M/S. Ambika Food Industries PVT LTD vs. Union Of INDIA

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY .THE SIXTEENTH DAY OF NOVEMBER TWO THOUSAND AND TWENTY ONE PRESENT THE HONOURABLE SRIJUSTICE UJJAL BHUYAN AND THE HONOURABLE DR. JUSTICE CHILLAKUR SUMALATHA Between: I\,4/s. Ambika Food lndustries Pvt. Ltd., 56,57,62 and 91/A, TSHC, Kattedan, Ranga Reddy District, Telangana State. (Represented by its Director, Alok Aga ruval), ...PETITIONER AND 1 Union of lndia, Represented by it's Secretary, Ministry of Finance, Department of Revenue, Central Secretariat, New Delhi. 2. The Central Board of lndirect Taxes, and Customs At North Block, New Delhi- 110001. 3. The Commissioner of Central Tax, Hyderabad GST Commissionerate, L.B. Stadium Road, Hyderabad. 4. The Additional Commissioner (Audit) Hyderabad, Audit- I Commissionerate, 3-4- 1 18/1, l st Floor, Elegant lr/aharaja Chambers, Ramanthapur, Hyderabad-13 . 5. The Joint Commissioner/Additional Commissioner, Hyderabad GST Commissionerate, L.B.Stadium Road, Hyderabad. ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction, more particularly one in the nature of writ of mandamus, by declaring the action of the Respondent no.4, in issuing the impugned Showcause notice dated 12.04.2021, in C.No. V13010112021- Tech and Legal, without jurisdiction, as illegal, arbitrary and violative of Articles 19(1) (g), 20 and 21 of the Constitution of lnd ia. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to, stay all further proceedings in Showcause notice dated 12.04.2021, issued by the Respondent No.4 without jurisdiction, in C.No. V 13010112021-Tech and Legal bearing SCN No. 01lADC|2O21-22, pending final disposal of the writ petition. Counsel for the Petitioner:SRl. SRINIVAS CHATURVEDULA Counsel for the Respondent No. 1i SRl. N. RAJESHWAR RAO, ASST. SOLICITOR GENERAL Counsel for the Respondent Nos. 2 to 5: SRl. B. NARASIMHA SARMA, SC FOR CGST The Court made the following: WRIT PETITION NO: 28893 OF 2021 lA NO: 1 OF 2021 ) O I D E R (l'er the llorr'blc Sri Justire t.iiul Ilhuran) Heard Mr. i rinivas Chaturveduala, learned counsel fbr the petitioner and Mr. B.Narasi nha Sarma, learned Senior Standing Counsel lor Centrai Coods and Service ; Taxes 2. By fi1in i this petition under Article 226 of the Constitution o1' India, petitioner I as challenged legality and validity ofl the show cause notice dated 12.0 1.2021 issued by Additional Commissioner of Central Taxes and Custom , Hyderabad, Audit -l Commissionerate, Hyderabad. 3. By the in pugned show cause notice, Additional Commissioner i.e., the respor.rdent No 4 has called upon the petitioner to shorv cause as to why the ploduct manu acturecl and supplied to variolrs custolners during the period from July, 2017 to March, 2019 should not be classified under the tariff heading 210(9099 of Customs Tariff Act, 1975 made appticable to the Central Goods ard Services Tax Act,2017 (briefly'the CCST Act' hereinafter). 3.1. By the r aid notice, petitioner has been called upon to show cause as to why an amor nt of Rs.79,95,295.00 (Rupees seventy nine lakhs, ninety THE I ON,BLE SRT JUSTICE UJJAL BHU}.ANI AND THE HON'I LE DR. JUSTICE CHILLAKUR SUMALATHA W.P.NO.28893 0F 2021 : J five thousand, two hundred and ninety f,rve only) being the CCST not paid' should not be demanded under Section 74(1) ofthe CGST Act' 3.2. That apart, petitioner has also been called upon to show cause as to why an amount ol Rs.3,08,73,057'00 (rupees three crores' eight lakhs' seventy three thousand, and fitty seven only) being the Integrated Goods and Services Tax (IGST) not paid, should not be demanded and recovered from the petitioner under Section 74(1) of the CGST Act read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (briefly 'the IGST Act')' 3.3. In addition, petitioner has been show caused as to why interest and penalty under the provisions of the aforesaid Acts should not be levied and imposed. 