2021 (12) TMI 1300 - HC - GST

Jurisdiction - proper officer - case of petitioner is that it is the sine qua non that the officer who issues the show cause notice under Section 74(1) of CGST Act, has to be perforce a proper officer - HELD THAT - In terms of Board s Circular No.31/05/2018-GST dated 09.02.2018, more particularly in paragraph No.4 thereof, it is clarified that all officers up to the rank of Additional / Joint Commissioner of Central Tax are assigned as the proper officer for issuance of show cause notices and orders under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Sections 73 and 74 of the CGST Act, corresponding to Section 3 read with Section 20 of the IGST Act. As per the table appended thereto, Additional or Joint Commissioner of Central Tax have been assigned functions as the proper officer , and the monetary limit of the said officers for issuance of show cause notice and orders under Sections 73 and 74 of the CGST Act and Section 20 of the IGST Act, in the case of central tax and integrated tax not paid, or short paid, or erroneously refunded, or input tax credit of central tax and integrated tax wrongly availed of or utilized, is above ₹ 2,00,00,000.00 (Rupees two crores). Admittedly the monitory limit in the present case is above ₹ 2,00,00,000/- (Rupees two crores). In such circumstances, and having regard to the above, it cannot be said with any degree of certainty that respondent No.4 is not the proper officer competent to issue the impugned show cause notice. The issue before the Supreme Court in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS 2021 (3) TMI 384 - SUPREME COURT was completely different and distinct from what is being canvassed by learned counsel for the petitioner to support his contention that respondent No.4 is not the proper officer under Section 74(1) of the CGST Act. The writ petition is dismissed.

Summary

Issues Involved:
Challenge to legality and validity of a show cause notice under Article 226 of the Constitution of India. Determination of whether the officer issuing the notice is a 'proper officer' under Section 74(1) of the CGST Act.

Analysis:

1. Challenge to Legality and Validity of Show Cause Notice:
The petitioner challenged the show cause notice dated 12.04.2021 issued by the Additional Commissioner of Central Taxes and Customs, Hyderabad, Audit – I Commissionerate, Hyderabad. The notice called upon the petitioner to show cause regarding the classification of products under the Customs Tariff Act, 1975 and the Central Goods and Services Tax Act, 2017. The notice also demanded payment of CGST and IGST amounts, along with interest and penalty under the CGST Act.

2. Contention of the Petitioner:
The petitioner's counsel argued that the officer issuing the show cause notice must be a 'proper officer' as per the CGST Act. Referring to various provisions and a recent Supreme Court decision, the counsel contended that the Additional Commissioner was not a 'proper officer' authorized to issue the notice.

3. Response of the Respondents:
The Senior Standing Counsel for the respondents argued that the Additional Commissioner was indeed the 'proper officer' as per the CGST Act and relevant circulars issued by the Central Board of Excise and Customs. They highlighted that officers up to the rank of Additional/Joint Commissioner of Central Tax were designated as 'proper officers' for issuance of show cause notices under specific sections of the CGST Act.

4. Analysis of 'Proper Officer' Status:
The Court examined the definition of 'proper officer' under Section 2(91) of the CGST Act, which refers to officers assigned by the Commissioner in the Board. The circulars issued by the Board designated Deputy or Assistant Commissioners of Central Tax as 'proper officers' for specific functions under Section 74. The monetary limit for issuance of show cause notices by Additional or Joint Commissioners of Central Tax was above ?2,00,00,000, which was applicable in this case.

5. Comparison with Precedent Case:
The Court distinguished the present case from the precedent case of Canon India Private Limited vs. Commissioner of Customs, where the issue revolved around the authority of the Directorate of Revenue Intelligence to issue show cause notices under the Customs Act, 1962. The Court clarified that the issues in the two cases were distinct and not directly comparable.

6. Decision and Conclusion:
After considering the arguments and relevant provisions, the Court dismissed the writ petition challenging the show cause notice. However, the petitioner was granted three weeks to file a reply to the notice. The Court clarified that its observations were limited to the 'proper officer' contention, and no opinion on merits was expressed. The writ petition was dismissed, and interlocutory applications were closed without any order as to costs.