No Cross-Empowerment of CGST and SGST Authorities for GST Proceedings in Absence of Proper Notification u/s 6 of Respective GST Acts: Madras HC [Read Order]

A Single Bench of the Madras High Court has held that in the absence of a proper notification under Section 6 of the Central and State Goods and Services Tax Acts, there is no cross empowerment vested with the revenue to conduct inspection, search, seizure and arrest under GST Laws. The petitioner filed a writ petition, to direct the Respondents 4 & 5 to refrain from cross-empowerment of tax authorities under the provisions of Chapter XIV (inspection, search, seizure and arrest) of Central Goods and Services Tax Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 till relevant notifications are issued in this regard pursuant to the recommendations of the first respondent, and until such time, to transfer all the proceedings initiated by the 5th respondent to the 6th respondent, who is the jurisdictional assessing officer, for taking further action. In the batch of petitions, the petitioners are assessed by the Central Authorities under the CGST Act, 2017 and have thus challenged the notices issued under Sections 62 & 67 of the TNGST Act, 2017 and orders passed under Section 73 and 74 of the TNGST Act, 2017 by the respondents-State Authorities. Therefore, in the above mentioned writ petitions, the petitioners have challenged the impugned proceedings of the State Authorities. These Writ Petitions have arisen on account of the fact that the respective petitioners who have been assigned either to the State Authorities or to the Central Authorities for administrative purposes under the provisions of the respective GST Enactments namely, the CGST Act, 2017, TNGST Act, 2017 and IGST Act, 2017 are/were being subjected proceedings by their counterpart. In short, The petitioners have challenged the impugned proceedings of the Central Authorities on the ground they are without Jurisdiction. The petitioners submitted that in the absence of a proper Notification under Section 6 of the respective GST Enactments for cross-empowerment, the impugned proceedings by the respective counterparts were without jurisdiction. The bench noted that, these respective GST Enactments were enacted based on the model GST Law structured by the GST Council in its deliberations. The GST Council had a difficult task to balance the concerns of the Trade and interest of the different States. To avoid multiple assessments and to avoid confusion, the GST Council had to arrive at a consensus with the State and Central Government. It was also noted that, “The provisions of the respective GST Enactments contemplates power of the Central Government and the State Government to issue notifications on the recommendations of the GST Councils to empower the Officers of the State Tax Officer or Union Territory Officer to issue Notifications under Section 6 of the CGST Act, 2017 the Central Tax Officers to be the “proper officer” under the respective GST Enactments.” During the 22nd Goods and Services Tax (GST) Council Meeting, it was highlighted that there was disagreement of issue under IGST Act in relation to place of supply rules. While the Secretary stated that investigation of cross-empowerment was urgently required to enable the taxpayer and therefore, the notification can be issued. It highlighted that there was a persistent difference regarding the cross-empowerment for the Place of supply rules regarding IGST, Notification regarding the cross-empowerment in respect of other matters were to be deferred in 22nd GST Council Meeting held on 06.10.2017. It was thus submitted by the petitioner that there was no cross-empowerment. The bench noted that, “The scheme of enactments as mentioned above makes it clear that the assessees whether assigned to the Central Tax Authorities or the State Tax Authorities as the case may be are required to file only one set of Return under Chapter-IX of the respective GST Enactments of 2017 r/w Chapter-VIII of the respective GST Rules. The returns that are contemplated under Chapter-IX of the respective GST Enactments and Chapter-VIII of the respective GST Rules are pari materia with each other.” It was also noted that, the returns to be filed by the Assessee under the respective GST Enactments are same. They capture all the details under the respective GST Enactments applicable to an assessee. The relevant provisions of inspection, search, seizure and arrest were also perused by the Bench of Justice C Saravanan, who noted that, “The manner in which the provisions have been designed are to ensure that there is no cross interference by the counterparts. Only exception provided is under Section 6 of the respective GST enactment. Therefore, in absence of a notification for cross-empowerment, the actions taken by the respondents are without jurisdiction. Officers under the State or Central Tax Administration as the case may be cannot usurp the power of investigation or adjudication of an assessee who is not assigned to them.” It was thus held tha, “the proceedings initiated by the respondents so far against the respective petitioners by the Authorities other than the Authority to whom they have been assigned to are to be held as without jurisdiction.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates