Jharkhand High Court
M/S Aka Logistics Private Limited vs Union Of India on 3 October, 2024
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
IN THE HIGH COURT OF JHARKHAND AT RANCHI
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W.P.(T) No. 5071 of 2023
------
M/s AKA LOGISTICS PRIVATE LIMITED, having its registered
office and place of business at 230A, 1st Floor, Chitrakoot Building,
A.J.C. Bose Road, P.O. - L. R. Sarani, P.S. Bhawanipur, Dist.-Kolkata,
West Bengal-700020, in the State of West Bengal and place of business
at 3rd Floor, Space No.2, Park Plaza, Bariatu Road, Morabadi, Ranchi,
Jharkhand, PIN-834009 in the State of Jharkhand, through its General
Manager cum Authorized Signatory Shri Ashwani Agrawal, s/o Lalit
Kumar Agraral, resident of At-Royal Villa, Flat 1b, 142/a, SK Deb
Road, Near Notunpally Shiv Mandir, P.O. Sreebhumi, P.S. Late Town,
Dist.-North 24 Praganas, West Bengal-700048 who is a citizen of
India.
... ... Petitioner
Versus
1. Union of India, through the Secretary, Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. North Block, New Delhi-
110001.
2. The Additional Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, Sakchi, P.O. & P.S. Sakchi,
Jamshedpur, Jharkhand-831001, District-East Singhbhum.
3. The Additional/Joint Commissioner (Adjudication), Central Goods &
Services Tax and Central Excise, Kolkata South, Commissionerate
having its office at 180, Shantipally, P.O. & P.S. Shantipally, R.B.
Connector, Kolkata-700107.
4. The Senior Intelligence Officer, Directorate General of GST
Intelligence, Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, Sakchi, P.O. & P.S. Sakchi,
Jamshedpur, Jharkhand-831001, District East Singhbhum.
... ... Respondents
5. Damodar Valley Corporation, DVC Head Quarter, DVC Towers, VIP
Road, P.O. & P.S. Baguiati, Kolkata - 700054, through its authorized
signatory.
.... .... Proforma Respondent
With
W.P.(T) No. 4861 of 2023
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M/s Ambey Mining Pvt. Ltd. having its registered office at 8, A.J.C.
Bose Road, Circular Court, P.O. Circus Avenue, P.S. Shakespeare
1 W.P.(T) No. 5071 of 2023 & Ors.
Sarani, Dist.-Kolkata, West Bengal-700017 and place of business at
Park Plaza, Office-Space No.1, 03rd Floor, Vill-Morabadi, P.S. Bariatu,
Ranchi-834009, in the State of Jharkhand through its Authorized
Signatory Sri Om Prakash Pareek, s/o Sri Radhe Shyam Pareek, aged
about 62 years, resident of at-48, Subhash Sangha Square, Subhas
Pally, Benachity, Durgapur, P.O. Benachity, P.S. Durgapur, Dist.-
Burdwan, West Bengal-713213.
.... Petitioner
Versus
1. Union of India, through the Secretary Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. Central Secretariat, New
Delhi-110001.
2. The Additional Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, Sakchi, Jamshedpur, P.O. & P.S.-
Sakchi, District-East Singhbhum, Jharkhand-831001.
3. The Senior Intelligence Officer, Directorate General of GST
Intelligence, Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, Sakchi, Jamshedpur, P.O. & P.S. Sakchi,
District-East Singhbhum, Jharkhand-831001.
4. The Additional/Joint Commissioner (Adjudication), Central Goods &
Service Tax and Central Excise, Ranchi, Commissionerate having its
office at Central Revenue Building, 5A, Mahatma Gandhi Road, P.O.
G.P.O., P.S. Chutia, District-Ranchi, Jharkhand-834001.
... ... Respondents
5. Damodar Valley Corporation, DVC Head Quarter Towers, DVC
Towers, VIP Road, P.O. & P.S. VIP Road, District-Kolkata, West
Bengal, 700054, through its authorized signatory.
..... Proforma Respondent
With
W.P.(T) No. 6464 of 2023
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Gora Koley, s/o Late Kartick Prasad Koley, aged about 66 years,
resident of At -A5/4 Lake Window, 66A Gobindpur Road, P.O. Lake
Garden, P.S. - Lake Thana, Dist. Kolkata, West Bengal-700045, who is
citizen of India, working as Director for gain in Company M/s Ambey
Mining Private Limited, through his authorized signatory, Om Prakash
Pareek.
.... Petitioner
Versus
1. Union of India, through the Secretary Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. North Block, New Delhi,
110001.
2 W.P.(T) No. 5071 of 2023 & Ors.
2. The Additional Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, P.O. & P.S.- Sakchi, Jamshedpur,
Jharkhand-831001.
3. The Additional/Joint Commissioner (Adjudication), Central Goods &
Services Tax and Central Excise, Ranchi, Commissionerate having its
office at Central Revenue Building, 5A, Mahatma Gandhi Road, P.O. +
P.S. Chutia, Jharkhand-834001.
4. The Senior Intelligence Officer, Directorate General of GST
Intelligence, Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, P.O. & P.S.-Sakchi, Jamshedpur,
Jharkhand-834001.
... ... Respondents
5. Damodar Valley Corporation, DVC Head Quarter Towers, DVC
Towers, VIP Road, P.O. & P.S. VIP Road, Kolkata, 700054, through
its authorized signatory.
..... Proforma Respondent
With
W.P. (T) No. 6465 of 2023
--------
Shourabh Agrawal, Director of M/s Aka Logistics Pvt. Ltd. having its
registered office and place of business at 230A, 1st Floor, Chitrakoot
Building, A.J.C. Bose Road, P.O. - L. R. Sarani, P.S. Bhawanipur,
Dist.-Kolkata, West Bengal-700020, in the State of West Bengal and
place of business at 3rd Floor, Space No.2, Park Plaza, Bariatu Road,
Morabadi, P.O. Morabadi, P.S. Bariatu, Distict-Ranchi, Jharkhand, Pin-
834009 in the State of Jharkhand, who is a citizen of India.
.... Petitioner
Versus
1. Union of India, through the Secretary Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. Central Secretariat, New
Delhi-110001.
2. The Additional Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, P.O. & P.S.- Sakchi, District-
Jamshedpur, East Singhbhum, Jharkhand-831001.
3. The Additional/Joint Commissioner (Adjudication), Central Goods &
Services Tax and Central Excise, Kolkata South Commissionarte
having its office at 180, Shantipally, R.B. Connector, P.O. E.K.T, P.S.
Naskarhat, District-Kolkata-700107.
4. The Senior Intelligence Officer, Directorate General of GST
Intelligence, Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade
Centre, 159, Dhalbhum Road, Sakchi, P.O. & P.S. Sakchi, District-
Jamshedpur, East Singhbhum, Jharkhand-831001.
3 W.P.(T) No. 5071 of 2023 & Ors.
... ... Respondents
5. Damodar Valley Corporation, DVC Head Quarter Towers, VIP Road,
P.O. & P.S. Salt Lake, District-Kolkata-700054, through its Chairman-
cum-Managing Director.
