection, search and seizure); Part 70 (energy to summon individuals to offer proof and produce paperwork); Part 73 (Willpower of tax not paid or brief paid or erroneously refunded or enter tax credit score wrongly availed or utilised for any cause apart from fraud or any wilful misstatement or suppression of information); and Part 74 (Willpower of tax not paid or brief paid or erroneously refunded or enter tax credit score wrongly availed or utilised by cause of fraud or any wilful misstatement or suppression of information) etcetera, have been bestowed by the CGST Act on the „correct officer‟. Comparable vesting of energy is made in favour of “correct officer” below the SGST Act(s).
44. „Correct Officer‟ is outlined in Part 2 (91) of the CGST Act, as below:
“(91) ―correct officer‖ in relation to any operate to be carried out below this Act, means the Commissioner or the officer of the central tax who’s assigned that operate by the commissioner within the Board;”
45. Part(s) 3 and 4 of the CGST Act gives for the lessons of
Officers which may be appointed by the Authorities and/or by the Central Board of Oblique Taxes and Customs (hereinafter known as the „CBIC‟).
46. Part 5 of the CGST Act inter alia states that the Officers of the Central Tax might train the powers and discharge the duties conferred upon them below the CGST Act.
47. In train of energy below Part 3 learn with Part 5 of the CGST Act and Part 3 of the IGST Act, the CBEC has, vide Notification No. 2/2017 dated 19.06.2017, empowered quite a few Officers with restricted territorial jurisdiction over numerous areas of the nation.
48. By the Notification No. 14/2017 dated 01.07.2017, the CBEC has appointed the Officers within the Directorate Common of Items and Providers Tax Intelligence (DGGI), Director Common of Items and Service Tax (DGGST), and Director Common of Audit (DG Audit) because the Central Tax Officers and conferred on them the powers prolonged all through the territory of India.
49. Subsequently, by means of the above two Notifications, there are Central Tax Officers who’re empowered to train all-India jurisdiction and people who benefit from the restricted territorial jurisdiction.
50. We’re knowledgeable that equally, numerous State Governments have issued Notification below pari materia provisions of the SGST Act(s), empowering the State Tax Officers to train powers over restricted territorial jurisdiction inside the State and people having powers all through the territory of the States.
51. This results in a scenario the place for an entity/taxpayer in a specific jurisdictional space, let‟s say Gautam Buddh Nagar, there can be a Central Tax Officer having territorial jurisdiction and there would even be a State Tax Officer having territorial jurisdiction. There would even be a Central Tax Officer who would have jurisdiction over such an entity as such officer workouts pan-India jurisdiction
52. We’re additional knowledgeable that for administrative functions, a taxpayer in a specific space is assigned to the Central Tax Officer or the State Tax Officers exercising jurisdiction over that exact space. For instance, within the W.P.(C) 2420 of 2021, the petitioner has been assigned the SGST Commissionerate of Gautam Buddh Nagar, whereas in W.P.(C) 4036 of 2021, the petitioner has been assigned to SGST Commissionerate, South Delhi.
53. There would, nevertheless, even be a Central Tax Officer having territorial jurisdiction over the world the place the taxable entity is positioned. There would even be a transaction having each CGST as additionally SGST element/implication.
54. To attain the purpose of harmonized items and repair tax construction and within the spirit of cooperative federalism, Part 6(1) of the CGST Act and pari materia provisions within the SGST Act present for cross-empowerment of the Central Tax Officers and the State Tax Officers.
55. Part 6 of the CGST Act is reproduced herei
