The Court Rejects the Notion that the DGGI officer Questions the Credibility of the State GST Authorities
Verdict on Power & Privilege of DGGI officer vs State GST Officer: In a recent verdict, the Jharkhand High Court has clarified the powers and privileges of the Directorate General of Goods and Services Tax Intelligence (DGGI) compared to State Goods and Services Tax (GST) officers. The court disposed of a petition challenging summons issued by both the State GST Department and the DGGI, emphasizing the interrelated nature of proceedings initiated by these authorities.
The petitioner, owner of M/s. Manish Trading Company, faced inspections from the State Goods & Service Tax Intelligence Bureau. The proceedings were further complicated when the Preventive Branch of Central Goods & Services Tax and the DGGI issued notices, leading to searches, seizures, and summonses. The petitioner sought clarity on which authority should have the sole right to proceed.
Examining Section 6(2)(b) of the Act alongside clarifications from October 5, 2018, and June 22, 2020, the court highlighted the interconnected sequence of events under the Act. It emphasized that DGGI officer do not hold any special powers compared to State GST Authorities, despite arguments to the contrary. The court expressed hesitation in accepting the notion that DGGI questions the credibility of State GST Authorities.
The court also noted that proceedings initiated by the State Authorities, including the Preventive Wing and DGGI, were at an initial stage, with ‘Search & Seizure’ actions by the State Authorities preceding others. Section 6(2)(b) and the clarification dated October 5, 2018, supported the petitioner’s argument that State Authorities should continue with the ongoing proceedings.
Addressing concerns about the early attachment of the petitioner’s bank account, the court strongly disapproved of this coercive tactic, considering it misaligned with the principles of the Act. In its verdict, the court directed the Preventive Wing and DGGI to transfer investigations to the State Authorities, who were instructed to continue proceedings from the same stage. The Principal Commissioner and Senior Intelligence Officer were directed to transfer investigations to the Joint Commissioner of State Taxes for further action in accordance with the law.
In conclusion, the Jharkhand High Court’s decision provides clarity on the powers of DGGI officer and State GST Officer, emphasizing the need for a coordinated approach in the investigation of wrongful Input Tax Credit claims.
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