..... Proforma Respondent
With
W.P.(T) No. 4638 of 2024
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1. Coal Mines Associated Traders Private Limited, a Company registered
under the Companies Act, 1956 having its registered office at 18A,
Park Street, 6-0/1, Stephen Court, P.O. Middleton Row, P.S.
Shakespeare Sarani, District-Kolkata - 700071 through its Senior
Accounts Officer cum representative Sri Tilak Banerjee, son of
Somnath Banerjee, aged about 43 years, residing at Village -
Nabagram, P.O. Nabagram, P.S. Pandabeswar, District Paschim
Bardhaman, Pin-713363.
2. Mr. Sundeep De, one of the Directors of Coal Mines Associated
Traders Private Limited (CMAT), having its registered office at 18A,
Park Street, 6-0/1, Stephen Court, P.O. Middleton Row, P.S.
Shakespeare Sarani, District-Kolkata - 700071 represented by his
constituted Attorney Sri Tilak Banerjee, aged about 43 years, son of
Somnath Banerjee, residing at Village - Nabagram, P.O.-Nabagram,
P.S. Pandabeswar, District Paschim Bardhaman, Pin-713363.
... ... Petitioners
Versus
1. Union of India, through its Secretary, Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. New Delhi, District-New
Delhi-110001.
2. Deputy Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, having its office at 2 nd Floor,
Shaurya Trade Centre, 159, Dhalbhum Road, Sakchi, Jamshedpur, P.O.
- Sakchi, P.S. Sakchi, District-Singhbhum East, Jharkhand 831001.
3. Deputy/Assistant Commissioner (Adjudication), Central Goods &
Services Tax and Central Excise, Deoghar Division, having its office at
Deoghar Palace, VIP Chowk, Court More, Deoghar, P.O. & P.S.
Deoghar, District-Deoghar, Jharkhand-814112.
4. Senior Intelligence Officer, Directorate General of GST Intelligence,
Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade Centre, 159,
Dhalbhum Road, Sakchi, Jamshedpur, P.O. - Sakchi, P.S. Sakchi,
District-Singhbhum East, Jharkhand 831001.
4 W.P.(T) No. 5071 of 2023 & Ors.
5. Assistant Commissioner of Central Tax, Jamshedpur Division, Patna
Zonal Unit Commissionerate, having office at Boring Road, P.O. &
P.S. Boring Road, District-Patna (Bihar), PIN-800008.
6. Damodar Valley Corporation, DVC Head Quarter, through its
Chairman, having its office at DVC Towers, VIP Road, P.O.
Manicktala, P.S. Manicktala, District-Kolkata-700054.
... ... Respondents
With
W.P.(T) No. 4676 of 2024
-------
1. Coal Mines Associated Traders Private Limited, a Company registered
under the Companies Act, 1956 having its registered office at 18A,
Park Street, 6-0/1, Stephen Court, P.O. Middleton Row, P.S.
Shakespeare Sarani, District-Kolkata - 700071 through its Senior
Accounts Officer cum representative Sri Tilak Banerjee, son of
Somnath Banerjee, aged about 43 years, residing at Village -
Nabagram, P.O. Nabagram, P.S. Pandabeswar, District Paschim
Bardhaman, pin-713363.
2. Mr. Sundeep De, one of the Directors of Coal Mines Associated
Traders Private Limited (CMAT), having its registered office at 18A,
Park Street, 6-0/1, Stephen Court, P.O. Middleton Row, P.S.
Shakespeare Sarani, District-Kolkata - 700071 represented by his
constituted Attorney Sri Tilak Banerjee, aged about 43 years, son of
Somnath Banerjee, residing at Village - Nabagram, P.O.- Nabagram,
P.S. Pandabeswar, District Paschim Bardhaman, Pin-713363.
... ... Petitioners
Versus
1. Union of India, through its Secretary, Ministry of Finance (Department
of Revenue), 137, North Block, P.O. & P.S. New Delhi, District-New
Delhi-110001.
2. Deputy Director, Directorate General of Goods & Services Tax
Intelligence Regional Unit, Jamshedpur, having his office at 2nd Floor,
Shaurya Trade Centre, 159, Dhalbhum Road, Sakchi, Jamshedpur, P.O.
- Sakchi, P.S. Sakchi, District-Singhbhum East, Jamshedpur,
Jharkhand 831001.
3. Deputy/Assistant Commissioner (Adjudication), Central Goods &
Services Tax and Central Excise, Deoghar Division having its office at
Deoghar Palace, VIP Chowk, Court More, Deoghar, P.O. & P.S.
Deoghar, District-Deoghar, Jharkhand-814112.
5 W.P.(T) No. 5071 of 2023 & Ors.
4. Senior Intelligence Officer, Directorate of General of GST Intelligence,
Regional Unit, Jamshedpur, 2nd Floor, Shaurya Trade Centre, 159,
Dhalbhum Road, Sakchi, Jamshedpur, P.O. - Sakchi, P.S. Sakchi,
District-Singhbhum East, Jharkhand 831001.
5. Superintendent of Central Tax, Jamshedpur Division, Patna Zonal Unit
Commissionerate, having office at Boring Road, P.O. & P.S. Boring
Road, District-Patna (Bihar), PIN-800008.
6. Damodar Valley Corporation, DVC Head Quarter, through its
Chairman, having its office at DVC Towers, VIP Road, P.O.
Manicktala, P.S. Manicktala, District-Kolkata-700054.
... ... Respondents
CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE ARUN KUMAR RAI
.....
For the Petitioner : Mr. Kartik Kurmy, Advocate
Mr. Nitin Kr. Pasari, Advocate
Ms. Sidhi Jalan, Advocate
For the Resp.-CGST : Mr. P.A.S. Pati, Sr. Standing Counsel
Mr. Amit Kumar, Sr. Standing Counsel
Mr. Anurag Vijay, Jr. Standing Counsel
Mr. Om Prakash, Advocate
Mr. Srijan, Advocate
For the Resp.-DVC : Mrs. Debolina Sen Hirani, Advocate
.....
C.A.V. on 11th September, 2024 Pronounced on 03/10/2024
Per Sujit Narayan Prasad, J.
1. The instant writ petitions have been filed under Article 226 of the
Constitution of India wherein demand notice-cum-show cause notices
dated 31.03.2023 issued by the respondent no.2 in exercise of power
conferred under Section 74(1) of the Central Goods and Services Tax Act,
2017 (hereinafter referred to as the Act, 2017) for the period from July,
2020 to March, 2022; November, 2017 to April, 2020; November, 2017 to
April, 2020; July, 2020 to March, 2022; April, 2019 to March, 2022 and;
April, 2019 to March, 2022, respectively, have been assailed on the ground
of lack of jurisdiction.
2. Since in all these writ petitions, common issue has been raised, as such, are
being taken up together for its consideration.
