DGGI Summons Invalid After Inter-Departmental Consensus Transfers Investigation to State Authority.

DGGI Summons Invalid After Inter-Departmental Consensus Transfers Investigation to State Authority.

Issue

What is the legal validity of summons issued by a Central GST authority (DGGI) when both Central and State authorities have reached a formal consensus to transfer the investigation of the “same subject matter” to the State authority?

Facts

• The petitioner-company filed a writ petition seeking to quash multiple summons issued by the Central GST authority (DGGI, Respondent No. 2) for the period 2019-20 to 2024-25.
• The State GST authority had also initiated an enquiry into the petitioner’s Input Tax Credit (ITC) for the exact same period.
• A formal meeting was held between the DGGI and the State Taxes & Excise authorities to resolve this jurisdictional overlap.
• In the meeting, a consensus was reached: the State authority would be the sole agency to conduct the investigation.
• The DGGI officer formally concluded that no further investigation would be continued by the DGGI, and all relevant records would be forwarded to the State authority.
• Despite this consensus, the DGGI’s summons remained active, prompting the petitioner to approach the High Court.

Decision

• The High Court disposed of the writ petition (ruling in the assessee’s favor).
• It held that in light of the inter-departmental consensus to transfer the investigation to the State, the impugned summons issued by the Central authority (DGGI) had become redundant and unenforceable.
• The court’s order effectively nullified the Central authority’s summons, leaving the State authority as the sole body to proceed with the investigation.

Key Takeaways

• Inter-Departmental Consensus is Binding: When Central and State GST authorities formally agree on which agency will lead an investigation, that consensus is binding and resolves the “parallel proceedings” issue.
• No Parallel Proceedings (Section 6): This judgment reinforces the principle of Section 6 of the CGST Act, which aims to prevent a taxpayer from being subjected to simultaneous investigations by both Central and State authorities for the same subject matter.
• Summons Become Redundant Post-Transfer: Once an agency (like the DGGI) formally cedes jurisdiction or transfers a case, any summons or notices it had previously issued become legally unenforceable.
• Formal Minutes are Key Evidence: The “Minutes of Meeting” between the two departments served as the decisive evidence that the jurisdiction had been formally transferred, leading to the quashing of the Central summons.