2024 (10) TMI 314 - HC - GST

Jurisdiction of officers issuing SCN - composite/mixed supply - lack of jurisdiction - Maintainability of writ petitions challenging SCN - HELD THAT - It is evident from the definition of Commissioner as defined under Section 2(24) of the Act, 2017 which 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. While the Commissioner in the Board which has been defined under Section 2(25) which means the Commissioner referred to in Section 168. The power of officers has been defined under Section 5 thereof wherein it has been provided that 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. 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. 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. 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. This Court, therefore, is of the view that since the notification dated 01st July, 2017 has been issued in exercise of power conferred under Section 3 read with Section 5 under which the Board has been conferred with the power, in addition to appointment to be made by the Government, to impose the power upon the officer under the act and hence, the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit has been notified to exercise the power of Commissioner and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit has been authorized to exercise the power of Deputy Commissioner/Assistant Commissioner. From conjoint reading of Sections 2(34) and 28 of the Act, it has been found that only such a Customs Officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose inasmuch as the test contemplated under Section 2(34) of the Act is that of specific conferment of such functions. The Proper Officer which has been defined under Section 2(34) of the Act, 1962 and comparing it with the provision of Section 2(91) of the Act, 2017, it would be evident that there is material difference since under Section 2(34), the Proper Officer means the officer of Customs who is assigned those functions by the Board or the Commissioner of Customs while the Proper Officer as defined under Section 2(91) of the Act, 2017 means the proper officer in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board. This Court is of the view that by virtue of the power exercised by the Board under Section 5 of the Act, 2017, a notification has been issued conferring power upon the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit to act as a Commissioner and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit to act as Deputy Commissioner/Assistant Commissioner and as such, it is incorrect on the part of the writ petitioners to take the ground that the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit are having no power to initiate a proceeding under the Act, 2017. This Court is of the view that the Additional Director General, Goods and Services Tax Intelligence or Additional Director General, Goods and Services Tax or Additional Director General, Audit and the Deputy/Assistant Director, Goods and Services Tax Intelligence or Deputy/Assistant Director, Goods and Services Tax or Deputy/Assistant Director, Audit are having jurisdiction to issue show cause notices. This Court, therefore, is of the view that the writ petitioners are required to response to the said show cause notices for its consideration by the authority concerned, in accordance with law - Petition disposed off.

Summary

Issues Involved:
1. Jurisdiction of officers issuing show cause notices under Section 74 of the CGST Act, 2017.
2. Maintainability of writ petitions challenging show cause notices.
3. Authority of the Additional Director and Deputy Director of GST Intelligence to issue notices.

Issue-wise Detailed Analysis:

1. Jurisdiction of Officers Issuing Show Cause Notices:
The primary issue in the judgment was whether the Additional Director and Deputy Director of the Directorate General of Goods and Services Tax Intelligence (DGGI) had the jurisdiction to issue show cause notices under Section 74 of the Central Goods and Services Tax Act, 2017. The court examined the definition of "Proper Officer" under Section 2(91) of the Act, which refers to the Commissioner or an officer of central tax assigned that function by the Commissioner in the Board. The court concluded that the notification dated 1st July 2017, as amended by the corrigendum on 29th July 2019, authorized these officers to act as "Proper Officers." This was supported by the statutory provisions under Sections 3, 4, and 5 of the CGST Act, which empower the Government and the Board to appoint and authorize officers to perform specific functions under the Act. Thus, the court held that the Additional Director and Deputy Director were competent to issue the show cause notices.

2. Maintainability of Writ Petitions Challenging Show Cause Notices:
The court addressed the maintainability of the writ petitions filed under Article 226 of the Constitution of India. The petitioners argued that the notices were issued without jurisdiction, constituting an abuse of process of law. The court referred to its previous order dated 18.06.2024, where it was held that the writ petitions were maintainable. However, it emphasized that the writ court should generally not interfere at the stage of issuance of show cause notices unless they are issued without jurisdiction or in abuse of process. The court cited precedents from the Supreme Court, including Union of India v. VICCO Laboratories and State of U.P. v. Arezzo Developers (P) Ltd., which support interference only in exceptional cases where jurisdictional errors are evident.

3. Authority of Additional Director and Deputy Director of GST Intelligence:
The court examined the statutory framework and notifications that conferred powers on the Additional Director and Deputy Director of GST Intelligence. It referred to the notification issued on 1st July 2017, which appointed officers in the Directorate General of Goods and Services Tax Intelligence as central tax officers with powers equivalent to their counterparts in the central tax hierarchy. The court also considered the corrigendum dated 29th July 2019, which clarified that the notification was issued by the Government. Additionally, the court analyzed Sections 3, 4, and 5 of the CGST Act, which outline the appointment and powers of officers under the Act. The court concluded that the officers in question were duly authorized to issue the notices, aligning with the statutory provisions and notifications.

Conclusion:
The court dismissed the writ petitions, holding that the Additional Director and Deputy Director of GST Intelligence had the jurisdiction to issue the show cause notices under the CGST Act. The court affirmed the maintainability of the writ petitions but emphasized that the petitioners should respond to the notices before the appropriate authorities, as the writ court's interference at the notice stage should be rare and only in cases of manifest jurisdictional errors.