3. Since the show cause notices are under challenge in these batch of writ
petitions and hence, serious objection has been raised on behalf of the
respondent-Union of India and the CGST agitating the issue that these
cases are not the cases where the writ petitions should be entertained at this
initial stage. The writ petitioners can very well raise all the grounds before
the assessing officer contending that it is a case of composite/mixed supply.
4. It needs to refer herein that the co-ordinate Bench has passed the order on
18.06.2024 in W.P.(T) Nos. 5071 of 2023; 4861 of 2023; 6464 of 2023
and; 6465 of 2023 holding the writ petitions maintainable.
5. This Court has posed a question to the learned counsel for the petitioners to
argue the matter on merit. Upon this, learned counsel for the respondent-
Revenue has submitted that although in paragraph-10 of the order dated
18.06.2024, the writ petitions have been held to be maintainable but if the
same is read along with the observation made by the co-ordinate Bench at
paragraph-8, wherein it has been observed on the basis of the consideration
of the show cause notice and the factual aspect about the prima facie view
of the Court that the writ petitioners have been able to establish a prima
facie case of abuse of process of law and lack of jurisdiction, hence, it has
been contended that since the Court on the basis of the prima facie view
has held the writ petitions maintainable, as such, the same is to be decided
conclusively by appreciating the statutory provisions and it has also been
submitted by Mr. Pati, learned counsel for the respondent-Revenue that the
issue of jurisdiction is still to be decided finally. For ready reference,
paragraph- 8 and 10 of the said order is being referred as under:
08.--- After going through the showcause and the factual aspects,
which are undisputed; it prima facie appears that the Petitioner has
been able to establish a prima facie case of abuse of process of law and
lack of jurisdiction---
"10. Having regard to the aforesaid discussions coupled with the
background of the instant case, relegating the Petitioner to alternative
remedy will be a palpable in-justice. Accordingly, we hold that the
instant writ application is maintainable."
6. Learned counsel for the petitioners after going through paragraph-8 of the
said order passed by the co-ordinate Bench of this Court has not disputed
the aforesaid fact rather he is fair enough to submit that since the co-
ordinate Bench has expressed the prima facie view and as such, the same
needs to be decided for the purpose of coming to the conclusive finding.
7. This Court, considering the observation made as under paragraphs-8 and 10
of the order dated 18.06.2024, is of the view that if the co-ordinate bench
on the basis of the prima facie view has held the writ petitions
maintainable, as such, the same is to be considered by coming to the
conclusive finding as to whether the writ petitions are maintainable or not.
8. Mr. Kartik Kurmy, learned counsel for the petitioners assisted by Mr. Nitin
Kr. Pasari, learned counsel has advanced his argument that the show cause
notices are under challenge on the ground of jurisdiction of the authority
who has issued the said show cause notices, since according to him, the
said notices have been issued under the signature of Additional Director,
Directorate General of Goods and Services Tax Intelligence, Regional
Unit, Jamshedpur and Deputy Director, Directorate General of Goods and
Services Tax Intelligence, Regional Unit, Jamshedpur who have got no
authority to issue the said notices.
9. It has been submitted that the Additional Director, Directorate General of
Goods and Services Tax Intelligence, Regional Unit, Jamshedpur and
Deputy Director, Directorate General of Goods and Services Tax
Intelligence, Regional Unit, Jamshedpur are not competent to issue the said
show cause notices due to the reasons that the notices are to be issued by
the proper Assessing Officer in view of the provision of Section 74 of the
Act, 2017 wherein it has been provided that where it appears to the proper
officer that any tax has not been paid or short paid or erroneously refunded
or where input tax credit has been wrongly availed or utilised by reason of
fraud, or any willful-misstatement or suppression of facts to evade tax, he
shall serve notice on the person chargeable with tax which has not been so
paid or which has been so short paid or to whom the refund has erroneously
been made, or who has wrongly availed or utilised input tax credit,
requiring him to show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon under section 50
and a penalty equivalent to the tax specified in the notice.
10. Heard learned counsel for the parties.
11. Since the show cause notice has been issued under section 74 of the Act,
2017, therefore for ready reference, Section 74(1) and other sub-sections of
the Act, 2017 where the power has been conferred under the Proper Officer
are being referred as under:
"74. Determination of tax not paid or short paid or erroneously
refunded or input tax credit wrongly availed or utilised by reason of
fraud or any willfulmisstatement or suppression of facts.-- (1) Where it
appears to the proper officer that any tax has not been paid or short paid
or erroneously refunded or where input tax credit has been wrongly
availed or utilised by reason of fraud, or any wilful-misstatement or
suppression of facts to evade tax, he shall serve notice on the person
chargeable with tax which has not been so paid or which has been so
short paid or to whom the refund has erroneously been made, or who has
wrongly availed or utilised input tax credit, requiring him to show cause
as to why he should not pay the amount specified in the notice along with
interest payable thereon under section 50 and a penalty equivalent to the
tax specified in the notice.
(2) The proper officer shall issue the notice under sub-section (1) at least
six months prior to the time limit specified in sub-section (10) for
issuance of order.
(3) Where a notice has been issued for any period under sub-section (1),
the proper officer may serve a statement, containing the details of tax not
paid or short paid or erroneously refunded or input tax credit wrongly
availed or utilised for such periods other than those covered under sub-
section (1), on the person chargeable with tax.
(4) The service of statement under sub-section (3) shall be deemed to be
service of notice under sub-section (1) of section 73, subject to the
condition that the grounds relied upon in the said statement, except the
ground of fraud, or any wilful-misstatement or suppression of facts to
evade tax, for periods other than those covered under subsection (1) are
the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice under
sub-section (1), pay the amount of tax along with interest payable under
section 50 and a penalty equivalent to fifteen per cent. of such tax on the
basis of his own ascertainment of such tax or the tax as ascertained by
the proper officer and inform the proper officer in writing of such
payment.
(6) The proper officer, on receipt of such information, shall not serve any
notice under sub-section (1), in respect of the tax so paid or any penalty
payable under the provisions of this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount paid under
sub-section (5) falls short of the amount actually payable, he shall
proceed to issue the notice as provided for in sub-section (1) in respect of
such amount which falls short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section (1) pays the
said tax along with interest payable under section 50 and a penalty
equivalent to twenty-five per cent. of such tax within thirty days of issue
of the notice, all proceedings in respect of the said notice shall be
deemed to be concluded.
(9) The proper officer shall, after considering the representation, if any,
made by the person chargeable with tax, determine the amount of tax,
interest and penalty due from such person and issue an order.
(10) The proper officer shall issue the order under sub-section (9) within
a periodof five yearsfrom the due date for furnishing of annual return for
the financial year to which the tax not paid or short paid or input tax
credit wrongly availed or utilised relates to or within five years from the
date of erroneous refund.
(11) Where any person served with an order issued under sub-section (9)
pays the tax along with interest payable thereon under section 50 and a
penalty equivalent to fifty per cent. of such tax within thirty days of
communication of the order, all proceedings in respect of the said notice
shall be deemed to be concluded."
