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TMI Blog2025 (1) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... owers of adjudication of the show cause notice issued by DGGI where the principal place of business of noticee/s fall under jurisdiction of multiple Central Tax Commissionerate or where multiple show cause notices are issued on the same issue on different noticee/s, such show cause notices may be adjudicated irrespective of amount involved in the show cause notices by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction as per Notification No. 2 of 2022. Therefore, reliance is placed on Notification No. 2 of 2022 which refers to Principal Commissioners/ Commissioners of the Central Tax which includes the Principal Commissioner of Lucknow only. The petitioners have therefore, referred to Notification No. 2 of 2017 which provides for notified officers having jurisdiction and as per Entry no. 12, Principal Commissioner of Lucknow falls within the Principal Chief Commissioner, Lucknow whereas Commissioner, Kanpur also would be under the territorial jurisdiction of the Principal Chief Commissioner of Lucknow. It was therefore, contended that as per para no. 7.1 of the Circular no. 169/2022, Principal Commissioner, Kanpur would not have All Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x) (xvii) (xviii) and (xix) of the Central Goods and Service Tax Act, 2017 (For short "the GST Act"). 4. It is the case of petitioner company that it is carrying on business in the State of Maharashtra and State of Uttar Pradesh in India. 5. The petitioners are served with three show cause notices for levy of penalty up on the petitioners for being beneficiaries for alleged evasion of tax by the three concerns namely M/s. Flora Naturale, M/s. Odochem Industries and M/s. Odosynth Inc. to whom the petitioner company has supplied the goods which was used as raw material for production of perfumery compounds and involved in clandestinely supplying perfumery compounds without payment of GST to M/s. Trimurti Fragrance Private Limited, Kanpur and M/s. Trimurti Fragrances and Flavours Private Limited, Kanpur for the unaccounted production and clandestine supplies/clearances of pan masala and scented tobacco/jarda. 6. It is the case of the petitioners that petitioner company regularly imports and purchases locally various chemicals for trading in India. The petitioner company also avail the input tax credit on the GST paid on the purchases. The petitioner company also pays IGST and custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have been made answerable to authority which does not have jurisdiction and as such, the impugned notices are void and illegal qua the petitioners. 15. In support of his submissions, learned Senior Advocate Mr. Joshi referred to and relied upon Notification No. 02/2017-Central Tax dated 19.06.2017 issued in exercise of powers conferred under section 3 read with section 5 of the GST Act and section 3 of the IGST Act, 2017 showing the jurisdiction of the Notified Officer under the GST Act. It was pointed out that Table I of the said Notification No. 02/2017 provides for jurisdiction of the Principal Chief Commissioner/Chief Commissioner of Central Tax in terms of Principal Commissioners/ Commissioners of Central Tax, Commissioner of Central Tax (Appeals), Additional Commissioner of Central Tax (Appeals) and Commissioner of Central Tax (Audit) by dividing the GST Commissionerate into 21 zones. Reference was made to Serial No. 12 of the Table I in the said notification to point out that the Principal Chief Commissioner, Lucknow shall have the jurisdiction over the Commissioner of Kanpur. 16. It was submitted that the aforesaid Notification No. 02/2017-Central Tax was amended by No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main Noticee in three show cause notices are situated in Uttar Pradesh and therefore, they are governed by the jurisdiction of Lucknow Commissionerate. 22. It was submitted that both Lucknow and Kanpur Commissionerate are separate and independent as per Notification No. 02/2017, and both falls under the Principal Chief Commissioner at Lucknow (Central Tax Zone) as per Serial No. 12 of Table I of Notification No. 02/2017 and the Additional/Joint Commissioner of Central Tax under the Principal Commissioner, Lucknow are appointed as the proper officers for adjudicating the show cause notices issued by the DGGI in terms of Serial No.9 of Table V of Notification No. 02/2017 and as such, respondent no. 2 shall not have any jurisdiction to adjudicate the impugned show cause notices. 