2021 (6) TMI 918 - HC - GST

Officer designated by Board is 'proper officer' under s.2(91) and can issue summons under s.70; s.74(5) payments valid

HC held that the officer designated by the Board under the CGST Act qualifies as a 'proper officer' under s.2(91) and was empowered to issue summons under ... Power to summon under Section 70 of the CGST Act - Definition of 'Proper Officer' under Section 2(91) of the CGST Act - Assignment of functions by the Board via Circular under Section 2(91) read with Section 20 of the IGST Act - Delegation of powers by Commissioner under Section 167 of the CGST Act - Voluntary payment under Section 74(5) of the CGST Act - Concurrent or parallel inquiries and respect for judicial nature summonsPower to summon under Section 70 of the CGST Act - Definition of 'Proper Officer' under Section 2(91) of the CGST Act - Respondent No.3 was a 'proper officer' entitled to issue summons under Section 70 of the CGST Act. - HELD THAT: - Section 70 confers upon the proper officer power to summon persons to give evidence or produce documents in an inquiry. Section 2(91) defines 'proper officer' in relation to any function as the Commissioner or an officer of Central Tax assigned that function by the Commissioner in the Board. The respondent No.3 was appointed as a Central Tax Officer (Superintendent rank) by Notification No.14 of 2017-CT dated 1.7.2017 and the Board, by Circular dated 5.7.2017 issued under Clause (91) of Section 2 read with Section 20 of the IGST Act, assigned the function corresponding to Section 70(1) to the Superintendent of Central Tax. On that basis the respondent No.3 qualified as a proper officer and was entitled to issue the summons under Section 70 in connection with the inquiry. [Paras 9, 13]The summons issued by respondent No.3 under Section 70 were valid as he was a proper officer for that function.Assignment of functions by the Board via Circular under Section 2(91) read with Section 20 of the IGST Act - Delegation of powers by Commissioner under Section 167 of the CGST Act - Assignment of functions to officers as 'proper officers' by the Board through Circular is effective and does not require a separate Notification under Section 167. - HELD THAT: - Section 167 deals with delegation of powers by the Commissioner by notification and is inapplicable to the separate power of the Board to assign functions under the definition in Section 2(91). The Board (Central Board of Indirect Taxes and Customs) exercised its authority to assign functions to officers by issuing the Circular dated 5.7.2017 under Section 2(91) read with Section 20 of the IGST Act. Therefore, there was no legal requirement that the assignment effected by the Board be repeated as a Notification under Section 167, and the submission that only a Commissioner's notification could effect such assignment was rejected. [Paras 11, 12, 14]The Circular dated 5.7.2017 validly assigned functions to officers as proper officers and did not contravene Section 167.Concurrent or parallel inquiries and respect for judicial nature summons - Existence of another inquiry by a different agency did not render the summons issued under Section 70 unsustainable or unenforceable. - HELD THAT: - The DRI communication and the summons under Section 70 related to overlapping but distinct aspects of the alleged incorrect double benefits; the former sought information on imports/exports while the latter was an exercise of a judicial nature power to record evidence/production of documents under the CGST Act. There was no interim stay restraining inquiry proceedings and the petitioners were required to cooperate with the summons; compliance would not cause prejudice. [Paras 3, 15, 16]Parallel or concurrent proceedings did not invalidate the summons and the petitioners were obliged to comply.Voluntary payment under Section 74(5) of the CGST Act - The payment of the amount under Form GST DRC 03 was not shown to be involuntary or under duress and must be dealt with in accordance with Section 74. - HELD THAT: - The petitioners made a payment via Form GST DRC 03 indicating 'voluntary' payment under Section 74(5) and annotated the reason as 'under protest'. No search or seizure under Section 67 took place, and no complaint was filed by the petitioners alleging coercion. Payments under Section 74(5) are to be notified to the proper officer and thereafter dealt with under the statutory scheme; absent proof of duress or contrary orders, the Court declined to treat the payment as involuntary. [Paras 10, 17, 18]The challenged payment will be governed by the procedures in Section 74 and is not set aside for being involuntary.Final Conclusion: The writ petition was dismissed. The Court upheld the validity of the Board's Circular assigning officers as proper officers for the functions in