TaxTMI 
TaxTMI 
2024 (2) TMI 808
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..... 3. The petitioner challenges the validity of Circular No. 3/3/2017-GST dated 05.07.2017, Circular No. 31/05/2018- GST dated 09.02.2018 and Circular No. 169/01/2022-GST dated 12.03.2022 (impugned circulars) mainly on the ground that the Central Board of Indirect Taxes and Customs (Board) had no powers to issue the same and based thereon to confer any power of assignment of functions of the 'proper officer' upon Central Tax Officers for issuing an audit report under Section 65(6) or show cause notices under Section 73 or 74 r/w. Section 65(7) of the Central Goods and Services Tax Act, 2017 (CGST Act). 4. The petitioner, based upon the above, also challenges the action of the Audit Authority issuing the audit report and the consequent three show cause notices viz. (i) show cause notice dated 26.04.2023 issued by Respondent No. 4 under Section 73 of the CGST Act, (ii) show cause notice dated 09.05.2023 issued by Respondent No. 4 under Section 74 of the CGST Act, and (iii) show cause notice dated 08.08.2023 issued by Respondent No. 5 under Section 74 of the CGST Act, 2017 (impugned show cause notices). 5. The petitioner's main contention in this petition is that the impugned circul....
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....nefit of interpretation must be extended to the assessee and not the revenue. He submitted that the position for interpreting any exemption provision or any exemption notification may be otherwise. He relied on Commissioner of Customs (Import), Mumbai v/s. Dilip Kumar And Company & Ors. - (2018) 9 SCC Page 1 to support this proposition. 10. Mr Sachdeva finally submitted that it is the settled position in law that where a show cause notice is issued based upon an invalid circular, such show cause notice can always be challenged before the Writ Court without having to show cause and face any adverse order from any officer or any authority lacking jurisdiction over the subject matter. He relied on Commissioner of Customs v/s. Sayed Ali And Anr. - (2011) 3 SCC 537 to support this contention. 11. Based on the above contentions, Mr Sachdeva submitted that the Rule in this petition ought to be made absolute by granting the petitioner reliefs in terms of prayer clauses (a), (b) or in the alternate prayer clause (c) of the petition. 12. Ms Asha Desai, learned Senior Standing Counsel submitted that this petition is pre-mature because the same was directed only against the show cause notic....
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....ons, and, therefore, the decisions in Dilip Kumar (supra) or Sayed Ali (supra) are inapplicable. 16. Ms Desai pointed out that the petitioner filed a reply to the show cause notices, and pursuant to the same, the Assistant Commissioner of Central GST, by order dated 29.12.2023, has already disposed of the impugned show cause notices by confirming certain demands and dropping others. She submitted that there was no challenge to the order dated 29.12.2023, which, in any case, was appealable under the provisions of the CGST Act. She, therefore, submitted that this is yet another reason why this Court ought not to entertain the present petition. 17. For all the above reasons, Ms Desai submitted that this petition may be dismissed. 18. The rival contentions now fall for our determination. 19. This petition came up for consideration on 26.09.2023, on which date, at Ms Desai's request, time was granted to the respondents to file their reply. On 23.10.2023, Ms Desai sought further two weeks to file reply. She stated that no coercive steps would be taken till the next date. Accordingly, this was recorded in our order dated 23.10.2023. 20. The respondents then filed Misc. Civil Applicat....
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.... we had clarified that such orders should not be given effect until further orders in this petition. Therefore, we do not think that it would be appropriate to dismiss this petition without going into the issue of challenge to the impugned circulars and the impugned show cause notices. 24. If the petitioner succeeds in establishing that the impugned circulars deserve to be quashed, then, as a corollary, the impugned show cause notices may have to be interfered with on the ground that they were not issued by the "proper officer" as defined under Section 2(91) of the CGST Act. However, if we conclude that the impugned circulars suffer from no legal infirmity, then perhaps leave will have to be granted to the respondents to give effect to the order dated 29.12.2023, and liberty would have to be granted to the petitioner to challenge the order dated 29.12.2023 by resorting to the remedies provided under the CGST Act. Therefore, the main issue involved in this petition concerns the legality and validity of the impugned circulars. 25. To appreciate the challenge, we have to first refer to some of the provisions of the CGST Act, which was enacted to make provision for the levy and colle....
