In a recent case Tvl Metal Trade Incorporation v. the Special Secretary, Head of the GST Council Secretariat and Ors.(W.P. No. 3033 of 2023 And W.M.P. No. 3125 of 2023 dated February 6, 2023), the Hon’ble Madras High Court ruled that the State Tax Authority cannot prosecute an assessee if the Central Tax Authority has already taken action regarding the same subject matter. The court further stated that the assessee must participate in a personal hearing or enquiry to substantiate such a defence and to determine whether the proceedings initiated by the Central and State Tax Authorities involve the same subject matter. The court directed the assessee to appear before the Revenue Department and present all their objections.
Facts of Case
The Petitioner, Tvl Metal Trade Incorporation, has filed a Petition challenging the summons issued by both the State Tax Authority and the Central Tax Authority under Section 70(1) of the Tamil Nadu Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017, respectively. These summons were issued on October 18, 2022, and are referred to as the “Impugned Summons”.
The Petitioner’s main contention is that both the Central Tax Authority and the State Tax Authority cannot initiate proceedings simultaneously under the CGST Act and the TNGST Act, respectively, with respect to the same subject matter. The Petitioner argued that since it was already facing proceedings initiated by the Central Tax Authority, the State Tax Authority cannot initiate proceedings against them as per Section 6(2)(b) of the CGST Act. Furthermore, the Petitioner contended that the State Tax Authority is constantly threatening and summoning them for personal hearings, even though the Petitioner has already replied to the summons issued by the Respondent.
Decision of Hon’ble Court
Upon examination, it was found that the Respondent had not made a final decision to initiate action against the Petitioner under the TNGST Act, and that the Petitioner was only being summoned for a personal hearing and to provide documents under the Impugned Summons. It was also noted that the Petitioner had not participated in the personal hearing and instead filed a petition challenging the Impugned Summons.
The Court stated that the truth of the matter can only be determined when the Petitioner participates in the enquiry to be conducted by the Respondent. It was also held that if the Central Tax Authority has already initiated action against the Petitioner in respect of the same subject matter, the Respondent cannot prosecute the Petitioner again.
To substantiate their defense, the Court directed the Petitioner to appear before the Respondent and state all of their objections with regard to the Impugned Summons. The Respondent was also directed to consider the Petitioner’s objections on their merits and in accordance with the law.