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2024 (2) TMI 808 - HC - GSTPower of CBIC to issue circular and delegate the functions of 'Proper officer' to issue Audit Report - Validity of Circular No. 3/3/2017-GST dated 05.07.2017, Circular No. 31/05/2018- GST dated 09.02.2018 and Circular No. 169/01/2022-GST dated 12.03.2022 - impugned circulars challenged mainly on the ground that the Central Board of Indirect Taxes and Customs (Board) had no powers to issue the same - jurisdiction to issue the audit report - functions of a proper officer as defined under Section 2(91) of the CGST Act - HELD THAT - In the present case, not even any dispute was raised about the officers referred to in the impugned circulars being central tax officers. Section 4 of the CGST Act provides that the Board may, in addition to the officers as may be notified by the Government under section 3, appoint such persons as it may think fit to be the officers under the CGST Act. Without prejudice to the provisions of sub-section (1) of Section 4, the Board may, by order, authorise any officer referred to in clauses (a) to (h) of Section 3 to appoint officers of central tax below the rank of Assistant Commissioner of Central Tax for the administration of the CGST Act. Section 5 of the CGST Act provides that subject to such conditions and limitations as the Board may impose, an officer of central tax may exercise the powers and discharge the duties conferred or imposed on him under the CGST Act. An officer of central tax may exercise the powers and discharge the duties conferred or imposed under the CGST Act on any other officer of central tax who is subordinate to him - Section 4, which begins with a non-obstante clause, provides that an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other officer of central tax. The Central Government has issued the notification dated 19.06.2017 in the exercise of powers conferred by Section 3 r/w. Section 5 of the CGST Act constitutes the Commissioner of Central Tax (Audit) and Central Tax officers subordinate to him as central tax officers. About this, not even any dispute was raised on behalf of the petitioner. The impugned circular dated 05.07.2017 is issued by the Board which is the proper authority in terms of Section 2(91) of the CGST Act. This is the reason why reference was made to Section 2(91) of the CGST Act. By the impugned circular dated 05.07.2017, the Board has inter alia assigned the Deputy or the Assistant Commissioner of Central Tax to function as a proper officer in relation to the CGST Act. This includes clause (v) of Section 65(6) concerning the communication of the audit report on the conclusion of the audit. The respondent No. 4 in the present case is the Deputy Commissioner of CGST (Audit). Consequently, he was the proper officer to communicate the audit report under Section 65(6) of the CGST Act to the petitioner vide the communication dated 15.11.2022 - Merely because the impugned circular dated 05.07.2017 refers to Section 2(91) of the CGST Act as one of its sources of power, no case is made out to strike down the impugned circulars on the ground that the Board had no power to issue the same by reference to the said section. As noted above, the source of power is contained in other provisions of the CGST Act, which were also referred to in the impugned circular. Whether the impugned circulars are intra vires and not whether any correct provision quoting the source of power was stated or there was an omission to quote the correct source? - HELD THAT - In THE MUNICIPAL CORPORATION OF THE CITY OF AHMEDABAD VERSUS BEN HIRABEN MANILAL 983 (4) TMI 291 - SUPREME COURT , the Hon ble Supreme Court has explained that the exercise of power, if there is indeed power, will be referred to a jurisdiction when the validity of the exercise of that power is in issue, which confers validity upon it and not to a jurisdiction under which it would be nugatory, though the Section was not referred, and a different or a wrong section of different provisions was mentioned. A wrong reference of the provision under which the Government takes action will not per se vitiate that action for it can be justified under some other power if the Government could lawfully do that act. Ben Hiraben Manilal was also cited with approval by the Constitution Bench in UUNION OF INDIA AND ANOTHER VERSUS TULSIRAM PATEL AND OTHERS 1985 (7) TMI 371 - SUPREME COURT where it was held that even the mention of a wrong provision or the omission to mention the provision which contains the source of power will not invalidate an order where the source of such power exists. Thus, no case is made out to strike down the impugned circulars or the impugned show cause notices inter alia on the ground that such show cause notices were issued by the officers who were not the proper officers as defined under Section 2(91) of the CGST Act - The respondents are permitted to give effect to the order dated 29.12.2023 disposing of the impugned show cause notices, subject no doubt to the petitioner s right of challenge to the order dated 29.12.2023 in accordance with law and on its own merits. Petition dismissed.
Issues Involved:
1. Validity of Circulars issued by the Central Board of Indirect Taxes and Customs (CBIC). 2. Jurisdiction of Central Tax Officers to issue audit reports and show cause notices under the CGST Act. 3. Applicability of the Supreme Court's decision in Canon India Pvt. Ltd. v/s. Commissioner of Customs. 4. Prematurity and maintainability of the petition. Summary: 1. Validity of Circulars: The petitioner challenged the validity of Circular No. 3/3/2017-GST, Circular No. 31/05/2018-GST, and Circular No. 169/01/2022-GST, arguing that the CBIC had no power to issue these circulars and assign functions of the 'proper officer' to Central Tax Officers for issuing audit reports and show cause notices under Sections 65, 73, and 74 of the CGST Act. The court analyzed Section 2(91) of the CGST Act, which defines a "proper officer" and concluded that the Board had the authority to assign functions to central tax officers through the impugned circulars. The court found that the circulars were intra vires and legally valid. 2. Jurisdiction of Central Tax Officers: The petitioner contended that the impugned circulars usurped jurisdiction by assigning functions of the proper officer to Central Tax Officers. The court examined the relevant provisions of the CGST Act, including Sections 3, 4, and 5, which empower the government and the Board to appoint and authorize officers for the purposes of the Act. The court held that the impugned circulars validly assigned the functions of the proper officer to the central tax officers, including the issuance of audit reports and show cause notices. 3. Applicability of Canon India Pvt. Ltd. v/s. Commissioner of Customs: The petitioner relied on the Supreme Court's decision in Canon India Pvt. Ltd., which dealt with the definition of "proper officer" under the Customs Act. The court distinguished this case, noting that the issue in Canon India Pvt. Ltd. was whether officers of the Directorate of Revenue Intelligence (DRI) could be appointed as proper officers without being designated as customs officers. In the present case, there was no dispute that the officers of the Audit Commissionerate were central tax officers. Therefore, the court concluded that the ratio of Canon India Pvt. Ltd. did not apply to the present case. 4. Prematurity and Maintainability of the Petition: The respondent argued that the petition was premature as it was directed only against the show cause notices, and the petitioner had alternate remedies under the CGST Act. The court noted that the Assistant Commissioner of Central GST had already disposed of the show cause notices by confirming certain demands and dropping others. The court held that it was appropriate to decide the issue of the validity of the impugned circulars and show cause notices, as the outcome could affect the jurisdiction of the officers who issued them. Conclusion: The court dismissed the petition, upholding the validity of the impugned circulars and the jurisdiction of the central tax officers to issue audit reports and show cause notices under the CGST Act. The court allowed the respondents to give effect to the order dated 29.12.2023, disposing of the show cause notices, subject to the petitioner's right to challenge the order in accordance with the law. The rule was discharged without any order for costs.
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