The Gujarat High Court has held that the Directorate General Of Goods And Service Tax Intelligence (DGGI) is empowered to transfer adjudication of Show cause notice (SCN) in GST evasion case.
The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that show cause notice issued by DGGI shall be adjudicated by the competent Central Tax Officer of the Executive Commissionerate in whose jurisdiction the noticee is registered. Therefore, it is necessary to refer to the main noticee/s who are 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.
The petitions were filed by the petitioner company and its Director challenging three show cause notices dated 16.03.2022 issued by respondent, the Additional Director, Directorate General of Goods and Service Tax Intelligence, Ahmedabad Zonal Unit proposing to impose penalty on the petitioners under section 122(1)(i)(x)(xvii)(xviii) and (xix) of the Central Goods and Service Tax Act, 2017.
The petitioner company is carrying on business in the State of Maharashtra and State of Uttar Pradesh in India.
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.
The petitioner contended that by the show cause notices, Additional/Joint Commissioner, Kanpur is designated as an adjudicating authority. It was submitted that Additional/Joint Commissioner, Kanpur is not a “proper officer” for adjudication of the show cause notices qua the petitioners as Additional/Joint Commissioner, Kanpur does not have jurisdiction to adjudicate the impugned show.
The petitioner 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 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.
The petitioner contended that invocation of Section 122(1) of the GST Act for imposition of penalty on petitioners is without jurisdiction as the said section is applicable qua the taxable person i.e. the supplier of goods or services, who commits any of the offences prescribed therein and such persons shall be liable to pay a penalty of Rs. 10,000 or the amount of tax evaded, whichever is higher.
The court held 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.
Case Details
Case Title: S. Kushalchand International Pvt. Ltd. & Anr. Versus
The Additional Director, Directorate General Of Goods And Service Tax Intelligence & Anr.
Case No.: R/Special Civil Application No. 15904 Of 2023 With R/Special Civil Application No. 15906 Of 2023 With R/Special Civil Application No. 15924 Of 2023
Date: 23/01/2025
Counsel For Petitioner: Mihir Joshi, Senior Advocate With Mr Dhaval Shah
Counsel For Respondent: Ms Hetvi H Sancheti
