📰 𝗣𝗮𝘁𝗻𝗮 𝗛𝗶𝗴𝗵 𝗖𝗼𝘂𝗿𝘁 𝗥𝘂𝗹𝗶𝗻𝗴: Parallel GST Probes by CGST & SGST Authorities Valid but Only One Assessment Allowed

📢 In a high-profile case involving alleged fake input tax credits, the Patna High Court ruled that parallel proceedings by the Central and State Tax Authorities are permissible, provided they are initiated against separate assessees. However, the court emphasized that only one assessment should be made on the same transaction.

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗖𝗮𝘀𝗲 𝗧𝗶𝘁𝗹𝗲: FONDEMENT BITUMENOUS INDUSTRIES PRIVATE LTD vs State of Bihar 𝗖𝗮𝘀𝗲 𝗡𝘂𝗺𝗯𝗲𝗿: Civil Writ Jurisdiction Case No. 3651 of 2023 𝗗𝗮𝘁𝗲: 11-Apr-2023

𝗜𝘀𝘀𝘂𝗲: The assessee, Fondement Bituminous Industries Pvt. Ltd., faced parallel GST probes by both the Central and State Tax Authorities for claiming input tax credit based on transactions with M/s D.S. Bitumix, a bogus firm involved in fake invoicing. The Central authority focused on M/s D.S. Bitumix, while the State targeted the assessee for claiming credit from the bogus dealer. Feeling trapped by these dual proceedings, the assessee filed writ petitions challenging the orders.

𝗣𝗿𝗼𝗰𝗲𝗲𝗱𝗶𝗻𝗴𝘀: The assessee argued that the enforcement actions by both tax authorities were unjustified since they were based on the same transactions. They relied on a notification (Annexure-5) issued by the Central Board of Excise and Customs, seeking clarity on enforcement actions by multiple tax bodies.

⚖ 𝗝𝘂𝗱𝗴𝗲𝗺𝗲𝗻𝘁: The Patna High Court dismissed the writ petitions, ruling that: • Both the Central and State Tax Authorities could initiate separate enforcement actions, provided they were against distinct assessees. • Although the proceedings were based on the same set of transactions, they were distinct investigations involving different parties (the assessee and the bogus dealer). • The court emphasized that while such parallel investigations are valid, only one assessment should be made on the same transaction. • The summons issued by the Central Tax Authority fell under Section 70 of the CGST Act, 2017, which pertains to the production of documents and evidence, and was not considered an overreach of enforcement power.

📜 This ruling clarifies the extent to which parallel tax investigations can be carried out by different authorities in cases of tax evasion. It also reinforces the principle that only one final assessment should result from such proceedings to prevent double taxation on the same transactions. Team GSTpanacea 7503031378