2024 (4) TMI 716 - HC - GST

Jurisdiction to issue show cause notice and initiate proceedings under GST - Director General of GST (Intelligence) - proper Officer and adjudicating authority as contemplated under Sections 73 and 74 of the CGST Act or not - HELD THAT - The respondents have conducted an inspection on the petitioner's premises. During the inspection, they found that during the period from 22.09.2017 to 20.08.2019, the petitioner company has effected outward supply of taxable goods viz., certain grocery items, under the unregistered brand name, but, they have not paid the appropriate GST and not fulfilled either one of the conditions prescribed in the Notification No.27/2017-Central Tax (Rate) dated 22.09.2017 to avail exemption. Therefore, the impugned proceedings has been issued. As per the Circular dated 09.02.2018 issued by the Central Board of Indirect Taxes and Customs, Central Government of India, the officers of Director General of G.S.T. (Intelligence) shall exercise the power to issue show cause notice. Therefore, this Court is not inclined to accept the submission of the petitioner that the impugned proceedings has been issued by the incompetent authority - Moreover, the impugned proceedings is only a pre-show cause notice. The writ petition is dismissed.

Summary

Issues:
The issues involved in this case include challenging impugned proceedings demanding tax payment, jurisdiction of the proper officer under Sections 73 and 74 of the CGST Act, validity of Circulars issued by authorities, issuance of show cause notice by the competent authority, and the nature of the impugned proceedings as a pre-show cause notice.

Jurisdiction of Proper Officer:
The petitioner challenged the impugned proceedings issued by the second respondent, arguing that the second respondent was not the proper Officer and adjudicating authority as per Sections 73 and 74 of the CGST Act. The petitioner relied on Circulars highlighting that show cause notices should be issued only by the jurisdictional proper Officer. The petitioner contended that since the impugned proceedings were not issued by the proper officer, they should be quashed.

Nature of Inspection and Proceedings:
The respondents conducted inspections at the petitioner's premises and found that the petitioner sold goods without discharging the GST amount. A summon was issued, which led to a pre-show cause notice challenged in the writ petition. The respondents argued that the Circular relied upon by the petitioner was applicable to State GST Officers and not binding on central tax officers. They maintained that the impugned proceedings were issued by the proper officer as per Circulars issued by CBIC.

Validity of Impugned Proceedings:
The impugned proceedings were issued as a pre-show cause notice to allow the petitioner to resolve the dispute by depositing the tax and interest at this stage. The Court noted that the petitioner had not paid appropriate GST for outward supplies of taxable goods during a specific period, leading to the issuance of the impugned proceedings. The Court also referenced Circulars assigning powers to issue show cause notices to specific officers.

Decision:
After considering the submissions and materials, the Court dismissed the writ petition, stating that the impugned proceedings were a pre-show cause notice. The Court upheld the jurisdiction of the second respondent as the proper officer to issue the proceedings. The petitioner was given the liberty to offer an explanation before the second respondent. No costs were awarded, and connected miscellaneous petitions were closed.