Assesse cannot take benefit of Section 6(2)(b) that an enquiry is still under consideration from the State Government, therefore Central Government cannot further proceed with another proceeding under the Act.

Case Title: Kuppan Gounder P.G. Natarajan v. Directorate General of GST Intelligence

Court: High Court of Madras

Petition Number: W.A. No. 2003 of 2021; C.M.P. No. 12863 of 2021

Category: Jurisdictional Dispute on Summons

Date of Judgement: 1st September 2021

Relevant Sections: Sections 6(2)(b), 70, 83 of the CGST Act, 2017

Type of Dispute: Jurisdiction and Summons under CGST

Facts of the Case

1. The appellant is the Managing Director of a transport company, which was subject to GST proceedings for alleged discrepancies between GSTR-3B and GSTR-8 returns for FY 2018–19 and 2019–20 (Para 3).
2. A search was conducted by CGST officers at the business premises on 19–20 Jan 2021; the appellant alleged harassment and lodged a police complaint (Para 3).
3. Summons were issued under Section 70 CGST Act on 20.01.2021 and again on 08.07.2021 by the Directorate General of GST Intelligence (DGGI), which were challenged as jurisdictionally invalid (Para 4, 7).
4. Provisional attachment orders were also issued under Section 83, later partially lifted pursuant to court orders (Para 5).
5. The appellant argued the DGGI had no jurisdiction since the assessee was assigned to the State GST authorities, and the same matter was already under State investigation (Para 8–10).

Questions in Consideration

1. Whether summons under Section 70 of the CGST Act issued by the central authority (DGGI) are valid when State GST authorities have already initiated proceedings on the same matter.
2. Whether Section 6(2)(b) bars central authorities from initiating action once proceedings are started by State authorities.
3. Whether the term “inquiry” under Section 70 can be equated with “proceedings” under Section 6(2)(b) of the CGST Act.

Observations of the Court

1. The Court analyzed the 05.10.2018 CBIC clarification allowing cross-empowerment: both State and Central GST authorities can initiate intelligence-based enforcement actions regardless of administrative assignment (Para 27).
2. Section 6(2)(b) prohibits parallel “proceedings” on the same subject matter, but Section 70 pertains to “inquiry,” which is distinct from proceedings (Para 32).
3. The terms “proceedings” and “inquiry” must not be confused; inquiries precede proceedings and are meant for collecting evidence (Para 33).
4. Summons under Section 70 are valid tools for inquiry, and the challenge based on lack of jurisdiction is unfounded (Para 36).

Judgment of the Court

The High Court dismissed the writ appeal, holding that the summons issued under Section 70 by the DGGI are valid and do not violate Section 6(2)(b). The appellant’s challenge based on jurisdiction was rejected. No costs were awarded (Para 37).

Between Fine Lines

• GST authorities (both State and Central) have concurrent powers for enforcement actions based on intelligence, even if administrative control lies elsewhere.
• Section 70 (summons for inquiry) is not equated with “proceedings” under Section 6(2)(b).
• Summons for recording statements cannot be challenged solely on jurisdictional overlap.
• Provisional attachment and inquiries by DGGI were held lawful despite State GST’s prior actions.
• Court reinforced the principle that inquiry precedes adjudication, allowing wider scope for investigation.

Summary of Referred Cases