SUPERINTENDENT HAS NO JURISDICTION TO PASS ORDER EXCEEDING RS. 10 LAKHS UNDER GST LAW

[Mr. M. GOVINDARAJAN]

Superintendent as proper officer

Circular No. 03/03/2017, dated 05.7.2017 as amended from time to time, provides that the Board assigned as the proper office for the functions under the following sections of Central Goods and Services Tax Act, 2017 or the rules made there under-

• Section 35 (6) ; - Maintenance of Accounts and other records by the Registered person;
• Section 61 (1) and (3) - Scrutiny of returns;
• Section 62(1) - Assessment of non filers of returns;
• Section 65(7) - initiation of action under section 73 or 74 when there is detection of tax not paid or short paid or erroneously refunded or wrong availment and utilization of input tax credit found in the audit;
• Section 66(6) - initiation of action under section 73 or 74 when there is detection of tax not paid or short paid or erroneously refunded or wrong availment and utilization of input tax credit found in the special audit;
• Section 67 (11) - power of inspection and search;
• Section 70(1) - Power to summon persons to give evidence or to produce any document;
• Section 73(1), (2), (3), (5). (6), (7), (9) and (10) - Determination of tax  not paid or short paid or erroneously refunded or  input tax credit wrongly availed or utilized for any reason other than fraud or any willful misstatement or suppression of facts;
• Section 74 (1), (2), (3), (5). (6), (7), (9) and (10) - Determination of tax  not paid or short paid or erroneously refunded or  input tax credit wrongly availed or utilized for any reason by reason of  fraud or any willful misstatement or suppression of facts;
• Rule 56 (6) - maintenance of accounts and records by registered persons;
• Rule 99 (1)(2)(3) - scrutiny of returns;
• Rule 132 (1) - Power to summon persons and to give evidence and produce documents;
• Rule 142 (1)(2)(3) and (7) - Notice and order for demand of amounts payable under the Act;
• Rule 150 - Assistance by police.

Monetary limit

Circular No. 31/05/2018, dated 09.02.2018, the Board decided  that Superintendents of Central Tax shall be empowered to issue show cause notices and orders under section 73 and section 74 of the CGST Act.  The Board also fixed the monetary limit upto which the Superintendent may pass order under section 73 and section 74 as below-

• Monetary limit of the amount of central tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act - not exceeding Rs.10 lakhs;
• Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act - Rs.20 lakhs;
• Monetary limit of the amount of central tax and integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax and integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to integrated tax vide section 20 of the IGST Act.

Case law

In M/S MANSOORI ENTERPRISES THRU. PROP. MOHD. SHAKEEL VERSUS U.O.I. THRU. SECY. MINISTRY OF FINANACE DEPTT. OF REVENUE, NEW DELHI AND 2 OTHERS - 2024 (2) TMI 1183 - ALLAHABAD HIGH COURT, the Superintendent of CGST,  Bahraich, initiated against the petitioner under Section 73 of the CGST Act.  The Superintendent passed an order against the petitioner and disallowed the input tax credit to the tune of Rs. 1624246.88 on 20.11.2023.  The petitioner challenged the said order before the High Court by filing a writ petition.

The main ground of challenge to the said order was that respondent No.3 did not have jurisdiction to pass the said order in light of the circular dated 9.2.2018 issued by Government of India, Ministry of Finance, Department of Revenue, assigning the jurisdiction to various authorities in relation to the maximum amount of Central Tax not paid or short paid or erroneously refunded or input tax credit of central tax wrongly availed or utilized.

The petitioner contended that according to the circular dated 09.02.2018, power of the Superintendent, Central Goods and Service Tax is limited to the matter not exceeding Rs.10,00,000/- and in the present case the amount involved is more than Rs.16,00,000/- and consequently, the impugned order passed by it is without jurisdiction.

The Revenue has fairly submitted that the impugned order dated 20.11.2023 is not proper to the extent that it was not passed by proper officer as per the Circular No.31/05/2018-GST,  dated 09.02.2018 as the monetary limit of the input tax credit wrongly availed or utilized of Rs.10,00,000/- for issuance of show cause notices and passing of orders under Sections 73 and 74 of CGST Act.

The High Court held that the impugned order dated 20.11.2023, is without jurisdiction and is accordingly set aside.  The High Court granted the liberty to the Department to proceed in accordance with the law.