12. It is thus evident that the Proper Officer has been made competent to
exercise the power for the purpose of initiating a proceeding under Section
74 of the Act, 2017.
13. At this juncture certain definitions are required to be referred herein which
are relevant for the purpose of consideration of the instant issue.
14. The definition of 'Commissioner' which has been defined under Section
2(24), 'Commissioner in the Board' which has been defined under Section
2(25) and 'Proper Officer' as has been defined under Section 2(91) are
being referred as under:
"2(24) ―Commissioner 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;
2(25) ―Commissioner in the Board means the Commissioner referred
to in section 168;
2(91) ―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;"
15. It is thus 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.
16. Section 168 also needs to be referred herein of the Act, 2017 as per which
power has been given to issue instructions or directions. For ready
reference, Section 168 of the Act, 2017 reads as under:
"168. Power to issue instructions or directions.-- (1) The Board
may, if it considers it necessary or expedient so to do for the purpose
of uniformity in the implementation of this Act, issue such orders,
instructions or directions to the central tax officers as it may deem fit,
and thereupon all such officers and all other persons employed in the
implementation of this Act shall observe and follow such orders,
instructions or directions.
(2) The Commissioner specified in clause (91) of section 2, sub-
section (3) of section 5, clause (b) of sub-section (9) of section 25,
sub-sections (3) and (4) of section 35, sub-section (1) of section 37,
sub-section (2) of section 38, sub-section (6) of section 39, [sub-
section (1) of section 44, sub-sections (4) and (5) of section 52]103,
[sub-section (1) of section 143, except the second proviso thereof]104,
sub-section (1) of section 151, clause (l) of sub-section (3) of section
158 and section 167 shall mean a Commissioner or Joint Secretary
posted in the Board and such Commissioner or Joint Secretary shall
exercise the powers specified in the said sections with the approval of
the Board."
17. It is evident from the provision as contained under Section 168 of the Act,
2017 that the Board has been conferred with the power to issue instructions
or directions and from sub-section (2) thereof it would be evident that the
Commissioner specified in clause (91) of section 2, sub-section (3) of
section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and
(4) of section 35, sub-section (1) of section 37, sub-section (2) of section
38, sub-section (6) of section 39, [sub-section (1) of section 44, sub-
sections (4) and (5) of section 52]103, [sub-section (1) of section 143,
except the second proviso thereof]104, sub-section (1) of section 151,
clause (l) of sub-section (3) of section 158 and section 167 shall mean a
Commissioner or Joint Secretary posted in the Board and such
Commissioner or Joint Secretary shall exercise the powers specified in the
said sections with the approval of the Board.
18. The aforesaid statutory provision clarifies that the Board has been
conferred with the power to issue instructions or directions upon the
Commissioner to exercise the power specified in the other sections with the
approval of the Board.
19. The 'Proper Officer' as has been defined under Section 2(91) of the Act,
2017 means 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, meaning
thereby, the Proper Officer will be said to be the Officer either the
Commissioner or the Officer of the Central Tax who is assigned that
function by the Commissioner in the Board.
20. If the definition of the Poper Officer will be taken into consideration along
with the provision of Section 168 of the Act, 2017, the Commissioner if
authorized to act by the Board in view of the power as conferred under
Section 168 of the Act, 2017, the Commissioner or the Joint Secretary will
be said to exercise the power of Commissioner or Joint Secretary construed
to be with the approval of the Board.
21. The reference of a notification dated 01st July, 2017 has been made upon
which much emphasis has been given by the learned counsel for the
petitioners. The said notification has been issued under the authority of the
Ministry of Finance, Department of Revenue, Central Board of Excise and
Customs in exercise of powers conferred under Section 3 read with Section
5 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and
Section 3 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017).
For ready reference, the said notification is being referred as under:
"Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Notification No. 14/2017 - Central Tax
New Delhi, the 1st July, 2017
10 Ashadha, 1939 Saka
G.S.R. (E). - In exercise of powers conferred under section 3 read with
section 5 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and
section 3 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017),
the Central Board of Excise and Customs hereby appoints the officers in the
Directorate General of Goods and Services Tax Intelligence, Directorate
General of Goods and Services Tax and Directorate General of Audit as
specified in column (2) of the Table below, as central tax officers and
invests them with all the powers under the Central Goods and Services Tax
Act, 2017 and the Integrated Goods and Services Tax Act, 2017 and the
rules made there under, throughout the territory of India, as are exercisable
by the central tax officers of the corresponding rank as specified in column
(3) of the said Table, namely:-
TABLE
Sl. Officers Officers whose
No. powers are to be
exercised
(1) (2) (3)
1. Principal Director General, Goods Principal Chief
and Services Tax Intelligence or Commissioner
Principal Director General, Goods
and Services Tax
2. Director General, Audit Chief Commissioner
3. Principal Additional Director Principal
General, Goods and Services Tax Commissioner
Intelligence or Principal Additional
Director General, Goods and
Services Tax or Principal Additional
Director General, Audit
4. Additional Director General, Goods Commissioner
and Services Tax Intelligence or
Additional Director General, Goods
and Services Tax or Additional
Director General, Audit
5. Additional Director, Goods and Additional
Services Tax Intelligence or Commissioner
Additional Director, Goods and
Services Tax or Additional Director,
Audit
6. Joint Director, Goods and Services Joint Commissioner
Tax Intelligence or Joint Director,
Goods and Services Tax or Joint
Director, Audit
7. Deputy/Assistant Director, Goods Deputy
and Services Tax Intelligence or Commissioner or
Deputy/Assistant Director, Goods Assistant
and Services Tax or Deputy/Assistant Commissioner
Director, Audit
8. Senior Intelligence Officer, Goods Superintendent
and Services Tax Intelligence or
Superintendent, Goods and Services
Tax or Superintendent, Audit
9. Intelligence Officer, Goods and Inspector
Services Tax Intelligence or
Inspector, Goods and Services Tax or
Inspector, Audit`
2. This notification shall come into force with effect from the 1st day of
July, 2017.
[F. No.349/52/2017-GST]
(Dr. Sreeparvathy S.L.)
Under Secretary to the Government of India"
22. Subsequent to the aforesaid notification, a corrigendum has been issued on
29th July, 2019 whereby and whereunder, the notification which was issued
on 01st July, 2017 has been modified to the extent that in place of "Central
Board of Excise and Customs", the same shall be read as "the
Government" in view of the provision of Section 3. For ready reference,
the said notification is also being referred as under:
"Ministry of Finance
(Department of Revenue)
(Central Board of Indirect Taxes and Customs)
Corrigendum
New Delhi, the 29th July, 2019
G.S.R. 533(E).--In the notification of the Government of India, in the
Ministry of Finance, Department of Revenue, No. 14/2017-Central Tax,
dated the 01st July, 2017, published in the Gazettee of India,
Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R.
818(E), dated the 01st July, 207, in English version, in page 2, in line 3,
for "the Central Board of Excise and Customs" read "the Government".