23. It was further submitted that as per Serial No. 18 and 19 of the Table annexed to the Circular dated 12.03.2022, in case where the principal place of business of the noticee having highest demand of tax involved, falls under the Lucknow and Meerut Zones, the Additional Commissioner and Joint Commissioner under the Lucknow Central Tax Commissionerate shall have the jurisdiction to adjudicate the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, invocation of Section 122 (1) of the GST Act proposing to impose penalty equal to the tax evaded by the buyers of the petitioner no. 1 is not tenable and not sustainable in law and therefore, the impugned notices are without jurisdiction. 30. It was submitted that under Section 122 (3) of the GST Act, the maximum prescribed penalty cannot exceed Rs. 25,000/- and accordingly, the proposal to impose a penalty equal to the tax evaded by the buyers of the petitioner no. 1 is without jurisdiction. 31. In the alternative, it was submitted that penalty can be imposed only under section 127 of the GST Act as the proceedings against the petitioners is not covered under section 62 or section 63 or section 64 or section 73 or section 74 or section 129 or section 130 of the GST Act. 32. It was therefore, submitted that the proposal to impose penalty equal to the tax evaded by the buyers of petitioner no. 1 company which is a third party not connected or related to the petitioners is not an issue of quantification but of illegal assumption/conferment of jurisdiction since the only assessment contemplated under the impugned notices is that of the three entities/buyers for whom the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 122 (1) of the GST Act in absence of any allegation to that effect in the impugned show cause notices. 38. It was submitted that there is no allegation against the petitioner no. 1 for retaining benefit of transactions covered under the aforesaid clauses of Section 122 (1) of the GST Act as there is no demand raised towards any alleged non-payment/ short payment of tax and/ or erroneous availment of Input Tax Credit against the petitioner no. 1. 39. It was therefore, submitted that in the absence of basic elements to levy penalty, show cause notices issued to petitioner no. 2 would be rendered illegal for want of jurisdiction and further stands vitiated on the grounds of patent non-application of mind on behalf of the respondent no. 1. 40. It was further submitted in the alternative that provisions of section 122 (1A) of the GST Act is inserted with effect from 01.01.2021 by the Finance Act, 2020 whereas the period under dispute in the show cause notices for which demand is raised against the buyers of petitioner no. 1 is from April 2018 to December 2021 and therefore, the provisions of section 122 (1A) cannot apply to the transactions prior to 31.12.2020. 41. Reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in (2024) 17 Centax 18 (Bom). (ii) Sakshi Bahl v. Principal Additional Director General, DGGI, Delhi reported in 2023 (73) GSTL 330 (Del). (iii) Veremax Technologie Services Ltd. Vs The Assistant Commissioner of Central Tax, Bengaluru, reported in 2024 (9) TMI 1347. (iv) Titan Company Ltd. Vs The Joint Commissioner of GST & Central Excise, reported in 2024 (1) TMI 619. (v) The State of Jammu and Kashmir and Ors Vs Caltex (India) Ltd., reported in (1966) (17) STC 612 - Supreme Court. (vi) Kesar Enterprises Ltd. Vs State of UP & Ors., reported in 2010 SCC OnLine All 1608-Allahabad High Court. 48. On the other hand, learned Senior Standing Counsel Ms. Hetvi Sancheti for the respondents raised the preliminary objection regarding maintainability of the writ petition under Article 226 of the Constitution of India. 49. It was submitted that except the petitioner all other co-noticee have appeared before the adjudicating authority and have filed their replies and adjudication process is going on at the stage of cross examination of the witnesses. 50. It was submitted that the invocation of the jurisdiction of this Court by the petitioners only on the basis of powers of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners challenging powers of respondent no. 2 to adjudicate upon the show cause notices relying upon circular No.31/2018 dated 09.02.2018 as amended by Circular No. 169/2022 dated 12.03.2022 is not tenable as there is a marked difference between levy and imposition of penalty under the GST Act. It was submitted that creation of a penal liability in form of a penalty is a function of the Parliament as a policy decision, whereas imposition of such penalty on a subject of tax upon certain action/omission is a function of the proper officer. 54. It was submitted that Chapter XIX of the GST Act provides for levy of penalty but provision for imposition of penalty falls under Chapter XV which provides for "Demands and Recovery", where operation of invocation of Section 73 and Section 74 of the GST Act come into play. 55. It was therefore submitted that Section 122 (1) of the GST Act does not mention any "proper officer" or "any officer of GST" who can impose penalty in relation to an offence as enumerated in the said sections as the said provision only describes the levy of penalty and not imposition of penalty. 56. It was therefore, submitted that in absence of any such authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the ITC wrongly availed or utilized. 60. It was submitted that the assignment of proper officer is based on "demand of tax" and not "penalty". It was submitted that the impugned show cause notices have been issued under the head "Demand Cum Show Cause Notice Under Section 74 (1) Of the GST Act, 2017 read with Section 74 (1) Of the Uttar Pradesh GST Act, 2017 read with Section 20 Of the IGST Act, 2017". 61. It was submitted that all the three show cause notices have been issued as tax has been demanded under Section 74 of the GST Act from only one noticee in each show cause notice and therefore, all other co-noticee would fall within the jurisdiction of respondent no. 2 since tax is being demanded from a single noticee in all the three show cause notices. It was therefore submitted that the jurisdiction for the purpose of adjudication would be as per para no. 6 of Circular No. 169 of 2022 dated 12.03.2022 and hence the proper authority to adjudicate the case would be respondent no. 2. 62. It was further submitted that the word "notice" appearing in para no.7.1 of Circular No. 169 of 2022 has to be read in conjunction with the subject of the Circular No 31 of 2018 as reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of the adjudicating authority and penalty proposed on a noticee in some other jurisdiction, then also the show cause notice has to be adjudicated by the officer who is empowered to determine the tax amount under section 73/74 as per the monetary limits. It was therefore, submitted that applying the same analogy in case of show cause notices issued by DGGI, the adjudicating authority to issue order under section 73/74 would be the officer who is empowered to determine the tax and interest. 66. It was submitted that a literal meaning of "Noticee/s" mentioned in para no. 7.1 of Circular no 169/2022 dated 12.03.2022 would create a situation where there is one interpretation for show cause notice issued by the officers of Executive Commissionerate and another interpretation for show cause notice issued by DGGI which cannot be permitted inasmuch as the machinery provisions of section 74 concerning issuance of show cause notice and limitation of time for passing of order imposing penalty or determination of the amount of ITC wrongly availed or passed on to the proceedings to be conducted for taking penal action under section 122, in cases of fraudulent ITC without underlying suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions of passing on or availing fraudulent input tax credit liable for penalty similar to the penalty leviable on the person who commits such specified offences. It was therefore, submitted that the legislature in its wisdom has specifically chosen to use the word "Any Person" in section 122 (1A) instead of "taxable person" for levying of penalty upon any person who has received benefits of any fraudulent transaction. 70. It was submitted that any other interpretation is not possible as the same would defeat the purpose of such amendment and hence, strict interpretation is required to be given. It was submitted that the decision of the Hon'ble Bombay High Court in case of Shantanu Sanjay Hundekari and others v. Union of India and others reported in 2024 (17) Centax 18 is being challenged before the Hon'ble Apex Court. 71. It was submitted that word "Person" is defined under section 2(84) of GST Act whereas words "taxable person' is defined under section 2(107) of the GST Act and on perusal of both the definitions, it is apparent that definition of "person" is inclusive and wide and interpreting the same to mean "Taxable Person", the ambit of the same cannot be curtaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have entertained the writ petition at the stage of show cause notice, more so, against the final order as under: "30. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court. 31. The judgment of this Court in the case of Union of India & Anr. v. Guwahati Carbon Ltd. (supra) relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authority directing the adjudicating authority to take an independent decision. 75. Having heard the learned advocates for the respective parties and considering the facts of the case, the main grievance of the petitioners is regarding the jurisdiction of the adjudicating authority of the impugned show cause notices. 76. The impugned show cause notices are issued by the Additional Director, Directorate General of Goods and Service Tax Intelligence, Zonal Unit, Ahmedabad against three main noticee/s namely, M/s. Flora Naturale, M/s. Odochem Industries and M/s. Odosynth Inc. which are family firms situated at Kannauj, Uttar Pradesh. It is alleged in the show cause notices that the aforesaid three firms were involved in clandestinely supplying perfumery compounds without payment of GST as it is to M/s. Trimurti Fragrance Private Limited, Kanpur and M/s. Trimurti Fragrances and Flavours Private Limited, Kanpur for the unaccounted production and clandestine supplies/clearances of pan masala and scented tobacco/jarda. 77. It appears that on specific intelligence inputs received from source indicated movement of unaccounted goods and supplies without payment of GST from the factories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction in view of Notification No. 2 of 2017 dated 19.06.2017 read with Notification No. 2 of 2022 dated 11.03.2022 which provides for jurisdiction of the adjudicating authority and contention that only the Principal Chief Commissioner Lucknow would have the jurisdiction over the Commissionerate, Kanpur and Notification no. 2 of 2017 only provides for powers to Additional Commissioner or Joint Commissioner of Central Tax for passing the order or decision in respect of notices issued by the officers of Directorate General of Goods and Services Tax Intelligence and as per Table V, Serial no.9, Principal Commissioner, Lucknow shall have the powers to adjudicate such notices is therefore required to be analysed. 81. The contention of the petitioners can be summarized as that Commissionerate, Kanpur and Commissionerate, Lucknow would have separate jurisdiction in view of Serial Nos.54 and 61 of Table II of Notification No. 2 of 2017 and therefore, it was contended that Circular No.31 of 2018 read with Circular No. 169 of 2022 provides for jurisdiction of Additional Commissioner/Joint Commissioner where principal place of main noticee at Kannauj falls under jurisdiction of Kanpur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Tax and Joint Directors of Central Tax, (g) Deputy Commissioners of Central Tax and Deputy Directors of Central Tax, (h) Assistant Commissioners of Central Tax and Assistant Directors of Central Tax, (i) Commissioners of Central Tax (Audit), (j) Commissioners of Central Tax (Appeals), (k) Additional Commissioners of Central Tax (Appeals), [(l) Joint Commissioner of Central Tax (Appeals),] and the central tax officers subordinate to them as central tax officers and vests them with all the powers under both the said Acts and the rules made thereunder with respect to the jurisdiction specified in the Tables given below. 2. The Principal Chief Commissioners of Central Tax or the Chief Commissioners of Central Tax, as the case may be, specified in column (2) of Table I, are hereby vested with the territorial jurisdiction over the- (a) Principal Commissioners of Central Tax and Commissioners of Central Tax, as the case may be, specified in the corresponding entry in column (3) of the said Table; (b) Commissioners of Central Tax (Appeals) specified in the corresponding entry in column (4) of the said Table; (c) Additional Commissioners 2[or Joint Commissioner] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.3 Commissioner Kanpur 12.4.2 Commissioner (Appeals) Allahabad and Additional Commissioner [or Joint Commissioner] (Appeals) Allahabad 12.5.2 Commissioner (Audit) Kanpur 12.3.4 Commissioner Allahabad 12.3.5 Commissioner Varanasi TABLE II TERRITORIAL JURISDICTION OF PRINCIPAL COMMISSIONER/COMMISSIONER OF CENTRAL TAX Sl.No. Principal Commissioner/ Commissioner Central Tax Territorial Jurisdiction 54 Kanpur Districts of Kanpur Nagar, Kanpur Dehat, Lalitpur, Jhansi, Mahoba, Hamirpur, Jalaun, Kannauj, Manipuri and Farrukhabad in the State of Uttar Pradesh Notification No.31 of 2018 "6. The central tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (hereinafter referred to as "DGGSTI") shall exercise the powers only to issue show cause notices. A show cause notice issued by them shall be adjudicated by the competent central tax officer of the Executive Commissionerate in whose jurisdiction the noticee is registered. In case there are more than one noticees mentioned in the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated, irrespective of the amount involved in the show cause notice(s), by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction vide Notification No. 2/2022-Central Tax, dated 11th March, 2022. Principal Commissioners/ Commissioners