2023 (5) TMI 170 - HC - GST

Deputy Commissioner lacks authorization to issue GST notices under Rule 99 without Chief Commissioner approval

M/s. Sudhakar Traders Versus The State of Andhra Pradesh

The AP HC set aside GST notices dated 28.02.2023 issued by Deputy Commissioner under Rule 99 r/w Section 61 of APGST Act for lack of proper authorization. ... Scrutiny of GST Return - Validity of notices calling for explanation of the petitioner with regard to the discrepancies found in respect of the returns - Notices in Form GST ASMT-10 dated 28.02.2023 issued by 2nd respondent under Rule 99 of the A.P. Goods and Service Tax Rules, 2017 r/w Section 61 of the A.P. Goods and Service Tax Act, 2017 Whether the 2nd respondent has no statutory authority to inspect the premises of the petitioner and forward alert note to the 3rd respondent regarding the suppression of sales turnover and other deficiencies and 3rd respondent cannot act upon the said alert note and issue impugned notices dated 28.02.2023 to the petitioner? - HELD THAT:- It is true that when the Chief Commissioner requires the assistance of any other class of officers other than those mentioned in sub-section (1), he may require such assistance and the Government may issue notification in that regard. However, apart from that, the Government with an avowed object constituted V&E Department under G.O.Ms.No.269 and assigned certain functions, one of which is to safeguard the revenue due to the Government. In that context, the officers of the said department can share the relevant information with the Commercial Tax Department and assist them without any prior requisition. The powers conferred under G.O.Ms.Nos.269 and 504 are independent and exclusive and they are in aid to the Tax department but not in derogation to Section 72(2) and there is no conflict between the powers and functions of the V&E Department and the power of Chief Commissioner to make requisition to the Government under Section 72(2) of the APGST Act. Whether the impugned notices are unsustainable in law for want of authorization from the Proper Officer under Section 67 of the APGST Act and hence liable to be set aside? - HELD THAT:- The 3rd respondent who issued the impugned notices is the Deputy Commissioner (ST) but not the Chief Commissioner. Therefore, in order to issue the impugned notices, the 3rd respondent requires the authorization of the Chief Commissioner assigning the task of issuing notices under Rule 99 r/w Section 61 of the Act. In the impugned notices, neither any reference is made about such authorization nor it was filed separately in the Court - the two impugned notices suffer the vice of lack of authorization by the Proper Officer i.e., Chief Commissioner. Therefore, the impugned notices are liable to be set aside. However, that will not preclude the Chief Commissioner or the officer authorized by him to issue fresh notices under Rule 99 of the APGST Rules r/w Section 61 of the APGST Act. These Writ Petitions are allowed and the impugned notices dated 28.02.2023 are set aside with an observation that the respondent authorities are at liberty to issue fresh notices under Rule 99 of the APGST Rules r/w Section 61 of the APGST Act either through the Chief Commissioner or any other Officer of the State Tax authorized by the Chief Commissioner in that regard. Issues Involved:1. Authority of the 2nd respondent to inspect the premises and issue alert notes.2. Validity of the impugned notices for want of authorization under Section 67 of the APGST Act.Judgment Summary:Issue 1: Authority of the 2nd RespondentThe petitioner challenged the notices issued by the 3rd respondent based on alert notes from the 2nd respondent, arguing that the 2nd respondent lacked statutory authority under GST law to inspect business premises and issue alert notes. The court examined G.O.Ms.No.504 and G.O.Ms.No.269, which delineate the role of the Vigilance & Enforcement (V&E) Department, including the prevention of revenue leakage. The court found that the V&E Department has the authority to inspect premises and share relevant information with the tax department to safeguard government revenue. Thus, the contention that the 2nd respondent lacked authority was rejected.Issue 2: Validity of Impugned NoticesThe petitioner argued that the impugned notices were unsustainable for lack of proper authorization under Section 67 of the APGST Act. The court clarified that the notices were issued under Rule 99(1) r/w Section 61 of the APGST Act, which pertains to the scrutiny of returns and does not require authorization under Section 67. However, the court noted that the term 'Proper Officer' in Section 61 implies that the officer issuing the notices must be authorized by the Chief Commissioner. Since the 3rd respondent did not demonstrate such authorization, the notices were deemed invalid for lack of proper authorization.Conclusion:The writ petitions were allowed, and the impugned notices dated 28.02.2023 were set aside. The court permitted the respondent authorities to issue fresh notices under Rule 99 of the APGST Rules r/w Section 61 of the APGST Act, provided they are issued by the Chief Commissioner or an authorized officer. The petitioner must then submit objections within the stipulated time, and the Proper Officer should pass an appropriate order after a personal hearing. No costs were awarded, and any pending interlocutory applications were closed.