[F. No.349/52/2017-GST]
Ruchi Bisht, Under Secy."
23. It is evident that initially the notification dated 01 st July, 2017 was issued in
exercise of power conferred under Sections 3 and 5 but subsequently, it has
been modified said to be replacement by the words that the "Central Board
of Excise and Customs" be read as "the Government".
24. This Court, before proceeding further, needs to refer herein the provisions
as contained under Sections 3, 4 and 5 of the Act, 2017. For ready
reference, the same are being referred as under:
"3. Officers under this Act.-- The Government shall, by notification,
appoint the following classes of officers for the purposes of this Act,
namely:--
(a) Principal Chief Commissioners of Central Tax or Principal
Directors General of Central Tax,
(b) Chief Commissioners of Central Tax or Directors General of
Central Tax,
(c) Principal Commissioners of Central Tax or Principal Additional
Directors General of Central Tax,
(d) Commissioners of Central Tax or Additional Directors General of
Central Tax,
(e) Additional Commissioners of Central Tax or Additional Directors
of Central Tax,
(f) Joint Commissioners of Central Tax or Joint Directors of Central
Tax,
(g) Deputy Commissioners of Central Tax or Deputy Directors of
Central Tax,
(h) Assistant Commissioners of Central Tax or Assistant Directors of
Central Tax, and
(i) any other class of officers as it may deem fit:
Provided that the officers appointed under the Central Excise Act,
1944 shall be deemed to be the officers appointed under the
provisions of this Act.
4. Appointment of Officers.-- (1) The Board may, in addition to the
officers as may be notified by the Government under section 3,
appoint such persons as it may think fit to be the officers under this
Act.
(2) Without prejudice to the provisions of sub-section (1), the
Board may, by order, authorise any officer referred to in clauses (a)
to (h) of section 3 to appoint officers of central tax below the rank of
Assistant Commissioner of central tax for the administration of this
Act.
5. Powers of officers under GST.-- (1) 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.
(2) 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.
(3) 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.
(4) 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."
25. It is evident from the bare perusal of section 3 of the Act, 2017 which is
under Chapter II, the officer under this Act has been referred stipulating
therein that the Government shall, by notification, appoint the following
classes of officers for the purposes of this Act, namely:--
(a) Principal Chief Commissioners of Central Tax or Principal
Directors General of Central Tax,
(b) Chief Commissioners of Central Tax or Directors General of
Central Tax,
(c) Principal Commissioners of Central Tax or Principal
Additional Directors General of Central Tax,
(d) Commissioners of Central Tax or Additional Directors General
of Central Tax,
(e) Additional Commissioners of Central Tax or Additional
Directors of Central Tax,
(f) Joint Commissioners of Central Tax or Joint Directors of
Central Tax,
(g) Deputy Commissioners of Central Tax or Deputy Directors of
Central Tax,
(h) Assistant Commissioners of Central Tax or Assistant Directors
of Central Tax, and
(i) any other class of officers as it may deem fit:
Section 4 of the Act is with respect to the appointment of the
officers by the Board wherein it has been provided that the Board may, in
addition to the officers as may be notified by the Government under section
3, appoint such persons as it may think fit to be the officers under this Act.
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.
26. This Court, after going through the provisions of Sections 3, 4 and 5 of the
Act, 2017, is of the view that as per Section 3, it is the Government, by
notification, is to appoint the officers for the purpose of the Act while
Section 4 confers power upon the Board in addition to the appointment
which is to be made in pursuance of the provision of Section 3 to appoint
such persons as it may think fit to be the officers under the Act.
27. This Court, after having discussed the aforesaid statutory provision and
coming to the notification dated 01st July, 2017 reading it together with the
notification dated 29th July, 2019, is of the view that both are under
Sections 3 and 5 since Section 3 confers power upon the Government to
appoint the officers to act under the Act while Section 4 of the Act, 2017
confers power upon the Board in addition to the appointment which is to be
made by the Government, the Board can also appoint officers under this
Act.
28. It is evident from the notification dated 01st July, 2017, particularly from
the tabular chart, in column-(2), the reference of Officers is there and in
column-(3) Officers whose powers are to be exercised has been referred.
It appears from sl. no. 4 that the Additional Director General,
Goods and Services Tax Intelligence or Additional Director General,
Goods and Services Tax or Additional Director General, Audit is an officer
who has been authorized to exercise the power of Commissioner and from
sl. No.7, 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.
29. This Court, therefore, is of the view that since the notification dated 01 st
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.
30. The "Commissioner" has been defined under Section 2(24) of the Act,
2017 which has been taken note herein 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, as such, on the
basis of the conjoint reading of the said provision along with Section 2(91)
where the "Proper Officer" has been defined which means 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.
31. Since the notification dated 01st July, 2017 has been issued in exercise of
power conferred also under Section 5 of the Act, 2017 wherein the power
upon the Board may impose/confer powers upon the Officers in addition to
the Government in view of the provision of Section 3 and as such, the
notification dated 01st July, 2017 clarifies that the Additional Director
General, Goods and Services Tax Intelligence or Additional Director
General, Goods and Services Tax or Additional Director General, Audit
has been conferred with the power to exercise the power of Commissioner
by the authority as conferred to the Board under Section 5 of the Act, 2017,
hence, according to the considered view of this Court, Additional Director
General, Goods and Services Tax Intelligence or Additional Director
General, Goods and Services Tax or Additional Director General, Audit
will be the Proper Officer within the meaning of Section 2(91) of the Act,
2017.
32. Further, it would be evident from the Circular No.3/3/2017-GST dated
05.07.2017 issued by the Ministry of Finance, Department of Revenue,
Central Board of Excise and Customs, Government of India, wherein the
Officers, particularly in sl. No.3, the Deputy or Assistant Commissioner,
Central Tax has been mentioned, who has been empowered to function as
"Proper Officer" under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10)
of Section 74 of the Act.
33. Further, it would be evident from the Circular No.31/05/2018-GST dated
09.02.2018 issued by the Ministry of Finance, Department of Revenue,
Central Board of Excise and Customs, Government of India, wherein at
paragraph-5, pecuniary limit was fixed and specific power was provided to
the Superintendent of Central Tax; Deputy or Assistant Commissioner of
Central Tax; Additional or Joint Commissioner of Central Tax. For ready
reference, paragraph-5 of the said circular is being referred as under:
...
