Delhi High Court: DGGI Cannot Be Stopped From Taking Intelligence-Based Enforcement Action When Investigation By Other Authority Is Going On

The Delhi High Court in the case M/S. Hanuman Enterprises Pvt. Ltd. Versus The Additional Director General Directorate General Of GST observed and has held that the Directorate General of Goods and Service Tax Intelligence, DGGI cannot be stopped from taking intelligence-based enforcement action when the investigations by other authorities are still going on.
The bench comprising of Justice Vibhu Bakhru and Justice Amit Mahajan in the case observed and has held that if any of the authorities have found it necessary for investigating the petitioner based on the certain information, the said investigation cannot be stopped or interdicted on account of an investigation which is conducted with respect to any other entity.
The petitioner in the plea challenged the investigation which is conducted by the investigation agencies.
Therefore, the Directorate General of Goods and Service Tax Intelligence was investigating with regards to the petitioner.
It has also been contended by the petitioner in the plea that in terms of Section 6(2)(b) of the Central Goods And Service Tax, CGST Act, DGGI, Jaipur, cannot conduct any investigation as the petitioner has already been investigated for the same period by another agency, the Delhi Commissionerate.
The plea stated that the CBEC circular dated 05.10.2018, wherein it has been clarified in the circular issued that both the Central Tax and State Tax are authorised to initiate intelligence-based enforcement action on the entire taxpayer’s base, irrespective of the taxpayer’s administrative assignment to any authority and once the investigation is initiated by the State authorities, they are being required to complete the same and it is not open for the DGGI, Jaipur, to commence an investigation in respect of the petitioner.
On the other hand, it has been submitted by the department that the petitioner ITC was blocked on account of a communication received from DGGI, Jaipur, and the bank account of the petitioner was blocked at the instance of DGGI, Chennai. Therefore, the registration of the petitioner was supposed to be cancelled on account of a mismatch in returns; thus, the said proceedings were withdrawn on the petitioner furnishing invoices relating to M/s Girdhari Exports.
The DGGI also submitted before the court that the DGGI, Chennai had in the case not investigated the petitioner but was concerned with an entity named M/s Balaji Enterprises. Thus, the bank account of the Petitioner was provisionally being attached as it was found to be associated with Mr. Sandeep Singhal, who is also the director of the company of the petitioner and appears to be in control of its affairs. The said order was issued by the DGGI, Chennai, had issued the order for provisional attachment of the accounts of M/s Balaji Enterprises as well as other entities that were associated with Mr. Sandeep Singhal to protect the interests of Revenue.
It has also been noted by the said court that on behalf of the Delhi State Authority and DGGI, Chennai, it being apparent that although certain measures were taken that affected the petitioner, in as much as its ITC was blocked and the bank accounts were provisionally attached and no such investigation was conducted by any authority with regards to the affairs of the petitioner company.
Further, the court in the case did not find any reason to interdict DGGI, Jaipur in order to conduct the investigation in respect of the petitioner company.