Sona Infracon Private Limited vs. Directorate General Of GST Intelligence
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The petitioner, Sona Infracon Private Limited, filed a writ petition before the Patna High Court challenging a show-cause notice issued by the Additional Director, Directorate General of GST Intelligence (DGGSTI), Patna Zonal Unit. The petitioner contended that the officer issuing the notice was not competent. The petitioner specifically referred to Annexure-P2 circular, which assigns the Deputy or Assistant Commissioner of Central Tax as the Proper Officer under Section 74(5) and the Superintendent of Central Tax under Section 73(5) of the CGST Act. The petitioner argued that the Additional Director, who issued the notice under Section 74(5), lacked competence. However, the petitioner admitted that an Additional Director is equivalent to an Assistant Commissioner.
Held
The Court held that there was no reason to find the officer issuing the impugned communication incompetent. The Court noted that paragraph 6 of the Annexure-P2 circular specifically permits officers of the Directorate General of GST Intelligence (DGGSTI) to issue show-cause notices. Furthermore, the Court observed that the impugned communication was not even a show-cause notice, but merely an intimation to pay amounts, with the consequence of non-compliance being the issuance of a show-cause notice under Section 74(1). The Court found the Additional Director competent to issue such a notice under Section 74(1). Therefore, the Court found no reason to interfere with the impugned communication and dismissed the writ petition.
Key Issues
1. Whether the Additional Director, Directorate General of GST Intelligence, is a competent authority to issue a show-cause notice under Section 74(5) of the CGST Act, considering the delegation of powers under Annexure-P2 circular? Petitioner's contention: The petitioner argued that the Annexure-P2 circular clearly assigns the Deputy or Assistant Commissioner of Central Tax as the Proper Officer under Section 74(5), and therefore, an Additional Director of GST Intelligence is not competent to issue such a notice. The petitioner relied on the specific wording of the circular regarding the assignment of the Proper Officer. Respondent's contention: The respondents, through the Additional Solicitor General and Senior Standing Counsel, argued that paragraph 6 of the Annexure-P2 circular explicitly permits officers of the Directorate General of GST Intelligence to issue show-cause notices, with adjudication to be done by the competent central tax officer of the Executive Commissionerate. They also contended that the impugned communication was not a show-cause notice but an intimation, and that the Additional Director is competent to issue a show-cause notice under Section 74(1).
Sections Cited
Section 74, Section 73, Section 74(5), Section 74(1)
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Cause title — parties, addresses and appearances
ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 2 09-05-2024 The petitioner is aggrieved by the fact that a show- cause notice has been issued by an Officer, who is not competent to do so. The petitioner specifically refers to Annexure-P2 circular.
By Annexure-P2 circular, the Deputy or Assistant 2/3 Commissioner of Central Tax was assigned as the Proper Officer inter alia under sub-section (5) of Section 74, while the Superintendent of Central Tax was assigned as the Proper Officer under sub-section (5) of Section 73 of the C.G.S.T. Act. The impugned show-cause notice is issued by the Additional Director under Section 74(5). The learned Counsel for the petitioner admits that the Additional Director is equivalent to an Assistant Commissioner.
We also have to notice paragraph 6 of the circular which says as follows:- The central tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (hereinafter referred to as "DGGSTI") shall exercise the powers only to issue show cause notices. A show cause notice issued by them shall be adjudicated by the competent central tax officer of the Executive Commissionerate in whose juri iction the noticee is registered. In case there are more than one noticees mentioned in the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by the competent central tax officer in whose juri iction, the principal place of business of the noticee from whom the highest demand of central tax and/or integrated tax (including cess) has been made falls.
The petitioner’s contention is that the adjudication can be done only by the Assistant Commissioner and not an Additional Director of G.S.T. Intelligence. We are of the opinion 3/3 that there is no reason to find incompetence on the Officer, who has issued the impugned communication especially since the circular specifically permits show-cause notices to be issued by the Central Tax Officers of Audit Commissionerates and Directorate General of G.S.T. In fact, what is impugned is not even a show-cause notice, it is just an intimation to pay up the amounts indicated therein failing which the only consequence is the issuance of a show-cause notice under Section 74(1) for which also the Additional Director is competent.
We find absolutely no reason to interfere with the impugned communication. The writ petition stands dismissed.
sharun/- (K. Vinod Chandran, CJ) ( Harish Kumar, J) U
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.