5. Whereas, for optimal distribution of work relating to the issuance of show
cause notices and orders under sections 73 and 74 of the CGST Act and also
under the IGST Act, monetary limits for different levels of officers of central
tax needs to be prescribed. Therefore, in pursuance of clause (91) of section 2
of the CGST Act read with section 20 of the IGST Act, the Board hereby
assigns the officers mentioned in Column (2) of the Table below, the functions
as the proper officers in relation to issue of show cause notices and orders
under sections 73 and 74 of the CGST Act and section 20 of IGST Act (read
with sections 73 and 74 of CGST Act), up the monetary limits as mentioned in
columns (3), (4) and (5) respectively of the Table below:
Table
Sl. Officer of Monetary limit of Monetary limit of Monetary limit of
No. Central Tax the amount of the amount of the amount of
central tax integrated tax central tax and
(including cess) (including cess) not integrated tax
not paid or short paid or short paid (including cess)
paid or or erroneously not paid or short
erroneously refunded or input paid or
refunded or tax credit of erroneously
input tax credit integrated tax refunded or input
of central tax wrongly availed or tax credit of
wrongly availed utilized for issuance central tax and
or utilized for of show cause integrated tax
issuance of show notices and passing wrongly availed
cause notices and of orders under or utilized for
passing of orders sections 73 and 74 issuance of show
under sections 73 of CGST Act made cause notices and
and 74 of CGST applicable to passing of orders
Act matters in relation under sections 73
to integrated tax and 74 of CGST
vide section 20 of Act made
the IGST Act applicable to
integrated tax
vide section 20 of
the IGST Act
(1) (2) (3) (4) (5)
1. Superintendent Not exceeding Not exceeding Not exceeding
of Central Tax Rupees 10 lakhs Rupees 20 lakhs Rupees 20 lakhs
2. Deputy or Above Rupees 10 Above Rupees 20 Above Rupees 20
Assistant lakhs and not lakhs and not lakhs and not
Commissioner exceeding Rupees exceeding Rupees 2 exceeding Rupees
of Central Tax 1 crore crores 2 crores
3. Additional or Above Rupees 1 Above Rupees 2 Above Rupees 2
Joint crore without any crores without any crores without any
Commissioner limit limit limit
of Central Tax
34. The said issue has been taken note by different High Courts. In the case of
Yasho Industries Limited Versus Union of India reported in 2021 SCC
Online Guj 3131, wherein at para 13, the Gujrat High Court has held that
"proper officer" in relation to any function to be performed under the
CGST Act means the Commissioner or the officer of the Central Tax, who
is assigned that function by the Commissioner in the Board and respondent
No. 3 is an officer of Directorate General of Goods and Services Tax
Intelligence (DGGI) holding the designation of Senior Intelligence Officer,
who was appointed as the Central Tax Officer with all the powers under the
CGST Act and IGST Act and the Rules made thereunder, as are exercisable
by the Central Tax Officers of the corresponding rank of Superintendent as
specified in the Notification No. 14 of 2017-CT dated July 1, 2017 issued
by the Central Board of Excise and Customs. The Gujrat Haigh Court
further observed that respondent No. 3 being the officer of the Central Tax
and the Superintendent under the CGST Act by virtue of the said
notification dated July 1, 2017, he was also assigned the powers of proper
officer by the Board vide circular dated July 5, 2017 issued in exercise of
the powers conferred by clause (91) of section 2 of the CGST Act read with
section 20 of the IGST Act. For ready reference the relevant paragraph of
the aforesaid judgment is quoted as under:
"13. From the bare reading of section 70 of the CGST Act, it clearly
emerges that the proper officer has the power to summon any person
whose attendance he considers necessary either to give evidence or to
produce the documents in any inquiry in the same manner in the case
of a civil court under the CPC. Now, as per the definition of "proper
officer" as contained in section 2(91), a "proper officer" in relation to
any function to be performed under the CGST Act means the
Commissioner or the officer of the Central Tax, who is assigned that
function by the Commissioner in the Board. It is pertinent to note that
as stated in the petition itself, respondent No. 3 is an officer of
Directorate General of Goods and Services Tax Intelligence (DGGI)
holding the designation of Senior Intelligence Officer, who was
appointed as the Central Tax Officer with all the powers under the
CGST Act and IGST Act and the Rules made thereunder, as are
exercisable by the Central Tax Officers of the corresponding rank of
Superintendent as specified in the Notification No. 14 of 2017-CT
dated July 1, 2017 issued by the Central Board of Excise and
Customs. It is further pertinent to note that respondent No. 3 being the
officer of the Central Tax and the Superintendent under the CGST Act
by virtue of the said notification dated July 1, 2017, he was also
assigned the powers of proper officer by 5 the Board vide circular
dated July 5, 2017 issued in exercise of the powers conferred by
clause (91) of section 2 of the CGST Act read with section 20 of the
IGST Act. Therefore, respondent No. 3 is a proper officer in relation
to the function to be performed under the CGST Act as contemplated
under section 2(91), and as such, was entitled to issue summons under
section 70 of the CGST Act in connection with the inquiry initiated
against the petitioner."
35. Further the Allahabad High Court in the case of R.C. Infra Digital
Solutions Vs. UOI reported in 2024 SCC Online All 36, wherein the
authority of Government who issued Notification No. 14/2017-CT dated
01-07-2017 was under challenge contending that U/s 5(2) of the CGST
Act, on the ground that only the Board could have issued the said
notification not Government. The Division Bench has observed which is
quoted as under:
"14. No doubt, this Court is clear in its mind that in a taxation statute,
any officer performing a function under the said statute must
necessarily meet three concomitants, namely, (i) existence of a
class/post; (ii) appointment of officers to that said post/class; and
(iii) assignment of power to the said post/class. Under the CGST Act,
2017, it is seen and as has been rightly contended by the learned
counsel for the petitioner that Section 3 of the CGST, 2017 creates the
class/post of officers and it clearly says that the Government by
notification shall appoint the said class of officers for the purposes of
the CGST Act. Further, Section 4 of the CGST Act, 2017 provides for
appointment of officers/additional officers by the Board in addition to
the notification by the Government under Section 3 of the CGST Act,
2017. Most significantly, Section 5 of the CGST Act, 2017 says that
the Board may impose conditions/limitations on exercise of powers
and discharge of duties conferred or imposed on an officer of central
tax under the Act. It further says that an officer of central tax may
exercise the powers and discharge the duties conferred or imposed
under the GST Act on any other officer of central tax, who is
subordinate to him. Section 5(3) of the CGST Act, 2017 says that the
Commissioner may delegate his powers to any other officer who is
subordinate to him subject to conditions and limitation as may be
specified by him. Thus, it can be safely said that Section 5 of the CGST
Act provides that any officer who has been so appointed must be
assigned/entrusted/invested with specified powers under the CGST Act
to enable him to perform those functions.
15. Apparently, unless these processes are undertaken, an officer
cannot perform the functions under the law. The functions are
specified in various provisions where either it is assigned to a class of
officers or to a "proper officer". A proper officer as per Section 2(91)
of the CGST Act, 2017 is a "Commissioner" or the officer of the
central tax, who has been assigned that function by the Commissioner
in the Board. Thus, assignment of function to a specific class of
officers is an inevitable requirement.
