2024 (8) TMI 1381 - HC - GST

GST Input Tax Credit Blocked: Deputy Commissioner's Order Upheld After Comprehensive Review of Jurisdictional Authority

M/s. Atulya Minerals Versus Commissioner of State Tax, Cuttack and another

HC dismissed writ petition challenging Deputy Commissioner's order blocking Input Tax Credit. Court held that Deputy Commissioner had valid jurisdiction ... Seeking declaration that the blocking of ITC in question is bad in law - lack of jurisdiction to pass the order - orders impugned also have been passed without complying the principles of natural justice - HELD THAT:- The orders impugned relates to State GST and the same having been passed by the Deputy Commissioner of the State Taxes, the contention raised that he has no jurisdiction to pass the order, cannot be a justifiable ground in view of Rule 86 A (1) of the OGST Rules, 2017. It is made clear that the Commissioner or an officer authorized by him in this behalf, not below the rank of an Assistant Commissioner, can pass the order and in the instant case, the impugned orders having been passed by the Deputy Commissioner, who is higher in rank to Assistant Commissioner, it is well within his jurisdiction to pass such orders. So far as the contention raised with regard to the Circular issued by Government of India dated 02.11.2021 under Annexure-2 is concerned, that ipso facto can only applicable to the Central GST and not to the State GST unless the said circular is adopted by the State Government by making a declaration. Nothing has been placed on record to show that the said circular has been adopted by the State Government for State GST. The claim made by the petitioner that the orders impugned under Annexures-1 and 5 have been passed by an officer having no jurisdiction, cannot be sustained in the eye of law - Petition disposed off. Issues: Jurisdiction of Deputy Commissioner to pass orders, Compliance with principles of natural justice, Applicability of circular on State GSTThe judgment deals with a writ petition seeking to quash letters issued by the Deputy Commissioner of State Tax and challenging the blocking of Input Tax Credit (ITC) as being unlawful. The petitioner argued that the Deputy Commissioner lacked jurisdiction to issue such orders and that the orders were passed without adhering to natural justice principles. The petitioner relied on a circular issued by the Central Government to support their contention regarding jurisdiction and natural justice.The respondent, representing the Revenue, argued that the circular cited by the petitioner was not applicable to State GST as it was addressed to Central Tax officials. The respondent pointed out that under the OGST Rules, 2017, specifically Rule 86A (1), the Deputy Commissioner, being higher in rank than an Assistant Commissioner, had the authority to pass the impugned orders. Additionally, the respondent cited previous court decisions to support the position that the principle of natural justice had been complied with in this case.The court, after hearing arguments from both parties, analyzed Rule 86A (1) of the OGST Rules, 2017, which empowers the Commissioner or an officer not below the rank of an Assistant Commissioner to pass orders related to fraudulent availing of input tax credit. The court concluded that since the impugned orders were issued by the Deputy Commissioner, who holds a higher rank than an Assistant Commissioner, the jurisdictional challenge raised by the petitioner was not valid. The court also clarified that the circular from the Central Government did not automatically apply to State GST unless adopted by the State Government.Ultimately, the court dismissed the writ petition, stating that the petitioner's claims regarding lack of jurisdiction and non-compliance with natural justice principles were not sustainable in law. The court relied on previous decisions to affirm that the principle of natural justice had been addressed in this case, thereby disposing of the petition.