1 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 42 of 2020 Reserved on 19/02/2020 Delivered on 25/02/2020 Dadhichi Iron And Steel Pvt. Ltd. A-17 And A-18, Transport Nagar, Bilaspur Road, Rawabhata, Near Banjari Mandir, Raipur Chhattisgarh. Through Its Branch Head Ms. Jyoti Sharma, D/o Shri Deepak Kumar Sharma, Aged About 28 Years, R/o A-19, Sector 1, Shankar Nagar, Raipur, District : Raipur, Chhattisgarh ---- Petitioner Versus 1. Chhattisgarh G S T Through Principal Commissioner, Commercial Tax GST Department, North Block, Sector 19, Atal Nagar, Raipur, District : Raipur, Chhattisgarh 2. Additional Director General Directorate General of Goods And Service Tax Intelligence, 3rd Floor, A/b Block, GST Bhawan, Tikarapara, Raipur, District : Raipur, Chhattisgarh 3. Joint Director, Directorate General of Goods And Service Tax Intelligence, 3rd Floor, A/b Block, GST Bhawan, Tikarapara, Raipur, District : Raipur, Chhattisgarh 4. Assistant Director, Directorate General of Goods And Service Tax Intelligence, 3rd Floor, A/b Block, GST Bhawan, Tikrapara, Raipur, District : Raipur, Chhattisgarh ---- Respondents For Petitioner : Mr. Bishwa Ahluwalia, Advocate along with Mr. Rahul Tamaskar, Advocate For State : Mr. Jitendra Pali, Dy. A.G. For respective Respondents : Mr. Manish Sharma, Advocate Hon'ble Shri Justice P. Sam Koshy C.A. V. ORDER 1. present writ petition has been filed questioning investigation initiated by respondents and summons issued in connection with said investigation. primary challenge to investigation and summons issued was specific bar under GST Act, 2017. 2 2. It would be relevant at this juncture to take note of relief sought for by petitioner: 10.1 It is prayed that this Hon'ble Court may kindly be pleased to issue writ in nature of Quo Warranto and/or any other appropriate writ requiring respondents to show under what authority impugned action of investigation and summon dated 3.2.2020 has commenced despite there being specific bar in CGST Act, 2017. 10.2 This Hon'ble Court may kindly be pleased to issue writ in nature of mandamus and/or any other appropriate writ directing respondents No.2 & 3 to provide copies of documents seized during investigation so that appropriate representation may be made by petitioner before respondents in interest of justice. 10.3 This Hon'ble Court may kindly be pleased to issue writ in nature of mandamus and/or any other appropriate writ quashing investigation proceedings commenced by proper officer of DGGSTI under CGST Act, 2017 and impugned summon dated 3.2.2020 against petitioner holding same to illegal. 10.4 This Hon'ble Court may kindly be pleased to issue writ in nature of mandamus and/or any appropriate writ to direct respondents to return forthwith material, documents, electronics and personal effects of Petitioner, Directors & Employees of petitioner; and 10.5 This Hon'ble Court may kindly be pleased to issue writ in nature of mandamus and/or any appropriate writ commanding/directing respondents to restrain from any coercive action against petitioner during pendency of investigation if same is held to be legal. 10.6 This Hon'ble Court may kindly be pleased to issue writ in nature of mandamus and/or any appropriate writ commanding/directing respondents to follow due process of law and issue appropriate notices and follow adjudication proceedings along with principles of natural justice before any recovery of tax and/or prosecution may be done against petitioner or its Directors/employees. 3. If we peruse relief nos. 10.2, 10.4 and 10.6 it would clearly reveal that petitioner through this writ petition was ready to face investigation provided aforesaid relief sought in paragraph 10.2, 10.4 and 10.6 is complied with. 4. brief facts which led to filing of present writ petition is that petitioner is registered company, registered under Companies 3 Act, 1956. said company is engaged in business of trading of iron and steel items. nature of business which petitioner carries is that of purchasing goods from steel manufacturers and sell same to different customers in different parts of country. According to counsel for petitioner, petitioner pays CGST/SGST/IGST on goods purchased from manufacturers and further pays CGST/SGST/IGST on value of supply of said goods made at time of sale being made by petitioner to other customers. 5. According to counsel for petitioner, petitioner, therefore, was entitled for Input Tax Credit on GST paid on goods and service purchased. According to counsel for petitioner, respondents initially commenced investigation against petitioner on allegation of petitioner allegedly purchasing goods from bogus dealers and thereby issuing fake invoices and notice in this regard was issued to petitioner, based upon which subsequently Input Tax Credit available to petitioner was blocked and thereafter proceeding was drawn in-respect-of illegal availing of Input Tax Credit. said notice was subjected to challenge in WPT No. 130 of 2019. This court disposed-off said writ petition directing petitioner to file detailed representation/objection to concerned authorities under department, who in turn was further directed to take-into-consideration contents of representation/objection and decide same. According to counsel for petitioner, respondent officers have already issued show cause notice on 25.10.2019 proposing cancellation of registration 4 of petitioner for reasons of dealing in fake invoices. Subsequently, on 15.11.2019 respondents had cancelled registration of petitioner. 6. Subsequently, respondents again issued show cause notice on 12.12.2019 proposing to cancel registration of petitioner on same allegations of issuance of fake invoices to which also even before petitioner could response to proceedings commenced, respondents had vide order dated 28.08.2019 cancelled registration of petitioner. 7. petitioner again applied for restoration of registration vide application dated 31.12.2019, which is still pending consideration before concerned authorities. Meanwhile, respondents issued show cause notice dated 02.01.2020 proposing tax demand of Rs. 11 crores for allegedly dealing with fake dealers and using of fake invoices. Since it was only summary show cause notice, petitioner immediately filed representation on 03.01.2020 before concerned officer requesting to provide details of show cause notice enabling petitioner to effectively participate in proceedings before taking any decision on application filed by petitioner. respondents conducted raid on premises of petitioner including house of few employees of petitioner's establishment on 31.01.2020. Subsequently, one of directors Mr. Dadhichi has been arrested by respondents in-connection with aforesaid investigation proceedings on 04.02.2020 by DGCGST. It is this which has led to filing of present writ petition challenging 5 it on ground of it being illegal as there is express bar under Section 6(2)(1)(b) of CGST Act, 2017. 