The Single bench of the Kerala High Court has referred the issue of whether separate notification for cross-empowerment of state officials under GST Act is required to the division bench.
The bench of Justice Gopinath P. has observed that a reading of Section 6(1) of the CGST Act makes it clear that the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be proper officers for the purposes of the Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify.
The bench noted that since the issue raised in this writ petition will affect several proceedings, and taking note of the view expressed by the Madras High Court in Tvl. Vardhan Infrastructure, which is contrary to the prima facie view that this issue requires an authoritative pronouncement by a Division Bench of this Court.
The petitioner/assessee is a registered person under the Central Goods and Services Tax/State Goods and Services Tax Acts, 2017 (CGST/SGST Acts) allocated to the jurisdiction of the Central Tax Authorities. The petitioner has approached the Court challenging show cause notice on a short ground.
The petitioner submitted that show cause notice has been issued by the State Tax Authority without jurisdiction and without there being any notification as contemplated by the provisions of Section 6(1) of the Central Goods and Services Tax Act, 2017 (CGST Act).
The petitioner relied on the judgment of the Madras High Court inTvl. Vardhan Infrastructure v. Special Secretary, Head of the GST Council Secretariat, which takes the view that, without there being a notification as contemplated by the provisions of Section 6(1) of the CGST Act, there is no cross-empowerment, and the Central Authority or the State Authority to which a taxpayer is assigned must be the one to initiate proceedings under CGST/SGST Acts.
The department argued that a reading of the provisions of Section 6(1) of the CGST Act will show that empowerment of the State Authorities as proper officers under the CGST Act is contemplated by the provision itself, and it is only when any restriction on such powers is to be placed that a notification as contemplated by the provisions of Section 6(1) of the CGST Act has to be issued.
The department relied on the letter issued by the GST Policy Wing of the Central Board of Indirect Taxes and Customs, which answers a reference from the Directorate General of GST Intelligence and takes the view that it is only when any restriction has to be placed on the power of the State Authorities that a notification as contemplated by the provisions of Section 6(1) of the CGST Act has to be issued. The petitioner has not made out any ground for interference with show cause notice on the ground that it is issued without jurisdiction.
The court was of the prima facie view that the petitioner has not made out any case for interference with show cause notice on the ground that it is issued without jurisdiction on account of the fact that there is no notification issued under the provisions of Section 6(1) of the CGST Act empowering the officers of the State Goods and Services Tax Act to issue such a show cause notice.
The court observed that unaided by authority, a reading of the provision of 6(1) of the CGST Act suggests that by virtue of the operation of the provision itself, the officers appointed under the State Goods and Services Tax Act are proper officers for the purposes of the Central Goods and Services Tax Act, and it is only when any restriction or condition has to be placed on the exercise of power by any officer appointed under the State Goods and Services Tax Act that a notification as contemplated by the provisions of Section 6(1) of the CGST Act has to be issued.
However, the court noted the view expressed by the Madras High Court in Tvl. Vardhan Infrastructure, which is contrary.
Therefore, the court referred the issue whether intelligence based enforcement actions initiated by the Central Tax officers against those taxpayers which are assigned to the State Tax administration gets covered under section 6(1) of the CGST Act and the corresponding provisions of the SGST/UTGST Acts or whether a specific notification is required to be issued for cross empowerment on the same lines as notification No.39/2017-CT dated 13.10.2017 authorizing the State Officers for the purpose or refunds under section 54 and 55 of the CGST Act to the division bench.
Case Details
Case Title: Pinnacle Vehicles And Services Private Limited Versus Joint Commissioner
Case No.: WP(C) NO. 25724 OF 2024
Date: 7/11/2024
Counsel For Petitioner: Ammu Charle
Counsel For Respondent: J. Vishn