16. Vide Notification No. 02/2017-CT, dated 19-6-2017 issued under
Section 3 read with Section 5 of the CGST Act, 2017, the Central
Government appointed classes of officers for central tax and vested
them with all the powers in respect of the territory specified. However,
these provisions do not provide for assignment/entrustment/investment
of powers by the Government. The Central Government issued
another Notification No. 14/2017-CT, dated 1-7-2017 under Section 3
read with Section 5 of the CGST Act, 2017 notifying equivalent
class/posts for officers of DGGI. Thus, officers of DGGI became
central tax officers of specified class/post. However, as pointed out by
the learned counsel for the petitioner, these DGGI officers were
merely appointed by the Government in view of Section 3 of the Act
and they could not have been assigned/entrusted/invested with
specified powers under the CGST Act to enable them to perform those
functions under Section 5 of the Act, as it is essentially the Board,
which has been empowered under the said section of the GST Act to
confer such power on the officer of central tax.
19. However, the question of investing powers on the central tax
officers by the Board or the Government does not end there as this
Court finds that the Circular No. 3-3-2017-GST, dated 5-7-2017
(Annexure 11) issued by the Commissioner in Board relates to
assignment of various functions under the CGST Act, 2017 to different
class of officers, who had been construed to be DGSI officers in terms
of Notification No. 14/2017.
20. A conjoint reading of Notification No. 14/2017, dated 1-7-2017
and Circular No. 3-3-2017-GST, dated 5-7-2017 sufficiently
contemplates the assigning of powers to DGSI officers by the Board.
Let's take an example, as per the circular of 5-7-2017, a
Superintendent of Central Tax has been assigned the power to
function as is mentioned in Sub-section (1) of Section 70 and a
reading of Notification No. 14/2017 leads us to conclude as mentioned
in Serial No. 8 that a Senior Intelligence Officer, Goods and Service
Tax Intelligence or Superintendent, Goods and Services Tax or
Superintendent, audit has been notified to be appointed under Section
3 of the GST Act as a central tax officer and is invested with all the
powers under the Central Goods and ServiceTax Act, 2017,
throughout the territory of India, as are exercisable by the central tax
officers of the rank of "Superintendent". In any case, this Court does
not find any force in holding that such technical nuances to be fatal
for the notification or to the functions performed by various DGGI
officers. The jurisprudence on the implications of invocation of a
wrong provision suggests that as long as an authority has power,
which is traceable to a source, the mere fact that source of power is
not indicated or wrongly indicated in an instrument does not render
the instrument invalid.
21. For all the aforesaid reasons, this Court is not inclined to hold
that the impugned Notification No. 14/2014, dated 1-7-2017 is ultra
vires to the powers provided to the Government under the CGST Act,
2017.
36. Thus, the Division Bench of the Allahabad High Court has observed that
the impugned Notification No. 14/2014, dated 1-7-2017 is not ultra vires to
the powers provided to the Government under the CGST Act, 2017 and it
has further been held that a proper officer as per Section 2(91) of the CGST
Act, 2017 is a "Commissioner" or the officer of the central tax, who has
been assigned that function by the Commissioner in the Board. Thus,
assignment of function to a specific class of officers is an inevitable
requirement.
37. Learned counsel for the petitioners has relied upon the judgment rendered
by the Hon'ble Apex Court in the case of Commissioner of Customs vs.
Sayed Ali and Anr., (2011) 3 SCC 537.
38. This Court, before applying the applicability of the said judgment, is of the
view that the factual aspect of the aforesaid case needs to be referred herein
which is being referred as under:
Set of civil appeals were filed before the Hon'ble Apex Court
wherein the validity of the demands raised by virtue of reassessment orders
passed by the Collector of Customs (Preventive), Mumbai, pursuant to the
issuuance of show-cause notices under Section 28 of the Act has been
questioned. Since the question of law arising in all the appeals was similar,
as such Hon'ble Apex Court had disposed of the said appeals by the
common judgment.
In the first set of appeals, Customs, Excise and Gold (Control)
Appellate Tribunal (for short "Cegat") has held that the Commissioner of
Customs (Preventive), Mumbai, not being a "proper officer" as defined in
Section 2(34) of the Customs Act, 1962, did not have the jurisdiction to
issue show-cause notice in terms of Section 28 of the Act. However, in the
second set of appeals (Nos. 4603-604 of 2005), the Customs, Excise and
Service Tax Appellate Tribunal (for short "Cestat") has, to the contrary,
held that the Commissioner of Customs (Preventive), Mumbai had the
jurisdiction to issue notice under Section 28 of the Act.
However, to appreciate the controversy, facts in Civil Appeal
being CAs Nos. 4294-95 of 2002 has been taken into consideration by the
Hon'ble Apex Court wherein the Respondent No. 1 was a partner in
Respondent No. 2 firm viz. M/s Handloom Carpet, which was engaged in
the business of carpet manufacture/export. Respondent No. 2 was charged
with misusing the Export Passbook Scheme by selling goods cleared duty
free in the open market or selling the passbook on premium in violation of
the ITC restriction imposed on such sale.
Investigations in the matter were conducted by the Marine and
Preventive Wing of the Customs and the Assistant Collector of Customs
(Preventive), Mumbai, issued to the respondents a show-cause notice,
alleging violation of the provisions of Section 111(d) of the Act. Later on,
the same officer adjudicated upon the said show-cause notice, confirming
the demands raised in the show-cause notice.
Being aggrieved, the respondents preferred an appeal before the
Collector of Customs (Appeals), which was allowed by holding that since
the matter involved demand of duty beyond a period of six months, the
show-cause notice was required to be issued by the Collector, and not by
the Assistant Collector. However, the Collector (Appeals) granted liberty to
the Department to readjudicate the case by issuing a proper show-cause
notice.
Accordingly, the Collector of Customs (Preventive) issued show-
cause notice dated asking the respondents to show cause as to why the
goods should not be confiscated, and customs duty be not levied in terms of
Section 28(1) of the Act, by invoking the extended period of limitation.
In reply to the show-cause notice, the jurisdiction of the
Collector of Customs (Preventive) was questioned on the ground that the
jurisdiction of a commissioner by virtue of Notification No. 251/83 being
more specific and limited in nature, the said notification will prevail over
Notification No. 250/83. But vide order dated 19-8-1996, the Collector of
Customs (Preventive) rejected the objections regarding his jurisdiction and
the Collector confirmed the demand of duty under Section 28(1) of the Act
and simultaneously ordered confiscation of two consignments of dyes,
sulphur blue and sulphur blue green valued, and imposed a redemption
fine.
Aggrieved, the respondents preferred appeals before Cegat and
accepting the preliminary objection of the respondents regarding
jurisdiction of the Collector (Preventive), Cegat has, allowed the appeals by
holding that the Commissioner of Customs (Preventive) does not have
jurisdiction to issue the impugned show-cause notice and in view thereof
he could not have the jurisdiction to adjudicate the matter when imports
have taken place at Bombay Customs House.
Further, the facts of another set of Civil Appeals being CAs Nos.
4603-604 of 2005 were similar to those in CAs Nos. 4294-95 of 2002, but,
in the former case, the Cestat while upholding the issue of show-cause
notice by the Collector of Customs (Preventive) under Section 28 of the
Act, set aside the order of adjudication passed by the said officer with a
direction that the issues be determined afresh by the jurisdictional Collector
of Customs who had earlier assessed the bill of entry in question at
Bombay Port. Hence, the cross-appeals were preferred by the Revenue and
the importers.
