Investigation Initiated Against Supplier of Petitioner Can’t Have Any Bearing on Action Against it by State Authority | HC

Case Details: Fondement Bitumenous Industries (P.) Ltd. v. State of Bihar - [2023] 153 taxmann.com 452 (Patna)

Judiciary and Counsel Details

• • K. Vinod Chandran, CJ. & Madhuresh Prasad, J.
  • D.V. Pathy, Advs. for the Petitioner.
  • Vikash Kumar for the Respondent.

Facts of the Case

In the present case, the petitioner challenged the summons issued by Central Tax Officer and contended that proceedings were also initiated by State Tax Authority on very same transaction. It was also submitted that CBEC has restrained State Authority from initiating any proceeding with respect to which there is a proceeding initiated by Central Authority.

High Court Held

The Honorable High Court noted that there is no prohibition in State Tax Authority initiating an action where Central Tax Authority is seized of matter but, however, on very same transaction, obviously, only one assessment can be made and it is proper that authority, who initiated action first, continues with it and other authority restrains itself from so proceeding.

However, in the instant case, proceeding initiated by Central Authority and State Authority were against different assesses. The summons by Central authority required petitioner to produce details of purchases made from its supplier but the proceeding initiated by State Tax Authority was with respect to input tax credit claimed by petitioner on purchases made from the said supplier who was engaged in availment of and passing of irregular/inadmissible input tax credit to many entities.

Therefore, the Court held that investigation initiated against supplier of petitioner could not have any bearing on action taken by State Authority for relevant periods, being distinct from each other and against two separate assesses. Thus, the Court dismissed the writ petition.