Maintainability of WP where there is no appeal provided A case about delegation of power under GST law decided by the Supreme Court discussion with relevant provisions.

[DEV KUMAR KOTHARI]

Maintainability of WP where there is no appeal provided

A case about delegation of power under GST law decided by the Supreme Court discussion with relevant provisions.

M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH & ORS. [2021 (4) TMI 837 - SUPREME COURT]

Relevant provisions of CGST Act 2017.  

Readers may also refer to corresponding provisions of HPGST Act, 2017  were under consideration. Those provisions are similar to CGST Act with necessary modifications for state tax and  state officers. For the purpose of this article, provisions of CGST Act have been reproduced and analyzed.

Section 2 – definitions. Sub-section (4) is  definition of “adjudicating authority”

Section 5 is about powers of officers including power of delegation.

Section 83 is about provisional attachment  

Section 107 is  about   Appeals to Appellate Authority.

Section 108 is about Powers of Revisional Authority.

Rule 159 Provisional attachment of property           

Definitions.     

2. In this Act, unless the context otherwise requires,––

(4) “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the ²[Central Board of Indirect Taxes and Customs], the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, ⁹[the National Appellate Authority for Advance Ruling,] ³[the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171];

(8) “Appellate Authority” means an authority appointed or authorised to hear appeals as referred to in section 107;

(9) “Appellate Tribunal” means the Goods and Services Tax Appellate Tribunal constituted under section 109;

(24) “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act;

Section 5  is about powers of officers including power of delegation reads as follows, with highlights added by author for analysis:

Powers of officers.

5. (1) 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 this Act.

(2) An officer of central tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him.

(3) The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him.

(4) Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other officer of central tax.

Analysis:

Delegation- As per sub-section(3) The Commissioner may delegate his powers. This means the

In pursuance of any delegation the concerned officer to whom powers have been delegated will act as Commissioner and not any other rank or post.

An appellate authority cannot delegate his authority.

Section 83 of CGST Act, is about provisional attachment which is  with highlights added by author for analysis:

83. ¹[(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.]

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).

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NOTES:-

1. Substituted vide THE FINANCE ACT, 2021 dated 28-03-2021 w.e.f. 01-01-2022 before it was read as

"(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed."

Un quote:

In case before the Supreme Court Provision prior to amendment was applicable in the case considered by the supreme Court because the issue involved was about  a delegation made on 21 October 2020, by the Commissioner who  had in exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1).

Unquote:

Therefore, power of Commissioner were delegated, because delegation can be of ‘his powers’ and not power of other authority. Therefore order of officers to whom delegation was made will be order of Commissioner. 

Whether such order is appealable or not will be decided as if the order passed by delegate is order of Commissioner. If order of Commissioner is not appealable, then order of delegate will also not be appealable.

Therefore, honorable Supreme Court reversed judgment of High Court and held that the Writ Petition is maintainable against order of Commissioner including his delegate.

From Rule 159 Provisional attachment of property.-

159.5 (5) Any person whose property is attached may ⁶[file an objection in FORM GST DRC-22A] to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC- 23.

Foot note:

6. Substituted vide NOTIFICATION No. 40/2021 – Central Tax dated 29-12-2021 w.e.f. 01-01-2022 before it was read as 

", within seven days of the attachment under sub-rule (1), file an objection"

Note: Here also pre amendment Rule was applicable in the case before the Supreme Court.

Commissioner has assumed that in view of Rule 159.5 opportunity of allowing a hearing was optional and at discretion of Commissioner. Supreme Court held this was not correct, meaning that opportunity was to be given.

 Analysis from judgment of the Supreme Court:

Maintainability of writ petition before the High Court was under consideration. Court had held that WP was not maintainable, This has been reversed in view of facts and legal provisions.

Adjudicating authority:

The expression ‘adjudicating authority’ does not include among other authorities, the Commissioner.

On 21 October 2020, the Commissioner had in exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1). As per provision as discussed earlier Commissioner can delegate ‘his powers’.

 Provisional attachment by Joint Commissioner (delegate officer) - Section 83 of the CGST Act/ HPGST Act

The Joint Commissioner,  was exercising the powers which are vested in the Commissioner under Section 83(1) to order a provisional attachment in pursuance of the delegation exercised on 21 October 2020.

The Joint Commissioner as a delegate of the Commissioner was not an adjudicating authority, and his order  was not  subject to an appeal under Section 107(1).

Therefore, the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution of India

Supreme Court thus held that the High Court was, therefore, clearly in error in declining to entertain the writ proceedings.

The entire procedure which was followed by the Joint Commissioner was found to be  contrary to the provisions contained in Section 83 read with Rule 159.

 The Joint Commissioner (acting on behalf of the Commissioner) has proceeded on an understanding that an opportunity of being heard to the person whose property is provisionally attached is a matter of discretion, the discretion of being that of the Commissioner.

The Commissioner's understanding that an opportunity of being heard was at the discretion of the Commissioner is therefore flawed and contrary to the provisions of Rule 159(5). There has, hence, been a fundamental breach of the principles of natural justice.