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....d person, whose records are audited, about the findings, his rights and obligations and the reasons for such findings. Secondly, under Section 65(7), it is the "proper officer" who may initiate action under Section 73 or 74 where the audit conducted under sub-section (1) results in the detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised. 31. In the present case, there is no dispute that the tax authorities audited the petitioner's accounts under Section 65 of the CGST Act. On the conclusion of the audit, the Deputy Commissioner (Circle-VI Goa) CGST Audit-II Commissionerate, Pune, vide the communication dated 15.11.2022, informed the petitioner of the audit report and called upon the petitioner to discharge its statutory liabilities in this regard as per the provisions of the CGST Act. This communication, along with the accompanying audit report, was issued to the petitioner under Section 66(6) of the CGST Act. 32. By communication dated 27.10.2022, the petitioner filed a detailed response to the audit report, though the same was styled as a preliminary reply to the GST audit observations. Each of the audit objections wa....
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....urisdiction specified in the tables given below the notification. 36. Mr Sachdeva submitted that the above notification dated 19.06.2017 merely provides for the appointment of Central Tax Officers for exercising powers in the respective territorial jurisdiction and that this notification does not provide for any assignment/entrustment of the functions of such officers to act as "proper officers" under the CGST Act, IGST Act and rules made thereunder. Mr Sachdeva also submitted that in any case, in terms of Section 2(91) of the CGST Act, the Central Government cannot assign the functions of a "proper officer" to the central tax officers since such assignment has to be made by the "Commissioner in the Board". He, therefore, submitted that the above notification dated 19.06.2017 is not very relevant for determining whether the fourth and the fifth respondents were validly assigned the functions of "proper officer" under Section 2(91) of the CGST Act. 37. The first of the impugned circulars is dated 05.07.2017 (Exh. B Colly at pages 130 to 131), and the same reads as follows: "Circular: 3/3/2017-GST dated 05-Jul-2017 Proper officer relating to provisions other than Registration and....
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....tion to Rule 93 xxiii. Rule 94 xxiv. Sub-rule (6) of Rule 96 xxv. Sub-rule (2) of Rule 97 xxxvi. Sub-rule (2), (3), (4), (5) and (7) of Rule 98 xxvii. Sub-rule (2) of Rule 100 xxviii. Sub-rules (2), (3), (4) and (5) of Rule 101 xxix. Rule 143 xxx. Sub-rules (1), (3), (4), (5), (6) and (7) of Rule 144 xxxi. Sub-rules (1) and (2) of Rule 145 xxxii. Rule 146 xxxiii. Sub-rules (1), (2), (3), (5), (6), (7), (8), (10) (11) (12) (14) and (15) of Rule 147 xxxiv. Sub-rules (1), (2) and (3) of Rule 151 xxxv. Rule 152 xxxvi Rule 153 xxxvii. Rule 155 xxxviii. Rule 156 4. Superintendent of Central Tax i. Sub-section (6) of Section 35 ii. Sub-sections (1) and (3) of Section 61 iii. Sub-section (1) of Section 62 iv. Sub-section (7) of Section 65 v. Sub-section (6) of Section 66 vi. Sub-section (11) of Section 67 vii. Sub-section (1) of Section 70 viii. Sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Section 73 ix. Sub-rule (6) of Rule 56 x. Sub-rules (1), (2) and (3) of Rule 99 xi. Sub-rule (1) of Rule 132 xii. Sub-rule (1), (2), (3) and (7) of Rule 142 xiii. Rule 150 5. Inspector of Central Tax i. Sub-section (3) of Section 68 ii. Sub-rule (17) ....
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....anon India Pvt. Ltd. (supra), in the context of the definition of "proper officer" under Section 2(34) of the Customs Act, 1962, had declared the Central Board's notification dated 02.05.2012 assigning functions of "proper officer" on certain officers as ultra vires on the short ground that Section 2(34) did not confer any powers on any authority to entrust any functions to officers. The Hon'ble Supreme Court held that Section 6 was the only Section which provides for the entrustment of functions of Customs officers to other officers of the Central or the State Government or local authority. Therefore, if it was intended that officers of the Directorate of Revenue Intelligence who are officers of the Central Government should be entrusted with the functions of the Customs officers, it was imperative that the Central Government should have done so in the exercise of its power under Section 6 of the Act. 42. The Court noted that the reason why such a power is conferred on the Central Government is obvious, and that is because the Central Government is the authority which appoints both the officers of the Directorate of Revenue Intelligence, which is set up under the Notification dat....
