The Directorate General of Goods and Service Tax Intelligence (DGGI) cannot be prevented from opting the intelligence-based enforcement action when investigations are under process by other authorities, the Delhi High Court ruled.
When any of the council would have revealed it important to investigate the applicant based on specific data, the investigation could not be suppressed on the basis of the investigation performed with regard to any other entity, the bench of Justice Vibhu Bakhru and Justice Amit Mahajan.
The investigations would get contested by the applicant. The applicant was investigated by the Directorate General of Goods and Service Tax Intelligence.
Since the applicant would have previously been investigated for the identical duration via another agency, the Delhi Commissionerate, the petitioner questioned that for Section 6(2)(b) of the CGST Act, DGGI, Jaipur, cannot conduct any investigation.
The CBEC circular from October 5, 2018, was cited by the petitioner. The circular made it clear that, regardless of the taxpayer’s administrative assignment to any authority, both the Central Tax and State Tax are empowered to begin intelligence-based enforcement action on the whole taxpayer base. It is not permissible for the DGGI, Jaipur, to launch an inquiry into the petitioner once the state authorities have started one since they were expected to finish it.
The department claimed that the petitioner’s bank account was frozen at the request of DGGI, Chennai and that the petitioner’s input tax credits (ITC) were blocked as a result of a message received from DGGI, Jaipur. A recommended cancellation of the petitioner’s registration due to a discrepancy in returns was removed after the petitioner provided invoices for M/s Girdhari Exports.
The DGGI said that while M/s Balaji Enterprises was of concern, the DGGI, Chennai, had not looked into the petitioner. The bank account of the petitioner was temporarily frozen when it was discovered to be linked to Mr Sandeep Singhal, who also serves as the company’s director and seems to be in charge of its operations. To safeguard the interests of Revenue, the DGGI, Chennai, has issued an order for the temporary attachment of the accounts of M/s Balaji Enterprises and other businesses connected to Mr Sandeep Singhal. However, there was no examination into the business dealings of the petitioner.
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The court stated on behalf of the Delhi State Authority and DGGI, Chennai, that while some actions were taken that directly impacted the petitioner, such as the blocking of its ITC and the provisional attachment of its bank accounts, it is apparent that no investigation regarding the petitioner company’s affairs was carried out by any authority.
The court did not see any justification for preventing DGGI, Jaipur, from looking into the petitioner firm.
| Case Title | M/S. Hanuman Enterprises (OPC) Pvt. Ltd. |
| Citation | W.P.(C) 2900/2023 & CM APPL. 11322/2023 |
| Date | 14.08.2023 |
| Counsel For Appellant | Mrs Anjali Jha Manish & Mr Priyadarshi Manish |
| For The Respondents | Mrs Anjali Jha Manish & Mr. Priyadarshi Manish |
| Delhi High Court | Read Order |