question, held respondent No.3 competent to issue summons under Section 70, rejected the challenge to parallel inquiries, and declined to set aside or treat as involuntary the payment made under Section 74(5), leaving its adjustment and adjudication to the statutory process. Issues Involved:1. Challenge to Summons under Section 70 of CGST Act.2. Request for refund/recredit of INR 3 Crore.3. Challenge to Circular dated 5.7.2017 regarding assignment of functions to officers under CGST Act.4. Allegation of coercive recovery of INR 3 Crore.5. Jurisdiction of respondent No.3 to issue summons.6. Parallel proceedings by different authorities.7. Voluntariness of payment made under Section 74(5) of CGST Act.Issue-wise Detailed Analysis:1. Challenge to Summons under Section 70 of CGST Act:The petitioners challenged the summons dated 12.4.2021 issued under Section 70 of the CGST Act, which required them to provide evidence and documents. The court examined the definition of 'Proper Officer' under Section 2(91) of the CGST Act and concluded that the respondent No.3, being a Senior Intelligence Officer of DGGI and appointed as a Central Tax Officer, had the authority to issue the summons. The court found that the Circular dated 5.7.2017, which assigned functions to officers, was valid and did not require a separate notification under Section 167 of the CGST Act.2. Request for Refund/Recredit of INR 3 Crore:The petitioners sought a direction for the refund or recredit of INR 3 Crore paid on 9.2.2021. The court noted that the payment was made under Section 74(5) of the CGST Act and was reflected in Form GST DRC-03. The court emphasized that the payment was marked as 'voluntary' and 'under protest' related to an inquiry into an incorrect claim of double benefits. The court stated that the payment would be dealt with or adjusted by the concerned respondent in accordance with the law, particularly under Section 74 of the CGST Act.3. Challenge to Circular dated 5.7.2017:The petitioners challenged the Circular dated 5.7.2017, arguing that the assignment of functions to officers should be through a notification as per Section 167 of the CGST Act. The court rejected this argument, clarifying that Section 2(91) pertains to the assignment of functions by the Commissioner in the Board, not the delegation of powers under Section 167. The court upheld the validity of the Circular, stating that the Board had the authority to assign functions to officers through the Circular.4. Allegation of Coercive Recovery of INR 3 Crore:The petitioners alleged that the INR 3 Crore payment was made under duress. The court examined the Form GST DRC-03, which marked the payment as 'voluntary' and 'under protest.' The court found no evidence of coercion, noting that no search or seizure proceedings were conducted under Section 67 of the CGST Act, and the petitioners did not file any complaint regarding coercion. The court concluded that the payment was voluntary and would be adjusted as per the provisions of Section 74 of the CGST Act.5. Jurisdiction of Respondent No.3 to Issue Summons:The petitioners questioned the jurisdiction of respondent No.3 to issue the summons. The court reaffirmed that respondent No.3, being a Senior Intelligence Officer of DGGI and appointed as a Central Tax Officer, had the authority to issue the summons under Section 70 of the CGST Act. The court emphasized that the Circular dated 5.7.2017 validly assigned the function of issuing summons to the proper officers.6. Parallel Proceedings by Different Authorities:The petitioners argued that they were subjected to parallel proceedings by the Directorate of Revenue Intelligence (DRI) and respondent No.3. The court clarified that the DRI's inquiry was related to the incorrect availment of double benefits under the EOU Scheme, while respondent No.3's inquiry pertained to the refund of ITC under the CGST Act. The court found no issue with parallel proceedings, as they were related to different aspects of the petitioners' activities.7. Voluntariness of Payment Made under Section 74(5) of CGST Act:The court examined the voluntariness of the INR 3 Crore payment made under Section 74(5) of the CGST Act. The court noted that the payment was marked as 'voluntary' in Form GST DRC-03 and found no evidence of coercion. The court emphasized that the payment would be dealt with according to the law, particularly under Section 74 of the CGST Act.Conclusion:The court dismissed the petition, finding no merit in the arguments presented by the petitioners. The court upheld the validity of the summons issued under Section 70 of the CGST Act, the Circular dated 5.7.2017, and the voluntariness of the INR 3 Crore payment made by the petitioners. The court emphasized that the payment would be adjusted according to the provisions of Section 74 of the CGST Act.