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SGST High Court Cases

GST - Interpretation of Section 6 of CGST Act, 2017 - Cross-empowerment of officers, Bunching of show cause notice, Monetary limit for issuance of show cause notice – Jurisdiction of proper officers under CGST Act to initiate proceedings against petitioner who is assigned to State Tax Authorities - Petitioner challenge the show cause notices issued by the Central Tax Authorities on grounds of lack of jurisdiction, improper bunching of notices and on the ground that Joint Commissioner lacks of authority to issue notice below Rs.1 crore - Whether issuance of a specific notification for cross-empowerment under Section 6 of CGST Act, 2017 and SGST Act, 2017 is mandatory, or officers can exercise jurisdiction over assessees assigned to the other administration without such notification - HELD – The Sub-section (1) of Section 6 of CGST Act, 2017 speaking of cross-empowerment, unequivocally prescribes that the officers appointed under the State GST Acts or UT GST Acts are authorized to act as proper officers for the purpose of CGST Act, 2017, and this cross-empowerment envisaged in Sub-section (1) of Section 6 is without prejudice to other provisions of the Act and, therefore, does not interfere with the powers of officers conferred under the provisions of the CGST Act of 2017 – Further, the expression “subject to such conditions as the Government may, on the recommendations of Council, by notification, specify” means that if the Government intends to impose conditions on cross-empowerment, it can do so only by issuing a notification specifying such conditions on the recommendations of the GST Council. Reading the words “subject to such conditions… by a notification specified” to mean that the cross-empowerment, which is inherent and inbuilt in Sub-section (1), can be effectuated only through the issuance of a notification by the Central Government would be tantamount to doing violence to the plain language of the Sub-section - The cross-empowerment under Section 6(1) is automatic and inherent, and does not require a separate notification by the Government. A notification would be required only if the Government intends to impose conditions on such cross-empowerment. In the absence of any notification, officers appointed under the State/UT GST Acts are deemed to be proper officers for the purposes of the CGST Act, 2017 - The cross-empowerment envisaged under sub-section (1) of Section 6 is automatic and a result of legislative mandate. No separate notification by the Government is required to effectuate cross-empowerment – The proceedings arising from audit of accounts or detailed scrutiny of returns are to be initiated by the tax administration to which the taxpayer is assigned. However, the proceedings which are based on intelligence-based enforcement action relating to tax evasion, can be initiated either by the Central or the State tax administration - The question is answered accordingly and the writ petitions are dismissed - Whether bunching of show cause notices under Section 74 of the CGST Act, 2017 for multiple assessment years is permissible - HELD - From a plain reading of Section 74 of the CGST Act, 2017, it does not prima facie come out that there is any prohibition against the issuance of a show cause notice for evasions that have taken place in more than one financial year. However, the issue is left open to be determined in appropriate proceedings, as the Act does not expressly prohibit such bunching of notices - Whether the Joint Commissioner is competent to issue show cause notice where the amount involved is less than Rs.1 crore under the CGST Act, 2017 - HELD - Under Section 5(2) of the CGST Act, the central tax officer is empowered to exercise the powers of a subordinate officer, meaning thereby that the Joint Commissioner had the right to issue the notice, being the authority higher than the one empowered to initiate action - the CBIC Circular dated 09.02.2018 authorizes the Joint Commissioner to issue show cause notice where the amount involved exceeds Rs. 1 crore. However, this does not mean that the Joint Commissioner of Central Tax is not competent to issue a show cause notice where the monetary limit or the amount involved is less than Rs. 1 crore - The Joint Commissioner is competent to issue show cause notices irrespective of the monetary limit. The Rs. 1 Crore limit is only an administrative measure for optimal distribution of work relating to show cause notices and orders under Sections 73 and 74 of the CGST Act and does not restrict the authority of the Joint Commissioner - Whether the action envisaged by the show cause notice falls within the scope of an ‘intelligence-based enforcement action’ – HELD - The SCN was issued pursuant to intelligence inputs received by the authorities with regard to the availing of bogus claim of input tax credit by twelve units. Two of the units are functional, while the others are non-functional. These units availed bogus input credits by entering into paper transactions only. Searches were conducted in all twelve units and the intelligence inputs were found substantiated. This formed the basis for issuance of the SCN. The argument of petitioners that the show cause notice is not an intelligence-based enforcement action defies logic and rejected.
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