3.4. The impugned show cause notice has been issued under Section 74( l) ol the CCST Act. Basic contention of learned counsel for the petitioner is that it is lhe sine qua tlot't that the officer who issues the show cause notice undet' Section 74(l) of CCST Act, has to be perforce a'proper officer'' He has referred to various provisions of the CGST Act and the documents annexed to the writ petition to contend that Additional Commissioner is not a 'proper officer' having jurisdiction to issue the impugned show cause notice' ln learned counsel for the petitioner has also placed support of Iris submissions' 4. "1 reliance on a recent decision of the Suprenie Court tn CANON INDIA PRIVATE LIIIITED COMMISSrcENR Ol' CL|STOMSt, rvhich was vs. in the context , f the Customs Act, I 962. 5. On the other hand Mr. B. Narasiurha Sarma' Iearned Senior Standing cour sel for respondents has also referred to various provisions of the cGST Ac , as well as circular dated 05.07.2017 0f the central Board of Excise and C rstoms (briefly 'the Board' hereinafter), and circular dated 09.02.2018 ol the said Board, to contend that Additional Commissioner i.e., the responder t No.4 is indeed the 'proper olficer' in the present case, and therefore, the e should be no intert'erence with the inrpugned show cause notice on thi ground that the notice issuing authority is not the 'proper otTicer'. 6 We rave given our due consideration to the respective submissions made at the E ar. 7. As .lready pointed out earlier, the impugned shorv cause notice has been issued t y respondent No.4 alleging contravention of various provisions of the cGST Act, as well as the lcST Act, where-atler, petitioner has been callecl upon 1 I show cause as to why the quantified amount of ccST as well Telangan r Goods and Services Tax, bcsides ICST should not be AS ' alR 2o2t sc tr r9 5 recovered from the petitioner; in addition, as to why interest and penalty should not be levied and irnposed on the petitioner. 8. Section 74 ol the CGST Act deals rvith determination of tax not paid, or short paid, or crrotteously ref'unded, or input tax credit wlongly availed, or utilized by reason of fraud, or any willful misstatement, or suppression of facts. 8.1. As per sub-section (1) thereof, where it appears to the proper fficer that any tax lias not been paid, or short paid, or erroneously lefunded, or where input tax credit has been wrongly availed of or utilized by reason of fraud, or any wiltful-misstatement or suppression of facts to evade tax, he (proper officer) shall serve notice on the person chargeable with tax, which has not been so paid, or which has been so short paid, or to whom the refund has enoneously been made, or who has wrongly availed or utilized input tax credit, requiring hirn to show cause as to why he should not pay the amount specilicd in the notice along with interest and penalty. 8.2. Section 2(91) ol the CGST Act, defines the expression 'proper officer'. As per this definition, 'proper officer' means the Commissioner or the officer of the central tax, who is assigned that function by the Commissioner in the Board. g. Thoug r learned counsel tbr the respondents had ref-erred to Sections 3 to 5 ol the CGST Act. it rvould not be necessary tor us to delve deep into the al rresaid provisions, because those provisions deal rvith appointment of cl tss of offlcers, and not speciticalll with the allpointment o1: ,proper oftlcer'. ,,lonetheless we may nlention that as per sub-section (2) of Section 5 ol CGI T Act, the of tlcer o1'central tax may exercise the powers and discharge thi duties conferred or imposed under the CCST Act, on any other officer ofct ntral tax, lvho is subordinate to him 10. As p:r Circular No.3/3/2017 - GST dated 05'07 2017 of the Board, rvhich has been issued in exercise ol powers conf'erred by clause (91) of Section 2 0f t re CGST Act, read rvith Section 20 0f the IGST Act, ancl subject to sub-sl ction (2) of Section 5 ol the CGST Act, the Board has assigned the offl )ers mentioned in column No.2 of the appended table, the functions of ,prc ter- officer' in relation to various sections of the cGST Act. we find that at ir.No.3 Deputy or Assistant commissioner ,lf central Tax have been desit nated as 'proper officer' fbr discharging i'unctions under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Section 