In a landmark judgment, the Madras High Court resolved a longstanding issue faced by contractors in Tamil Nadu regarding charges and summons related to the Goods and Services Tax (GST). The ruling, delivered yesterday, prohibits the issuance of dual notices by both the central and state GST departments for a single violation.

Justice prevailed as the Madras High Court delivered a significant ruling on a batch of writ petitions, including W.P.No.34792 of 2019, concerning jurisdictional disputes under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act).

The Justice C. Saravanan, after reserving the order on September 15, 2023, pronounced the judgment today.
Various entities, including Vardhan Infraastructre, filed petitions challenging the authority of tax officials from both central and state tax departments to conduct investigations and proceedings. The core issue questioned whether taxpayers assigned to either central or state tax authorities could face investigations by their counterparts under the respective GST enactments.

The petitioners argued that without proper notification for cross-empowerment under Section 6 of the GST enactments, the proceedings initiated by opposing tax authorities lacked jurisdiction.The court observed that while the GST laws allow cross-empowerment through notifications issued on the GST Council’s recommendation, such notifications were limited, primarily for tax refunds.

Emphasizing the need for clarity on jurisdictional matters, Justice Saravanan underscored the importance of adherence to statutory provisions and notifications.The ruling brings clarity to the jurisdictional complexities under the GST laws, ensuring a smoother implementation of the regime. The judgment is anticipated to have far-reaching implications for taxpayers and tax authorities alike.

For years, contractors grappled with confusion and undue burden caused by dual notices issued by both central and state GST departments. This prompted the Coimbatore Corporation Contractors Welfare Association to file a case in the Chennai High Court, which culminated in yesterday’s verdict after three years of litigation involving six government offices.

Recognizing the hardship faced by contractors, the High Court ruled against the practice of dual notices and actions for a single violation. The judgment clarified that either the central or state GST department could independently issue charges or summons and takes appropriate action, aiming to streamline procedures and alleviate the burden on contractors in Tamil Nadu.

KCP Chandra Prakash, Secretary of the Ccca (Tamil Nadu) and Managing Director of KCP INFRA Limited, expressed gratitude for the High Court’s decision, lauding its intervention in resolving the issue. The ruling is expected to simplify procedures and mitigate challenges faced by contractors and taxpayers in the state.