8. primary contention of counsel for petitioner was that once when show cause notice proceeding initiated by respondents dated 14.11.2019 is pending before concerned authorities under CGSGST, respondents could not have issued or initiated another investigation or proceeding in-respect of same subject matter, which otherwise is not permissible under provisions of Section 6(2)(1)(b). Referring to aforesaid provision of law, petitioner submitted that whole investigation proceeding initiated by respondents including that of arrest that has been made is without and beyond jurisdiction. 9. According to counsel for petitioner, once matter ceased by officers of CGSGST Act, 2017, same cannot be simultaneously put to another investigation by officers appointed under section 3 of CGSGST Act, 2017 in view of express bar under section 6(2)(b). According to counsel for petitioner, subject matter in both proceedings is in-respect-of alleged use of fake and fictitious invoices. Thus, entire subsequent investigation and proceedings drawn deserves to be quashed. 10. counsel for respondents No.2 to 4 opposing petition submitted that writ petition is totally misconceived in as much as grounds raised by petitioner in instant case is not one which is sustainable. According to petitioner, show cause notice initially issued was firstly in respect of using of fake invoices for purpose of Input Tax Credit (ITC) and subsequent show cause notice is in 6 respect of tax demand proposed of Rs. 11 crores on account of dealing with fake dealers and fake invoices. However present investigation, which has been initiated and where one of Directors of petitioner-establishment has been arrested, has been at instance of officers of Directorate of General of GST Intelligence Wing, which had received certain secret information in respect of petitioner issuing fake ITC invoices worth crores of rupees to different Firms in Country. According to counsel for respondents No.2 to 4, petitioner was dealing with fake transactions by issuance of fake and bogus invoices relating to transactions of Steel goods without actual supply of goods being made and subsequently these bogus and fake invoices were used for facilitating for discharge of his own GST liabilities. Since offences reflected from transactions were made in more than one State, respondents had all powers for initiating proceeding under provisions of Section 132 of CGST Act, 2017. 11. counsel for respondents No.2 to 4 further referring to documents enclosed along with writ petition submitted that from perusal of records in course of investigation as of now respondents have been able to detect petitioner of having availed ineligible ITCs of approximately Rs. 60 crores and said amount is likely to increase manifold in course of further investigation taking into consideration large number of bogus transactions that petitioner-establishment have shown to have been made. 12. further contention of counsel for respondents No.2 to 4 is that since nature of offence now being investigated is entirely 7 different than proceedings drawn in show cause notice or proceedings pending before State Authorities are concerned, it would not be hit by provisions of Section 6(2)(1)(b). According to counsel for respondents No.2 to 4, present investigation is more in respect of defrauding of government revenue committed by petitioner in contravention to provisions of CGST Act and nature of offence committed by petitioner is one which false under provisions of Section 132(1)(i) and in view of provision of Section 132(5) of said Act, offence is also cognizable offence and is non-bailable offence as well. Thus, prayed for rejection of writ petition. 13. Having heard contentions put forth on either side and on perusal of record and also taking note of provisions of Act what clearly reflects is that initial issuance of show cause notice and proceedings drawn were in respect of intrastate transactions made by petitioner, wherein he had used fake and bogus invoices for purpose of availing ineligible ITC, whereas subsequent to secret information being received and further investigation being made, particularly in course of raid, which was conducted at premises of petitioner-establishment and other related premises, it was reveled that magnitude of offence committed by petitioner-establishment was far more grave and serious. It was in course of raid found that petitioner had been making false and bogus transactions and has illegally availed ineligible ITC credits. magnitude of which detected by now is approximately Rs.60 crores and with further investigation amount is likely to increase manifold. 8 14. This Court does not find any substance in arguments of petitioner, when they say that investigation and proceedings now initiated is one, which hit by Section 6(2)(1)(b) of CGST Act of 2017. What has also to be appreciated is fact that there is clear distinction between proceeding drawn for demand of tax evaded by petitioner-establishment and investigation be conducted by Department of DG, GST Intelligence Wings in respect of offence committed by establishment by way of using bogus and fake invoices and illegally availing ITCs, which petitioner-establishment otherwise was ineligible. 15. So far as judgments referred to by petitioner in support of his contention what cannot be lost sight of is fact that those judgments were rendered under entirely different contextual background as compared to factual matrix in present case and ratio laid down in those judgments are also not what could be applied at this juncture. Even judgments of Division Bench of this Court referred to by petitioner-establishment again is one, which has been decided in entirely different contextual background as compared to facts of present case and those judgments are distinguishable on facts itself. 16. writ petition thus fails and is accordingly rejected. Sd/- (P. Sam Koshy) Judge Ved Dadhichi Iron And Steel Pvt. Ltd. v. Chhattisgarh G S T / Additional Director General Directorate General of Goods And Service Tax Intelligence / Joint Director, Directorate General of Goods And Service Tax Intelligence / Assistant Direc