74' 10.1 . A( mittedly Deputy or Assistant Commissioner of Central Tax are officers subc rdinate to Additional Commissioner' ) 1 11. In tenns of Board's Circular No'31/05/2018-GST dated 09.02,2018, more parlicularly in paragt'aph No'4 thereof it is clalified that all officers up to the rank of Additional / Joint Commissioner of Central Tax are assigned as the 'proper officer' for issuance of show cause notices and orders uuder sub-sections (1), (2)' (3)' (5)' (6)' (7)' (9) and (10) of SectionsT3and.T4oftheCGsTAct,correspolrdingtoSection3readwith Section 20 of the IGST Act' As per the table appended thereto' Additional or Joint Commissioner of Central Tax have been assigned functions as the 'proper ofhcer', and tlie monetary f imit of the said officers for issuance of show cause notice and orders under Sections 73 and74 of the CGST Act and Section20oftheIGSTAct'inthecaseofcentraltaxandintegratedtaxnot paid, or short paid, or erroneously refunded, or input tax credit of central tax and ir.rtegrated tax wrongly availed of or utilized' is above Rs'2'00'00'000'00 (Rupees two crores) ' 12. Admittedly the monitory limit in the present case is above Rs.2,00,00,000/- (Rupecs two crores)' In such circumstances, and having regard to the above, it cannot be said with any degree of cerlainty that respondent No.4 is not the 'proper officer' competent to issue the impugned show cause notice. 13. Insofar the decision in Canon India Private Limited (supra) is concemed, the main issue confronting the Supreme Court was whether after I S clearance of the ce neras on the basis that they were exempted tiom levy of basic customs duty , the proceedings initiated by the Directorate of Revenue Intelligence for r 'covery ol duty not paid under Section 28(4) of the Customs Act, i961 , are valid in law? It was in that context that the question which arose for onsideration was, whetlier the Directorate of Revenue Intelligence had t re authority in law to issue a show cause notice under Section 28(4) of tl e Customs Act, 1962 for recovery of duties allegedly not levied, nor paid v hen the goods had beerl cleared fbr irrrport by a Deputy Commissioner of )ustoms, who had decided that the goods were exernpted Thus the question was as to whether in the context ol Section 28(4) ol the i Customs Act, l! 62 the Directorate ol Revenue lntelligence could be construed as the 'l roper officer'. 13.1. Ther :fore, the issue before the Suprenle Court in Canon Indio Private Limited ( upra) was completely difl'erent and distinct tiom what is being canvassed by learned counsel for the petitioner to support his contention that respondent No.4 is not the 'proper o:'flcer' under Section 74(l) of t re CGST Act 14. Thus ir the light of the above, we are not inclined to entertain the writ petition. Ho vever, fbr the ends ofjustice, we grant further three weeks time to the petitio rer to file reply to the show cause notice clated 12.04.2021. 9 If any such reply is filed within the aforesaid period of three weeks, the same shatl be considered by the authority in accordance with law. i5. AII discussions made in the present order is only in response to officer'. We have not expressed any opinion on merits and all contentions are kept open. 16. Subject to the above observations, writ petition is dismissed. 17. lnterlocutory applications pending, ifany, shall stand closed. No order as to costs. SD/.I.NAGALAKSHMI ASSISTANT REGISTRAR SECTION OFFICER One fair copy to the Hon'ble Sri Justice UJJAL BHUYAN (For His LordshiPs Kind Perusal) One fair copy to the Hon'ble Dr' Justice CHILLAKUR SUMALATHA (For Her LordshiPs Kind Perusal) To, 1. 11 LR.CoPies i. fn" UnO"t Secretary, Union of lndia, Ministry of Law' Justice and Company Affairs, New Delhi 3.Thesecretary,Advocates'AssociationLibrary,HighcourtBuildings'Hyderabad' +. On" CC to S;i. Srinivas Chaturvedula Advocate [OPUC] 5. il; CC io Sti. N. Rajeshwar Rao, Asst Solicitor General [OPUC] o. On. CC to Sri. B. Naiasimha Sarma, SC for CGST IOPUC] 7. Two CD CoPies. PIV BS the contention of the petitioner that respondent No.4 is not the ,proper //TRUE COPY// A, HIGH COURT DATED:16/11/2021