TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 170
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....der the Companies Act, 2013 and engaged in the business of manufacturing and trading of various goods falling within the purview of the Central Goods and Services Tax Act, 2017 ['CGST ACT of 2017'] and the State Goods and Services Tax Act, 2017 ['SGST Act of 2017']. The petitioner are aggrieved of and has challenged the show cause notice dated 17.04.2024 issued in Form GST DRC-01 by the Joint Commissioner, CGST Commissionerate, Jammu, and the summary thereof issued in Form GST GRC-01 dated 31.03.2024. 2. The aforesaid show cause notice, as well as its summary have been challenged by the petitioner on the following grounds: (i) That the impugned show cause notice as well as its summary are without any authority, inasmuch as the proper officers under CGST Act have no jurisdiction to initiate any proceedings under the Act, for the reason that the petitioner is assigned to the State Tax Authorities of J&K; (ii) That the Joint Commissioner, CGST Jammu, also lacks jurisdiction to issue the impugned notices in view of the circular dated 09.02.2018 issued by the Government of India, Ministry of Finance, Department of Revenue as the amount involved is below Rs.1.00 cror....
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....permission from the District Industries Centre (DIC), Kathua to undertake fabrication activities. There were other discrepancies and irregularities noticed in respect of the remaining units as well. 6. The intelligence inputs and materials collected during the search operations clearly indicated that all the 12 units, including the petitioner, were involved in fraudulent availment and utilization of bogus ITC of GST through paper transactions, without actual receipt or supply of goods among themselves. This formed the basis for issuance of the show cause notices against all the 12 companies/firms i.e., petitioners herein. However, instead of contesting the show cause notice in accordance with law, the petitioners chose to directly approach this Court by way of the instant proceedings under Article 226 of the Constitution of India, challenging the impugned show cause notice on the grounds which we have taken note of hereinabove. Questions: 7 Having heard learned counsel for the parties and perused the material on record, we are of the considered opinion that the following questions arise for determination in these petitions: (i) Whether the issuance of a specific n....
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....the Constitution, the power to make laws in respect of inter-State supply of goods and services is reserved exclusively to the Parliament, though the taxes collected on goods and services in the course of inter-State trade are to be ultimately apportioned between the Union and the States. Article 279A provides for the constitution of a federal body, namely the Goods and Services Tax Council ['GST Council'], which would be a body to make recommendations to the Union and the States on model Goods and Services Tax laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under Article 269A of the Constitution, and the principles that govern the place of supply. Prior to the implementation of the GST regime, the GST Council had conducted 80 meetings, broadly laying down the administrative framework under the GST legislations. Administrative Framework 11. Deriving legislative competence from Article 246A of the Constitution, the Centre came up with the CGST Act, 2017, whereas the States, including the then State of Jammu and Kashmir, also legislated the State GST Act, providing for simultaneous levy of the t....
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....ubject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to the conditions specified in the notification issued under sub-section (1), (a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax; (b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter. (3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an officer appointed under this Act shall not lie before an officer appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act'. 16. From a plai....
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.... UT GST Acts are authorized to act as proper officers for the purpose of CGST Act, 2017, and this cross-empowerment envisaged in Sub-section (1) of Section 6 is without prejudice to other provisions of the Act and, therefore, does not interfere with the powers of officers conferred under the provisions of the CGST Act of 2017. The expression 'without prejudice to the provisions of this Act' would mean that Sub-section (1) does not override, limit, or conflict with the provisions of the main Act, and in case of any inconsistency, the provisions of the Act would prevail. 20. The phrase 'without prejudice to the provisions of the Act' would mean that the provision being enacted will not override, limit, or affect any other provisions of the Act. It is a sort of saving clause that ensures that the operation of rest of the Act remains intact. To put it simply, the Section functions in addition to, and not in derogation of, the rest of the provisions of the main Act. 21. There are several judgments of the Supreme Court available on the issue. However, for us, it is sufficient to say that the expression 'without prejudice to the provisions of the Act' is generally used to maintain h....
