2023 (12) TMI 70 - HC - GST

Jurisdictional Challenge in GST Notice Dismissed: Commissioner's Authority Upheld on Highest Demand Basis

HC ruled on jurisdictional dispute involving GST Show Cause Notice. Court determined Thane's Additional/Joint Commissioner had proper jurisdiction based ... Jurisdiction to adjudicate show cause notices under delegated Circular - allocation of DGGI adjudication to Additional/Joint Commissioner based on highest demand - applicability of Circular dated 09.02.2018 as amended by Circular dated 12.03.2022 (paragraph 7.1) - right to raise defences in response to a show cause notice - requirement to pass a speaking order on rejection of defencesJurisdiction to adjudicate show cause notices under delegated Circular - allocation of DGGI adjudication to Additional/Joint Commissioner based on highest demand - applicability of Circular dated 09.02.2018 as amended by Circular dated 12.03.2022 (paragraph 7.1) - Additional/Joint Commissioner of Central Tax, Thane has jurisdiction to adjudicate the impugned Show Cause Notice under paragraph 7.1 of the Circular as amended. - HELD THAT: - The Court accepted the respondents' factual position that multiple show cause notices have been issued in connected matters and that the maximum demand arises in respect of a notice issued to an entity registered in Thane. Paragraph 7.1 of the Circular (as amended) empowers specified Additional/Joint Commissioners of Central Tax to adjudicate DGGI show cause notices on an All India basis and contemplates allocation of adjudication to the Commissionerate corresponding to the noticee whose principal place of business has the highest demand. Applying that administrative scheme to the facts placed before the Court, the impugned notice can be adjudicated by the Additional/Joint Commissioner of Central Tax, Thane. The petitioner's contention that the Thane officer lacks jurisdiction was therefore rejected as unmerited. [Paras 6, 9, 10, 11, 12]Jurisdiction of the Additional/Joint Commissioner, Thane to adjudicate the impugned SCN is upheld and the petitioner's challenge to such jurisdiction is dismissed.Right to raise defences in response to a show cause notice - requirement to pass a speaking order on rejection of defences - Other substantive contentions raised in the petition were not adjudicated and remain open for consideration by the adjudicating officer at the show cause notice stage. - HELD THAT: - The Court declined to examine factual or substantive allegations (such as non-activity during the relevant period, detention of directors, absence of capacity to provide online gaming services, or linkage to a particular GSTIN) at the writ stage because the matter is at the show cause notice stage. The petitioner is not precluded from raising these defences in response to the impugned SCN. The Court directed the adjudicating officer to consider all contentions and, if any defence is not accepted, to record reasons in a speaking order. [Paras 3, 4, 6, 13, 14]Substantive objections are left for the adjudicating officer to decide on merits; the officer must consider them and, if rejecting any, pass a speaking order.Final Conclusion: The petition is disposed of: the Additional/Joint Commissioner of Central Tax, Thane is competent to adjudicate the impugned SCN under paragraph 7.1 of the relevant Circular as amended; other substantive contentions were not decided and are left open for consideration by the adjudicating authority, which must deal with them and, if not accepted, record reasons in a speaking order. Issues involved:The petition impugned a Show Cause Notice (SCN) dated 15.09.2023, raising objections related to jurisdiction, liability, and business activities during a specific period.Jurisdiction Issue:The petitioner argued that the SCN was required to be adjudicated by the Additional/Joint Commissioner of Central Tax, Thane, not the Additional Director of Directorate General of GST Intelligence, Delhi Zonal Unit. The petitioner contended that the officer in Thane was the proper authority for adjudication.Liability Issue:The petitioner claimed that the SCN inaccurately attributed liability for a period when the petitioner was inactive due to the detention of the directors. Additionally, the petitioner disputed the basis of the SCN, stating that the assumption of involvement in online gaming services was incorrect as the petitioner lacked the means to provide such services.Business Location Issue:The petitioner highlighted discrepancies in the SCN concerning the business location. Although the SCN referenced the petitioner's principal place of business in Hyderabad, Telangana, the petitioner argued that it should be adjudicated by an officer in Thane, where the petitioner also had a separate registration.Legal Interpretation Issue:Reference was made to Circulars dated 09.02.2018 and 12.03.2022, with the petitioner contending that they did not apply to their situation. However, the respondent argued that the Circulars empowered officers with jurisdiction based on the highest demand raised in connected matters.Judgment Summary:The Court found that the Additional/Joint Commissioner of Central Tax, Thane, had jurisdiction to adjudicate the SCN, as the highest demand was raised in a notice issued to another entity registered in Thane. The petitioner's objections were deemed unmerited, and the Court emphasized that the concerned officer must consider all contentions and defenses before passing a speaking order. The petition was disposed of accordingly, with all pending applications also being resolved.