39. In the aforesaid backdrop of the facts the Hon'ble Apex Court while taking
into consideration a conjoint reading of Sections 2(34) and 28 of the Act of
the Act 1962 wherein "proper officer" and "Notice for payment of duties,
interest, etc" has been dealt respectively, has observed 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. It has further been
observed that only the officers of Customs, who are assigned the functions
of assessment, which of course, would include reassessment, working
under the jurisdictional Collectorate within whose jurisdiction the bills of
entry or baggage declarations had been filed and the consignments had
been cleared for home consumption, will have the jurisdiction to issue
notice under Section 28 of the Act.
40. Thus, from the factual aspects of the said case it is evident that the matter
pertains to the Customs Act, 1962 wherein the provision has been made
under Section 2(34) giving definition of Proper Officer. For read reference,
the same is being referred as under:
"2.Definitions.-- * * *
(34) 'proper officer', in relation to any functions to be performed
under this Act, means the officer of Customs who is assigned those
functions by the Board or the Commissioner of Customs;"
41. It is evident from the aforesaid definition that the Proper Officer in relation
to any functions to be performed under this Act, means the officer of
Customs who is assigned those functions by the Board or the
Commissioner of Customs.
42. It is evident from the aforesaid provision that only such officers of the
customs who has been assigned specific function would be Proper Officer
in terms of Section 2(34) of the Act. Specific entrustment of function by
either the Board or the Commissioner of Customs is therefore, the
governing test to determine whether an "officer of Customs" is the "proper
officer".
43. 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.
44. The Hon'ble Apex Court has further observed at paragraph-21 with the
contention of the Revenue that once territorial jurisdiction is conferred, the
Collector of Customs (Preventive) becomes a "proper officer" in terms of
Section 28 of the Act is accepted, it would lead to a situation of utter chaos
and confusion, inasmuch as all officers of Customs, in a particular area be
it under the Collectorate of Customs (Imports) or the Preventive
Collectorate, would be "proper officers". Therefore, the Hon'ble Apex
Court has observed that it is only the officers of Customs, who are assigned
the functions of assessment, which of course, would include reassessment,
working under the jurisdictional Collectorate within whose jurisdiction the
bills of entry or baggage declarations had been filed and the consignments
had been cleared for home consumption, will have the jurisdiction to issue
notice under Section 28 of the Act.
45. The Hon'ble Apex Court has decided that the view taken in opposition that
the source of power to act as a "proper officer" is Sections 4 and 5 of the
Act and not sub-section (34) of Section 2 of the Act, as such, said sections
merely authorise the Board to appoint officers of Customs and confer on
them the powers and duties to be exercised/discharged by them, but for the
purpose of Section 28 of the Act, an officer of Customs has to be
designated as "proper officer" by assigning the function of levy and
collection of duty, by the Board or the Commissioner of Customs.
46. This Court, after going through the aforesaid judgment and again adverting
to the factual aspect of the present case, is of the view that the factual
aspect of the aforesaid case is quite different to that of the present case
since herein the issue pertains to the Act, 2017 while the said case is under
the Customs Act, 1962.
47. 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.
48. The fact of the judgment relied upon by the learned counsel for the
petitioners is different since herein the Central Government has come out
with the notification as also the Board, two separate notifications said to be
issued in exercise of power conferred under Sections 3 and 5 of the Act,
2017. The moment the notification has been issued in exercise of power
conferred under Section 4 which confers power upon the Board to appoint
the Commissioner in addition to appointment of Commissioner under
Section 3 by the Government, the conferment of power to act as a Proper
Officer will be there within the meaning of Section 2(91) of the Act, 2017.
Conclusion
49. The notification dated 01st July, 2017 and 09th February, 2018 thus confers
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 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 as
would be evident from the tabular chart but the aforesaid distinguishable
fact as per the discussion made of the factual aspect in the case of
Commissioner of Customs vs. Sayed Ali and Anr. (supra) is not available,
therefore, 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.
50. This Court, therefore, is of the view based upon the aforesaid discussion
that the ground which has been taken by the petitioner to quash the show
cause notices due to want of jurisdiction is having no substance.
51. Accordingly, 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.
52. This Court, after answering the said issue and coming to the conclusion
that the reference of the factual aspect has widely been discussed which is
relevant with the consideration/appreciation of the factual aspect, as such,
is of the view that it would not be just and proper to exercise the
extraordinary jurisdiction conferred upon this Court to show interference
with the show cause notices due to the settled position of law that the writ
court should not interfere at the stage of issuance of show-cause notice by
the authorities because the parties get ample opportunity to put forth their
contentions before the authorities concerned but it is also equally settled
proposition of law that when a show-cause notice is issued either without
jurisdiction or in an abuse of process of law, certainly in that case, the writ
court would not hesitate to interfere even at the stage of issuance of show-
cause notice, as has been held by the Hon'ble Apex Court in the case of
Union of India v. VICCO Laboratories, (2007) 13 SCC 270. For ready
reference the relevant paragraph is quoted as under:
"Normally, the writ court should not interfere at the stage of issuance
of show-cause notice by the authorities. In such a case, the parties get
ample opportunity to put forth their contentions before the authorities
concerned and to satisfy the authorities concerned about the absence
of case for proceeding against the person against whom the show-
cause notices have been issued. Abstinence from interference at the
stage of issuance of show-cause notice in order to relegate the parties
to the proceedings before the authorities concerned is the normal rule.
However, the said rule is not without exceptions. Where a show-cause
notice is issued either without jurisdiction or in an abuse of process of
law, certainly in that case, the writ court would not hesitate to
interfere even at the stage of issuance of show-cause notice. The
interference at the show-cause notice stage should be rare and not in
a routine manner. Mere assertion by the writ petitioner that notice
was without jurisdiction and/or abuse of process of law would not
suffice. It should be prima facie established to be so. Where factual
adjudication would be necessary, interference is ruled out."
53. Further the Hon'ble Apex Court in the case of State of U.P. v. Arezzo
Developers (P) Ltd., (2016) 12 SCC 530 has reiterated the same view
which is being quoted as under:
"4. Normally, this Court does not interfere with the show-cause
notice, but when any show-cause notice is issued without jurisdiction,
the Court has to see whether it is patently illegal, without jurisdiction,
arbitrary or mala fide in nature. In the present case, when the landed
properties were exchanged amongst the bhumidhars without any
consideration, can it be treated to be an instrument of transfer so as to
attract stamp duty."
54. 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.
55. Accordingly, all the instant writ petitions stand disposed of.
56. Pending interlocutory application(s), if any, also stand disposed of.
(Sujit Narayan Prasad, J.)
I Agree,
(Arun Kumar Rai, J.) (Arun Kumar Rai, J.)
Saurabh / A.F.R.
