2022 (3) TMI 1370 - HC - GST

State GST officer can assess taxpayer assigned to Central officer due to territorial jurisdiction and estoppel principles

Allahabad HC dismissed a writ petition challenging a show cause notice and assessment order issued by a State GST officer when the taxpayer was assigned ... Territorial Jurisdiction - proper officer or not - Registration was assigned to Central GST Officer - SCN was issued and adjudicated by the State GST officer - validity of impugned show cause notice and the impugned assessment order - HELD THAT:- It is admitted fact that the taxpayer i.e. the petitioner has been assigned to the Central Officer whereas the impugned show cause notice was issued by the State Officer i.e. the respondent no. 4 ( Dy. Commissioner, Commercial Tax Saharanpur, Sector 10, Saharanpur (B), Uttar Pradesh) before whom, despite show cause notice, the petitioner did not raise any objection as to the jurisdiction and instead participated in the proceedings and submitted to his jurisdiction. Thereafter the respondent no. 4 passed the impugned assessment order creating certain demand against the petitioner. It is thereafter that the petitioner filed the present writ petition and challenged the show cause notice and the assessment order solely on the ground that it is without jurisdiction. It is clear that the proper officer as defined under the CGST Act and UPGST Act, both are proper officers within their territorial jurisdiction and have been conferred with jurisdiction and powers under both the Acts to exercise their jurisdiction as proper officers subject to a rider that if an order is issued by a proper officer under the State Act or the Union territory Act on a subject matter then on the same subject matter, order shall not be passed by a proper officer under the CGST Act and vice versa and the orders so passed shall be intimated to the other jurisdictional officer under the other Act - Since proper officers under both the Acts have been empowered to exercise powers within their territorial jurisdiction and since both the set of officers i.e. under the CGST Act and UPGST Act are authorized to pass assessment orders, therefore, there arose necessity for division of work between two sets of officers, i.e. under CGST Act and UPGST Act having same territorial jurisdiction. A proper officer under the UPGST Act/CGST Act has inherent jurisdiction over assessees falling within his territorial jurisdiction but that jurisdiction has to be exercised as per cases assigned by the designated committee comprising Chief Commissioner/Commissioner, Commercial Taxes of respective States and jurisdictional Central Tax Chief Commissioners/Commissioners. In the present set of facts, the Chief Commissioner of Central Taxes, Lucknow and Meerut Zone, Lucknow and the Commissioner of Commercial Taxes, U.P. issued the aforesaid order no. 04/2018 assigning the taxpayers to proper officers and the case of the petitioner has been assigned to the proper officer under the CGST Act i.e. Central Officer and not to the respondent no. 4. Present case is not a case of inherent lack of jurisdiction rather it is a case of error of jurisdiction on account of non allotment of case of the petitioner assessee to the respondent no. 4/State officer. The respondent no. 4 being proper officer under the Act having territorial jurisdiction over the petitioner assessee is competent to exercise the powers conferred under the Act in respect of assessee, falling under his territorial jurisdiction. But as per minutes of the meeting of the G.S.T. Council and the circular issued in this regard, the distribution of work for administrative convenience was made and as per which the case of the petitioner was assigned to a central officer. Thus it is not a case that the state officer i.e. the respondent no. 4 lacks inherent jurisdiction but it is a case where the jurisdiction has been exercised by the respondent no. 4 in the absence of any objection or pointing out by the petitioner that the case has been assigned to a central officer - the impugned show cause notice and the impugned assessment order do not suffer from any inherent lack of jurisdiction and instead it is the result of contributory error of jurisdiction by the respondent no. 4., in the circumstances that the petitioner submitted to the jurisdiction of the respondent no. 4 without informing or without raising objection as to the assignment of the case to the central officer and after well participating in the assessment proceedings allowed the assessment order to be passed by the respondent no. 4. The writ petition is dismissed. Issues Involved:1. Jurisdiction of the State Officer to issue a show cause notice and pass an assessment order.2. The validity of the show cause notice and assessment order due to the assignment of the case to a Central Officer.3. The implications of the petitioner submitting to the jurisdiction of the State Officer without objection.4. The distinction between inherent lack of jurisdiction and error of jurisdiction.Issue-Wise Detailed Analysis:1. Jurisdiction of the State Officer to issue a show cause notice and pass an assessment order:The petitioner argued that the show cause notice and assessment order issued by the State Officer were without jurisdiction because the GST Council had assigned the case to a Central Officer. The relevant provisions of the CGST Act and UPGST Act, including Sections 2(21), 2(91), 6, and 9, were examined to determine the proper officer's jurisdiction. The court found that both the proper officers under the CGST Act and UPGST Act have jurisdiction within their territorial limits but must adhere to the assignment of cases for administrative convenience.2. The validity of the show cause notice and assessment order due to the assignment of the case to a Central Officer:The GST Council's decision and subsequent circulars mandated a division of taxpayers between Central and State tax administrations. The petitioner's case was assigned to a Central Officer, but the State Officer issued the show cause notice and passed the assessment order. The court noted that the petitioner did not raise any jurisdictional objections during the proceedings and participated fully, leading to a 'contributory error of jurisdiction.'3. The implications of the petitioner submitting to the jurisdiction of the State Officer without objection:The court emphasized that the petitioner, by not objecting to the jurisdiction and participating in the proceedings, effectively submitted to the jurisdiction of the State Officer. Citing precedents from the Supreme Court, the court held that a party cannot challenge the jurisdiction in further appellate proceedings if they have submitted to it initially. The court referenced cases such as 'Municipal Commissioner, Kolkata vs. Salil Kumar Banerji' and 'Kedar Shashikant Deshpandey vs. Bhor Municipal Council' to support this principle.4. The distinction between inherent lack of jurisdiction and error of jurisdiction:The court differentiated between inherent lack of jurisdiction and an error of jurisdiction. It concluded that the State Officer did not lack inherent jurisdiction but committed an error by exercising jurisdiction over a case assigned to a Central Officer. The court cited 'H.V. Nirmala vs. Karnataka State Financial Corporation' and 'Nusli Neville Wadia vs. Ivory Properties' to explain that jurisdictional errors can be corrected if timely objections are raised. Since the petitioner did not object, the error did not render the proceedings void ab initio.Conclusion:The court dismissed the writ petition, holding that the show cause notice and assessment order did not suffer from inherent lack of jurisdiction but were the result of a contributory error due to the petitioner's failure to object. The petitioner was advised to challenge the assessment order through an appeal under Section 107 of the CGST/UPGST Act.