2024 (9) TMI 1298 - HC - GST

Levy of interest and penalty - evasion of tax - challenge to SCN on the ground of jurisdiction - HELD THAT - The petitioner has not submitted any reply to the notice issued under Section 74 of the CGST Act which is a show cause notice. The petitioner has directly approached this Court challenging the said show cause notice on the ground of jurisdiction. It is also noticed that the show cause notice has emanated on the basis of GST audit report after the record for the period 2017-18, 2018-19, 2019-20 was examined by the internal Audit Team of Cirlce-1, Audit Commissionerate CGST, Chandigarh in terms of Section 65 of the CGST Act. The petitioner s objection that the officer having no jurisdiction to issue notice to it on the assumption of having its business in other States is noticed and to be rejected as misconceived. There is no jurisdictional error on the part of the respondents in issuing show cause notice under Section 74 of the CGST Act. The powers of the officers who have been appointed under Sections 4, 5 of the CGST Act and those appointed under Section 6 of the CGST Act are the same. A person is appointed by the State is authorized to be a proper officer for the purpose of this Act - once notice has been issued to the petitioner under Section 74 (1) of the CGST Act by the State GST Officer of Punjab, no other officer from any other State would be authorized to initiate proceedings and the question regarding evading of tax or availing of wrongful input tax credit or other issues in terms of Section 74 will be examined by the same officer alone. The authority at Chandigarh would have the power to issue notice under Section 74 of the CGST Act even with regard to dealings of the company in other States, and therefore, there is no jurisdiction error. No findings given relating to the challenge made by the petitioner regarding the contents of the notice under Section 74 of the CGST Act and the petitioner is left open to take up all arguments and objections in its reply. Petition dismissed.

Summary

Issues:
Challenge to show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017 based on jurisdictional grounds.

Detailed Analysis:

1. Challenge to Show Cause Notice:
The petitioner challenged the show cause notice issued under Section 74 of the CGST Act, alleging that the respondents had already made a decision regarding the petitioner's guilt of tax evasion. The petitioner argued that the notice incorrectly demanded tax payment for goods not supplied in Punjab but in other states where the petitioner was registered and had paid taxes. The petitioner contended that the authority lacked jurisdiction to issue the notice and had made errors in assuming factual supply of goods and non-payment of tax.

2. Jurisdictional Error Allegation:
The petitioner's counsel emphasized that the show cause notice was flawed due to jurisdictional errors. The petitioner argued that the notice wrongly attributed tax liabilities to the petitioner in Chandigarh, regardless of where the vouchers were issued or utilized. The petitioner claimed that the notice was issued based on incorrect assumptions and committed jurisdictional errors.

3. Authority's Jurisdiction to Issue Notice:
The court noted that the petitioner did not respond to the show cause notice but directly challenged it on jurisdictional grounds. The court found that the officer had the jurisdiction to issue the notice under Section 74 of the CGST Act based on an audit report. The court rejected the petitioner's objection regarding the officer's jurisdiction to issue the notice.

4. Proper Officer and Jurisdiction:
The judgment discussed the powers of officers appointed under Sections 4, 5, and 6 of the CGST Act, emphasizing that once a notice is issued under Section 74 by the State GST Officer of Punjab, no other officer from a different state can initiate proceedings on the same subject matter. The court clarified that the officer in Chandigarh had the authority to issue the notice regarding the petitioner's activities in other states.

5. Precedent and Proper Officer's Authority:
Referring to a previous judgment, the court held that the proper officer in Chandigarh could proceed with the notice under Section 74 of the CGST Act, even for transactions in other states. The court emphasized that the officer in Chandigarh had the jurisdiction to examine issues related to tax evasion or wrongful input tax credit.

6. Dismissal of Writ Petition:
The court dismissed the writ petition summarily, allowing the petitioner to present arguments and objections in response to the notice. The court directed the authority to consider the petitioner's reply and pass a reasoned order. The petitioner was granted the right to seek remedies before the appropriate forum if still aggrieved by the decision.

Conclusion:
The judgment upheld the authority's jurisdiction to issue the show cause notice under Section 74 of the CGST Act, dismissing the petitioner's challenge based on jurisdictional grounds. The court emphasized the proper officer's authority in Chandigarh to address issues related to tax liabilities and input tax credit across multiple states.