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....uncil by issuing a notification. 24. Sub-section (b) of Section 6(2) of the CGST Act provides for obviating duplicity in proceedings and lays down that where a proper officer under the State GST or UT GST Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by a proper officer under this Act on the same subject matter. 25. With a view to ensuring a single interface under the GST regime and to avoid dual control over taxpayers, the GST Council, in its 9thmeeting, resolved that a clear division of taxpayers between the Central and the State tax administrations be effected. The Council also recognized the necessity of empowering both the Central and State tax administrations to act on intelligence-based enforcement actions across the entire value chain, regardless of the administrative allocation. While the single interface was envisaged for the convenience of taxpayers and to avoid dual control over them, the cross-empowerment was intended to maintain a robust enforcement mechanism and prevent any scope of tax evasion. 26. Circular No. 01/2017 dated 20.09.2017 issued by the Government of India, pursuant to the aforesaid decision of the GST....
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.... to whether the issuance of a notification by the Government is a sine qua non for effectuating the cross-empowerment contemplated under Sub-section (1) of Section 6 has also been clarified. 29. The clarification reproduced above leaves no manner of doubt that Sub-section (1) of Section 6 provides for issuance of a notification only if the Government intends to specify conditions subject to which cross-empowerment is to be effectuated. A notification would therefore be required only when conditions are to be imposed and In the absence of such conditions specified by a notification issued by the Government on the recommendations of the GST Council, the cross-empowerment envisaged under Sub-section (1) would be absolute and complete. The Government of India has issued one such notification i.e Notification No. 30/2017 dated 13.10.2017 restricting the powers of State Tax Officers with respect to sanction of refunds. It is thus evident that if no notification is issued to impose any conditions, the officers of both the Central and State Tax administrations shall be the proper officers for all purposes of the CGST Act and the SGST/UTGST Acts. Sub-section (2) of Section 6 ensures a si....
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....ng to the show cause notice and contesting the proceedings initiated by way of the impugned notice, would be well within their rights to raise this issue before the concerned authority. Q.No.3(iii) Whether the Joint Commissioner is an authority competent to issue a show cause notice to the assessee where the amount involved is less than Rs.1.00 crore under the CGST Act? 33. The answer to this question is not far to seek. Under Section 5(2) of the CGST Act, the central tax officer is empowered to exercise the powers of a subordinate officer, meaning thereby that the Joint Commissioner had the right to issue the notice, being the authority higher than the one empowered to initiate action. 34. Aside, the circular dated 09.02.2018 authorizes the Joint Commissioner to issue show cause notice where the amount involved exceeds Rs. 1 crore. However, this does not mean that the Joint Commissioner of Central Tax is not competent to issue a show cause notice where the monetary limit or the amount involved is less than Rs. 1 crore. The circular makes it abundantly clear that all officers up to the rank of Commissioner and Joint Commissioner of Central Tax are assigned as proper office....
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.... '47. The concept of 'cross-empowerment' has been retained within the GST framework in order to maintain a robust enforcement mechanism and prevent any scope of evasion of taxes. For this purpose, both the Central and State tax administrations have been armed with the power to initiate intelligence-based enforcement action i.e., an action that is predicated on information of tax evasion emanating from the value chain or chain of transactions rather than from any administrative scrutiny by way of audit of accounts or returns; 48. Such gathering of intelligence is intended to be a non- intrusive exercise. The Department relies on data analytics, validation with third-party data, and other methods to collect actionable intelligence via analytical tools, human intelligence, modus operandi alerts as well as information through past detections. Taxpayers must be mindful that intelligence about evasion of tax cannot be procured from them through issuance summons or other non-descript letters and correspondence. 49. Any action arising from the audit of accounts or detailed scrutiny of returns falls within the first category, and proceedings in such cases are to be initiat....
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....se notice, and does not encompass the issuance of summons, or the conduct of any search, or seizure etc. vii. The expression 'subject matter' refers to any tax liability, deficiency, or obligation arising from any particular contravention which the Department seeks to assess or recover. viii. Where any two proceedings initiated by the Department seek to assess or recover an identical or a partial overlap in the tax liability, deficiency or obligation arising from any particular contravention, the bar of Section 6(2)(b) would be immediately attracted. ix. Where the proceedings concern distinct infractions, the same would not constitute a 'same subject matter' even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted. x. The twofold test for determining whether a subject matter is 'same' entails, first, determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and secondly, if the demand or relief sought is identical. 38. The conclusions of the Supreme Court reproduced hereinabove provide complete....