2021 (12) TMI 119 - HC - GST

Court upholds delegation of powers to Deputy Commissioner under Section 74

The court upheld the validity of the delegation of powers to the Deputy Commissioner and confirmed the Deputy Commissioner's jurisdiction under Section 74 ... Delegation of powers and sub-delegation - proper officer and function assignment - sub-delegation under section 5(3) of the U.P. Goods and Services Tax Act, 2017 - adjudication under section 74 of the U.P. Goods and Services Tax Act, 2017 - distinction between officers of State tax and officers of Central tax - requirement of notification for entrustment of functions to Central officersProper officer and function assignment - adjudication under section 74 of the U.P. Goods and Services Tax Act, 2017 - Validity of the Deputy Commissioner's jurisdiction to issue notice, conduct proceedings and pass the adjudication order under section 74 for Financial Year 2018-2019. - HELD THAT: - Section 74 confers power to issue notices and determine tax, interest and penalty only on the 'proper officer.' Under section 2(91) a 'proper officer' is the Commissioner or an officer of State tax assigned that function by the Commissioner. The Commissioner possesses power to sub-delegate functions to subordinate officers by virtue of section 5(3) read with the territorial and assignment scheme in section 4(2). The Office Orders dated 01.07.2017 and 19.11.2018 were issued by the Commissioner and expressly set out the function-jurisdiction (including adjudication under Section 74) and pecuniary limits among officers of ranks including Deputy Commissioner. There is no statutory requirement that the source provision (section 5(3)) must be recited in the delegating order or that a gazette notification is necessary for sub-delegation to officers of State tax. The Commissioner's exercise of sub-delegation by administrative office orders is a valid mode of creating function assignment in favour of officers of State tax. Consequently, the adjudication order passed by the Deputy Commissioner was made by a competent 'proper officer.' [Paras 24, 25, 26, 27, 30]The Deputy Commissioner validly had jurisdiction as a 'proper officer' to initiate and conclude adjudication under section 74 for Financial Year 2018-2019; the challenge to his inherent jurisdiction fails.Distinction between officers of State tax and officers of Central tax - requirement of notification for entrustment of functions to Central officers - Whether decisions relied upon by the petitioner (relating to Customs/Central officers) render the Deputy Commissioner's adjudication invalid or require a notification under section 6 for State officers. - HELD THAT: - The Supreme Court authorities cited (concerning Customs officers and Revenue Intelligence) turned on a different statutory scheme in which officers who were not within the defined class of Customs officers required a further entrustment/notification under the statutory provision analogous to section 6. In contrast, under the U.P. Act officers of State tax derive function-jurisdiction from the Commissioner pursuant to sections 2(91), 4(2) and the general sub-delegation power in section 5(3). Section 6 (which empowers entrustment to officers appointed under the Central Act) applies only to officers of the Central Act and does not restrict sub-delegation by the Commissioner to officers of State tax. Accordingly, the cited decisions are distinguishable and do not invalidate the Commissioner's office orders or the Deputy Commissioner's exercise of jurisdiction. [Paras 34, 36, 37, 38, 39]The precedents relied upon are distinguishable; section 6's notification requirement does not apply to officers of State tax, and therefore does not vitiate the Deputy Commissioner's adjudicatory power.Final Conclusion: Writ petition dismissed. The adjudication order dated 07.08.2021 passed by the Deputy Commissioner for Financial Year 2018-2019 stands not vitiated for want of jurisdiction; petitioner remains free to challenge the merits before the statutory appellate forum within four weeks as permitted by the Court. 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.