Order Date – 15 January 2024

Parties: Vivek Narsaria Vs The State of Jharkhand, The Commissioner of State Taxes,The Joint Commissioner of State Taxes, The Principal Commissioner, Central Goods & Service Tax and Central Excise,The Senior Intelligence Officer, Directorate General of GST Intelligence

Fact –

• The Petitioner, Vivek Narsaria, is the proprietor of M/s. Manish Trading Company. 
• On 16.03.2023, an inspection was carried out by the Intelligence Bureau of the State Goods & Service Tax, and While the proceedings had been initiated by the State Goods & Services Tax Department, the Petitioner was served with a notice dated 10.04.2023 by the Preventive Branch of Central Goods & Services Tax, Ranchi with a direction to reverse the Input Tax Credit along with interest and penalty on account of alleged purchases from the non-existent entity.
• While two departments were in seisin of the proceedings, a search was carried out by the DGGI, Intelligence Branch of CGST on 06.06.2023 and various seizures were made and a Panchnama was also drawn to that effect.

Issue –

• Whether the proceedings initiated by various departments are in accordance with law?

Order –

• The Divisional Bench Hon’ble High Court observed that bare perusal of section 6 of the Act, especially Section 6(2)(b), when read with the Clarification dated 05.10.2018, further read with Clarification dated 22.06.2020, when read together, it clearly denotes and implies that it is a chain of a particular event happening under the Act and every & any enquiry/investigation carried out at the behest of any of the Department are interrelated.
• Undeniably, the proceedings at the instance of State Authorities or the Preventive Wing or the DGGI is at initial stage and the proceedings on the basis of ‘Search & Seizure’ by the State Authorities, is prior in point of time.  Hence, Section 6(2)(b) read with clarification dated 05.10.2018, adds to the issues raised by the petitioner herein and manifestly crystalizes that since all the proceedings are interrelated, the State Authorities should continue with the proceedings.
• Prior to any determination or finding of any irregular/inadmissible/wrong availment of Input Tax Credit, the bank account has been attached, which appears to be an ‘arm twisting method’ to make the petitioner succumb to the particular authority, which cannot be the dictum of the Act.
• Hence it was held that the Preventive Wing of the CGST and DGGI Wing of the CGST, shall forward all their investigation carried out as against the petitioner and inter-related transaction to the State Authorities, who shall continue with the proceedings from the same stage. Also directed the Respondent to de-freezing of the bank accounts in terms of the observations made.