2021 (12) TMI 119 - HC - GST

Court upholds delegation of powers to Deputy Commissioner under Section 74

M/s Maa Geeta Traders Versus Commissioner Commercial Tax And Another

The court upheld the validity of the delegation of powers to the Deputy Commissioner and confirmed the Deputy Commissioner's jurisdiction under Section 74 ... Jurisdiction - lack of inherent jurisdiction with the Deputy Commissioner to issue a notice, conduct proceedings and pass the impugned adjudication order - Validity of ex-parte adjudication order in exercise of powers vested u/s 74 (9) of the U.P. Goods and Services Tax Act, 2017 - tax period/Financial Year 2018-2019 - HELD THAT:- The statutory scheme appears to be - the legislature has first recognised the Commissioner as the “proper officer” for all fuctions under the Act. It also recognises the classes of officers who may be appointed officers under the Act. Further, officers of the UP VAT Act have been recognised as officers under the Act, on deemed basis. As to the officers of the Central Government, the State Government has been delegated the power (under section 4(1) of the Act) to appoint them officers under the Act. Second as to the functions to be performed by various officers under the Act, the Commissioner may sub-delegate absolutely, any functions to an officer of “State tax” [as defined under section 2(104) of the Act]. On the contrary, an officer of the Central Government may not be subdelegated such powers generally. He may be sub-delegated that power and he may act as a “proper officer” subject to the conditions as the State Government may by notification (under section 6 of the Act), specify, in that regard. Insofar as the present respondent-Deputy Commissioner is an officer under section 3 of the Act, section 6 of the Act has no application. Only with respect to officers appointed under the Central Act, the exercise of jurisdiction would be circumscribed by a notification that would have to be first issued by the State Government, before such jurisdiction may be created in their favour. Upon clear language of the provisions of the Act, the officers appointed under the Act would continue to be governed by the provisions of sections 3 and 4 read with section 2(91) of the Act and the general orders issued by the “Commissioner” in that regard, issued with reference to the power exercised under section 5 of the Act. Though any officer other than the person of the Customs could be appointed as a Custom Officer by virtue of section 4 of the Customs Act, such an officer could not hold any function jurisdiction in his favour unless a specific entrustment/sub-delegation were first made in his favour by issuance of a notification under section 6 of that Act. Therefore, the Commissioner of Customs (Preventive) and the Additional Director General, Directorate of Revenue Intelligence though became Customs Officers by virtue of Notification dated 02.05.2012 read with earlier Notification dated 07.03.2002 yet, in the absence of any further notification issued under section 6, (it was reasoned), they could not act as a “proper officer” to adjudicate a dispute under section 28 of the Customs Act, 1962 - in the context of the Act, any officer of the Central Government who may become an officer under Act by virtue of his appointment thus made, under section 4(1) of the Act, would remain dependent on a further notification that may be issued under section 6 of the Act, regarding function assignment/sub-delegation made in his favour, by the State Government, before he may act as a “proper officer”, under Act. However, that requirement and condition of law would not attach to an officer of the “State tax”. No defect exists in the exercise of power made by the Deputy Commissioner. The challenge raised in the present petition thus fails - Petition dismissed. Issues Involved:1. Jurisdiction of the Deputy Commissioner under Section 74 of the U.P. Goods and Services Tax Act, 2017.2. Validity of the delegation of powers to the Deputy Commissioner.3. Applicability of Section 5(3) of the Act.4. Relevance of Supreme Court decisions in similar contexts.5. Validity of the impugned adjudication order.Issue-wise Detailed Analysis:1. Jurisdiction of the Deputy Commissioner under Section 74 of the U.P. Goods and Services Tax Act, 2017:The petitioner challenged the ex-parte adjudication order dated 07.08.2021, arguing that the Deputy Commissioner lacked inherent jurisdiction to issue a notice, conduct proceedings, and pass the adjudication order under Section 74 of the Act. The petitioner contended that only the Commissioner, State Tax, had jurisdiction over the entire State of Uttar Pradesh, and any other officer could only exercise such jurisdiction under a valid delegation of power made under Section 5(3) of the Act.2. Validity of the Delegation of Powers to the Deputy Commissioner:The respondent countered that the Deputy Commissioner was included in the list of officers described under Section 3 of the Act and that the necessary function assignment was complete and valid in law, as per the Office Orders dated 01.07.2017 and 19.11.2018 issued by the Commissioner. The court examined the provisions of the Act, including Sections 2(24), 2(91), 3, 4, 5, and 6, to determine the validity of the delegation of powers.3. Applicability of Section 5(3) of the Act:The petitioner argued that the Commissioner needed to sub-delegate his specified powers to the Deputy Commissioner under Section 5(3) of the Act. The court found that Section 5(3) granted the Commissioner a general power to sub-delegate all or any of his powers/functions to any other officer subordinate to him, including the power to act as the 'proper officer' under Section 74 of the Act. The court concluded that the Office Orders dated 01.07.2017 and 19.11.2018 validly sub-delegated the function-jurisdiction to the Deputy Commissioner.4. Relevance of Supreme Court Decisions in Similar Contexts:The petitioner relied on two Supreme Court decisions (Commissioner of Customs Vs. Sayed Ali and another, and M/s Canon India Private Limited vs. Commissioner of Customs) to support their argument. However, the court distinguished these cases, noting that the statutory and factual contexts were different. In those cases, the issue was whether the officers were properly designated as 'proper officers' under the relevant statutes. The court found that the statutory scheme under the U.P. Goods and Services Tax Act, 2017, was different, and the Deputy Commissioner was validly designated as a 'proper officer' under the Act.5. Validity of the Impugned Adjudication Order:The court concluded that the Deputy Commissioner had valid jurisdiction to issue the notice and pass the adjudication order under Section 74 of the Act. The court dismissed the petition, leaving it open to the petitioner to challenge the merits of the impugned order before the statutory forum of appeal within four weeks.Conclusion:The court dismissed the petition, upholding the validity of the delegation of powers to the Deputy Commissioner and the jurisdiction exercised under Section 74 of the U.P. Goods and Services Tax Act, 2017. The petitioner was given the option to appeal the merits of the adjudication order within a specified period.