of the Central Tax Commissionerates specified in the said notification will allocate charge of Adjudication (DGGI cases) to one of the Additional Commissioners/Joint Commissioners posted in their Commissionerates. Where the location of principal place of business of the noticee, having the highest amount of demand of tax in the said show cause notice(s), falls under the jurisdiction of a Central Tax Zone mentioned in column 2 of the table below, the show cause notice(s) may be adjudicated by the Additional Commissioner/Joint Commissioner of Central Tax, holding the charge of Adjudication (DGGI cases), of the Central Tax Commissionerate mentioned in column 3 of the said table corresponding to the said Central Tax Zone. Such show cause notice(s) may, accordingly, be made answerable by the officers of DGGI to the concerned Additional/Joint Commissioners of Central Tax." 83. It appears that the petitioners have trie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re situated at Kannauj and who would fall within the jurisdiction of Commissioner, Kanpur as per Entry No.54 of Table II of Notification No. 2 of 2017 and Principal Commissioner, Kanpur would have the territorial jurisdiction of District of Kannauj. Therefore, the respondent authorities have rightly directed the petitioners and other noticee/s to file their respective replies before the Additional/Joint Commissioner at Kanpur for adjudication of the impugned show cause notices. Moreover, the petitioners are the co-noticee/s for the purpose of levy of penalty whereas tax and interest are to be determined in case of main noticee/s i.e three entities who are liable for levy of GST for clandestine supply of material to M/s. Trimurti Fragrance Private Limited, Kanpur and M/s. Trimurti Fragrances and Flavours Private Limited, Kamnpur. 86. In case of Trimurti Fragrances and Flavours Pvt. Ltd and others v. Directorate General of Goods and Service Tax and others passed in Writ Tax no. 1286 of 2023 and in case of Trimurti Fragrances Pvt. Ltd and others v. Directorate General of Goods and Service Tax and others passed in Writ Tax no. 1280 of 2023 the Hon'ble Allahabad High Court, by judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The petitioners have also raised various disputed questions of fact regarding allegations made in the show cause notices. As observed here-in-above, prima-facie, it cannot be said that the petitioners are not at all involved in the clandestine supply of raw materials used by other co-noticee/s for clandestine supply of perfumery compounds being used by M/s. Trimurti Fragrance Private Limited, Kanpur and M/s. Trimurti Fragrances and Flavours Private Limited, Kanpur for the unaccounted production and clandestine supplies/clearances of Pan Masala and scented Tobacco/Jarda. It is pertinent to not that considering the magnitude of the evasion of GST described in the show cause notices which run into more than 400 pages levelling various allegations against the petitioners providing detailed reason for levy of tax, interest and penalty upon all the noticee/s, the respondent no. 2 would have the jurisdiction to adjudicate all the show cause notices. 89. In such circumstances, it would not be proper to entertain the writ petitions while exercising extraordinary jurisdiction under Article 226 of the Constitution of India in view of the fact that allegations made in the show cause notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be careful to see that the statutory functionaries specially and specifically constituted for the purpose are not denuded of powers and authority to initially decide the matter and ensure that ultimate relief which may or may not be finally granted in the writ petition is accorded to the writ petitioner even at the threshold by the interim protection, granted." 92. Exposition of law spelt out from above discussion is that ordinarily under Article 226 of the Constitution, the Court should not interfere with a show cause notice unless the same is without jurisdiction or barred by law or suffers from any patent illegality. In the facts of the case, none of the conditions exist so as to entertain this writ petition and no interference in writ jurisdiction at this stage is called for. 93. It is made clear that dismissal of these petitions will not come in way of the petitioners in any manner and independent decision on merits is to be taken by the adjudicating authority. 94. Subject to above observations, writ petitions stand dismissed. Ad interim relief granted, if any, stands vacated. Rule is discharged. No order as to costs. Further Order After pronouncement of the above jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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