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....us, the only substantive difference between the definition of "proper officer" under the Customs Act, 1962 and the "proper officer" under the CGST Act is that the expression "officer of customs" appearing in Section 2(34) of the Customs Act is replaced with the expression "officer of central tax" in Section 2(91) of the CGST Act. 47. In Canon India Pvt. Ltd. (supra) and Sayed Ali (supra), the notifications or the circulars impugned therein were struck down because an officer of DRI was not an "officer of customs" as provided under Section 2(34) of the Customs Act. In the present case, however, there is no dispute and no such dispute was ever raised about the officers of the Audit Commissionerate, which includes respondents No. 4 and 5 as being the "officers of central tax". In paragraph 5 of the written submissions filed by Mr Sachdeva on behalf of the petitioner, it is clearly stated that "the petitioner is not disputing the appointment of Audit Commissionerate as Central Tax Officers. In fact, the petitioner is raising the challenge with regard to the source of power of the Board in assigning functions of proper officer to Audit Commissionerate. To reiterate, the core of the cha....
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....ST Act and subject to Section 5(2) of the CGST Act has assigned the officers the functions as that of proper officers in relation to the various Sections of the CGST Act and the Rules made thereunder, and as such the Superintendent of Central Tax has been assigned the function of Section 70(1) of the CGST Act. Thus, there being no delegation of powers by the Commissioner, the provisions contained in Section 167 of the CGST Act could not be said to have been attracted, nor was there any necessity to issue Notification as sought to be submitted by Mr. Rastogi. There could not be any disagreement to the proposition of law laid down by the Supreme Court in case of Canon India Pvt. Limited (supra) relied upon by the learned Advocate Mr. Rastogi that when a statute directs that the things to be done in a certain way, it must be done in that way alone. However, in the instant case, the Board has assigned the officers to perform the function as proper officers in relation to various Sections of CGST Act and the Rules made thereunder by issuing the Circular in question, the question of issuing Notification for delegation of powers by the Commissioner as contemplated under Section 167 of the....
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....ed earlier, empowers the Government, by notification, to appoint certain classes of officers for the purposes of the CGST Act. Accordingly, in the exercise of powers conferred by Section 3 r/w Section 5 of the CGST Act and Section 3 of the IGST Act, the Central Government, vide notification dated 19.06.2017, has already appointed certain central tax officers and central tax officers subordinate to them for the purposes of the CGST Act and vested in them all powers under the CGST Act and IGST Act and Rules made thereunder with respect to the jurisdiction specified in the tables given below the said notifications. 53. Thus, in the present case, not even any dispute was raised about the officers referred to in the impugned circulars being central tax officers. Section 4 of the CGST Act provides that the Board may, in addition to the officers as may be notified by the Government under section 3, appoint such persons as it may think fit to be the officers under the CGST Act. Without prejudice to the provisions of sub-section (1) of Section 4, the Board may, by order, authorise any officer referred to in clauses (a) to (h) of Section 3 to appoint officers of central tax below the rank o....
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....s a "proper officer" in relation to the CGST Act. This includes clause (v) of Section 65(6) concerning the communication of the audit report on the conclusion of the audit. The respondent No. 4 in the present case is the Deputy Commissioner of CGST (Audit). Consequently, he was the "proper officer" to communicate the audit report under Section 65(6) of the CGST Act to the petitioner vide the communication dated 15.11.2022. 57. Similarly, the other two impugned circulars have assigned the functions under Section 74 to subordinate officers of central tax by specifying the monetary limits. Based upon the monetary limits so prescribed, respondents No. 4 and 5 have issued the impugned show cause notices. The impugned circulars very clearly assign the powers to issue notices under Sections 73 and 74 of the CGST Act. These circulars cannot be said to be legally infirm on the grounds alleged by the petitioner or otherwise. Accordingly, no case is made out to either strike down the impugned circulars or the impugned show cause notices on the ground that they were not issued by the "proper officer" as defined under Section 2(91) of the CGST Act. 58. Merely because the impugned circular dat....