2022 (5) TMI 343 - HC - GST

Jurisdiction - power of inspecting officers - whether the powers vested on inspecting officers can be withdrawn - whether after inspection is over, the inspecting officers has to forward the Inspection Report to the jurisdictional officer to initiate action or issuance of show cause notice and proceed with the adjudication? - CCT Circular No.72/2019-TNGST, dated 31.05.2019 - HELD THAT - Under CCT Circular No.72/2019-TNGST, dated 31.05.2019 instructions had been given by the Head of the Department, that is, State GST, that the officers of the Intelligence Wing were permitted to exercise the powers vested under Sections 62, 63, 64, 73 or 74 of the TNGST Act, 2017 in respect of the cases inspected by the said officers - After sometime, this issue has been examined at length by the Head of the Department, pursuant to which, the Department has come to a conclusion that the power vested with the inspecting officers can be withdrawn and after inspection is over, the inspecting officers has to forward the Inspection Report to the jurisdictional officer to initiate action or issuance of show cause notice and proceed with the adjudication. In this case, though such an inspection has been conducted by the inspecting officer, without sending the report to the jurisdictional officer as contemplated in the Circular, has initiated action on their own by issuing the show cause notice, dated 12.10.2021. Therefore, Ms.Aparna Nandhakumar, learned counsel appearing for the petitioner, by relying upon the afore-stated Circular, has contended that, the inspecting officer, who issued the show cause notice, dated 12.10.2021, is not a proper officer, therefore, he does not have the jurisdiction to issue the show cause notice. Therefore, on the ground of want of jurisdiction, the said impugned show cause notice is under challenge, hence she seeks indulgence of this Court. This Court, prima facie is of the view that the present officer, that is, the inspecting officer would not be a proper officer after 04.10.2021 in view of the Circular, dated 04.10.2021. Accordingly, this Court is of the considered view that the impugned order can be interfered with on the prima facie case by way of interim order - Post the matter after four weeks for filing counter.

Summary

Issues:
1. Interpretation of Circular No.72/2019-TNGST regarding powers of Intelligence Wing officers under TNGST Act, 2017.
2. Examination of Circular No.23/2021 issued by Principal Secretary of Commercial Taxes regarding inspection reports and show cause notices.
3. Jurisdictional validity of show cause notice issued by inspecting officer without forwarding inspection report to jurisdictional officer as per Circular No.23/2021.
4. Prima facie assessment of the inspecting officer's authority post-04.10.2021 based on Circular No.23/2021.

Analysis:
1. The judgment addresses the interpretation of Circular No.72/2019-TNGST, which allowed Intelligence Wing officers to exercise powers under specific sections of the TNGST Act, 2017 in inspected cases. Subsequently, Circular No.23/2021 emphasized the importance of detailed inspection reports by inspecting officers for initiating actions like show cause notices and adjudication by jurisdictional officers.

2. Circular No.23/2021 mandated that inspection reports must be submitted to the jurisdictional officer for further action within 30 days of inspection completion. It outlined the process of examination and approval of inspection reports by Joint Commissioners before forwarding them to the proper officer for adjudication. The circular also stressed the need for personal hearings and adherence to statutory provisions during adjudication.

3. The case in question involved an inspecting officer issuing a show cause notice without following the prescribed procedure of submitting the inspection report to the jurisdictional officer as per Circular No.23/2021. The petitioner contended that the inspecting officer lacked jurisdiction to issue the notice post-04.10.2021 based on the circular's requirements, leading to a challenge of the show cause notice on jurisdictional grounds.

4. The Court, considering the provisions of Circular No.23/2021, found merit in the petitioner's argument regarding the inspecting officer's authority post-04.10.2021. It concluded that the inspecting officer, who issued the impugned show cause notice without forwarding the inspection report to the jurisdictional officer, might not be a proper officer as per the circular's directives. Consequently, the Court granted an interim stay on the impugned order, indicating a prima facie case for interference based on jurisdictional concerns.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues addressed, the relevant circulars, and the Court's decision regarding the jurisdictional validity of the show cause notice in light of the prescribed procedures.