2024-VIL-283-BOM
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SGST High Court Cases

GST - Sections 2(94), 2(107), 122(1-A) and Section 137 of the CGST Act, 2017 - Jurisdiction to issue Show Cause Notice to employee for evasion of tax by the employer - wrongful utilization of Input Tax Credit by the employer - Levy of penalty equivalent to the tax by invoking provisions of section 122(1A) and Section 137 of the CGST Act, 2017 – For representing and acting on behalf of Maersk, in tax matters before the Indian tax authorities, the petitioner were given the power of attorney - Petitioners contention that in the absence of personal benefit availed by the petitioners, invoking of provisions of Section 122(1A) and Section 137 of the CGST Act - whether the provisions of Section 122(1-A) with Section 137(1) and 137(2) of CGST Act would stand attracted to the petitioner, so as to confer jurisdiction on respondents, to issue the impugned show cause notice against the petitioner, who is merely an employee of MLIPL and a power of attorney of Maersk – HELD – the section 122 of the CGST Act clearly implies that it provides for levy of penalty for “certain offences” by taxable person - sub-section (1-A) of Section 122 provides that any person (necessarily be a taxable person), retains the benefit of the transactions covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1), and at whose instance, such transaction is conducted, “shall be liable to a penalty of an amount equal to the tax evaded or input tax credit availed of or passed on” - the intention of the legislature that a person who would fall within the purview of sub-section (1-A) of Section 122 is necessarily a taxable person as defined under section 2(107) of the CGST Act read with the provisions of section 2(94) of the CGST Act and a person who retains the benefits of transactions covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) of Section 122. In the absence of these basic elements being present, any show cause notice of the nature as issued, would be rendered illegal, for want of jurisdiction as also would stand vitiated by patent non-application of mind - person like the petitioner, who is a mere employee of MLIPL which is although a group company of Maersk, cannot fall within the purview of the provisions of section 122 (1A), as the petitioner cannot be a ‘taxable’ or a ‘registered person’ within the meaning and purview of the CGST Act so as to retain such benefits as the provision ordains. Hence, there was no question of respondents invoking section 122(1-A) against the petitioner – the purpose of issuing the show cause notice to the petitioner who is merely an employee, was designed to threaten and pressurize the petitioner - the impugned show cause notice is bad and illegal, deserving to be quashed and set aside – the writ petitions are allowed - Applicability of Section 137 of CGST Act – HELD - Section 137 concerns “Offences by Companies”. Sub-section (1) thereof would provide that when an offence committed by a person under the CGST Act is a company, every person who, at the time of the offence being committed, was in charge of and was responsible, to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. As to how Section 137 can form part of any invocation against the petitioner that too along with the provision of Section 122(1-A), qua the petitioner cannot be comprehended, this more particularly for the reason that the show cause notice is issued under section 74 of the CGST Act - In any event, even assuming that Section 137 could be invoked or is made applicable against the petitioner, then certainly proceedings under section 137 cannot be the proceedings which could be made answerable in a demand cum show cause notice issued under section 74, as such proceedings would be in the nature of a prosecution necessarily involving the applicability of Section 134. There cannot be such intermixing of jurisdictions, and that too in foisting a monetary liability as demanded from the petitioner, which on the revenue’s own showing in the show cause notice is alleged to be the liability of the companies (noticee Nos.1 to 10) who are the principal noticee’s.
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