Facts of the Case

  • The petitioners (tobacco manufacturers/exporters) were registered under GST and engaged in manufacturing and export activities.
  • Multiple search operations, summons, and investigations were initiated by various authorities including:
    • CGST Commissionerate (Gautam Buddh Nagar)
    • DGGI (Delhi, Kanpur, Ahmedabad, Ghaziabad units)
  • The petitioner’s bank account was provisionally attached under Section 83 and refund claims were withheld.
  • Allegations involved fraudulent Input Tax Credit (ITC) and wrongful refund claims.
  • Several proceedings, including show cause notices and summons, were issued simultaneously by different authorities.
  • Petitioners challenged parallel investigations and repeated summons as illegal and without jurisdiction.

Issues Involved

  1. Whether multiple GST authorities can simultaneously investigate the same subject matter against a taxpayer?
  2. Whether Section 6(2)(b) of the CGST Act prohibits parallel proceedings by different authorities?
  3. Whether the CBEC Circular dated 05.10.2018 is binding on GST authorities?
  4. Whether DGGI (with all-India jurisdiction) can override jurisdictional commissionerates?
  5. Validity of repeated searches, summons, and investigations across multiple zones.

Petitioner’s Arguments

  • Violation of Section 6(2)(b): Once one authority initiates proceedings, others cannot proceed on the same subject matter.
  • Binding nature of Circular: CBEC Circular (05.10.2018) mandates single authority jurisdiction for investigation and adjudication.
  • Jurisdiction confined: Only the jurisdictional Commissionerate should conduct entire proceedings (investigation → SCN → adjudication).
  • Harassment & multiplicity: Repeated summons and searches by different agencies amount to abuse of power.
  • No concept of “investigation” in Act: Only “proper officer” has authority; multiple agencies acting simultaneously is illegal.

Respondent’s Arguments

  • All-India Jurisdiction of DGGI: Certain officers (via Notification No. 14/2017) have pan-India powers.
  • Nature of fraud: Case involved a large-scale fake ITC scam (₹300+ crore) spanning multiple states.
  • Complex network: Multiple entities and jurisdictions justified involvement of specialized agencies like DGGI.
  • Section 6(2)(b) limited: Applies only when jurisdiction is territorial—not in cases involving nationwide fraud.
  • Centralization achieved: All investigations were later consolidated under DGGI Ahmedabad Zonal Unit.

Court Findings / Judgment

  • GST is based on cooperative federalism, requiring coordination between central and state authorities.
  • Section 6 must be interpreted harmoniously with the structure of GST laws.
  • Multiple investigations initially may arise, especially in complex, multi-state fraud cases.
  • However, duplication and overlap must be avoided to prevent harassment.
  • The Court noted that:
    • Investigations were subsequently centralized under one authority (DGGI Ahmedabad).
    • This resolved the grievance of multiple proceedings.

Important Clarifications by Court

  • Section 6(2)(b) does not create an absolute bar in multi-jurisdictional fraud cases.
  • Authorities with all-India jurisdiction (like DGGI) can investigate when the matter spans multiple states.
  • The CBEC Circular must be followed, but practical realities of large-scale fraud may justify coordinated multi-agency action.
  • Final objective must be single, consolidated investigation.
  • GST framework emphasizes harmonization, not rigid territorial exclusivity.

Link to download the order -  https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:124-DB/NAC11012022CW40362021_161435.pdf

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