M/S.Ram Agencies vs. The Assistant Commissioner Of Central Tax
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M/s. Ram Agencies, the petitioner, challenged an Order-in-Original No.24/2023-GST dated 26.12.2023, passed by the Assistant Commissioner of Central Tax, Thanjavur Division. The petitioner argued that the order was passed in violation of natural justice and statutory provisions. Specifically, the petitioner contended that the order was issued despite a stay granted by the Principal Seat of the Madras High Court on notifications extending limitation periods, which was subject to W.P.No.33343 of 2023. Furthermore, the petitioner asserted that they are assessed by State Tax Authorities, making an order by the Central Tax Authorities contrary to law. The respondent confirmed the petitioner's assessment by State authorities, citing a Circular No.1/2017-GST (Council) dated 20.09.2017.
Held
The Court held that the impugned Order-in-Original No.24/2023-GST, dated 26.12.2023, passed by the respondent (Central Tax Authority) is liable to be quashed. The Court's reasoning was based on its previous examination of cross-empowerment and jurisdiction in Tvl. Vardhan Infrastructure's case. It concluded that in the absence of a notification issued for cross-empowerment, authorities from the counterpart department cannot initiate proceedings where an assessee is assigned to the counterpart. Therefore, the order passed by the Central Tax Authority against an assessee assessed by State Tax Authorities was deemed contrary to law. The ratio decidendi is that without explicit cross-empowerment notifications, the jurisdiction of one tax authority is restricted to assessees assigned to it, and the other cannot initiate proceedings on the same subject matter. The Court quashed the impugned order but granted liberty to the State authorities to proceed against the petitioner in terms of the observations in Tvl. Vardhan Infrastructure's case.
Key Issues
1. Whether the impugned Order-in-Original No.24/2023-GST, dated 26.12.2023, passed by the respondent (Central Tax Authority) is liable to be quashed on the ground that the petitioner is assessed by the State Tax Authorities, and whether this action violates Section 6(2)(b) of the CGST Act, 2017, in the absence of specific cross-empowerment notifications? The petitioner argued that since they are assessed by State Tax Authorities, the Central Tax Authorities cannot initiate proceedings on the same subject matter, relying on the principle laid down in Tvl. Vardhan Infrastructure vs. The Special Secretary. The respondent contended that the decision in Tvl. Vardhan Infrastructure's case is distinguishable, citing a Division Bench judgment in Kuppan Gounder P.G. Natarajan vs. Directorate General of GST Intelligence, which held that Central and State tax administrations have concurrent powers for intelligence-based enforcement actions, referencing a clarification dated 05.10.2018 and Section 6(2)(b) of the CGST Act.
Sections Cited
Section 6(2)(b)
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Cause title — parties, addresses and appearances
O R D E R The petitioner has challenged the Order-in-Original No.24/2023- GST, dated 26.12.2023, passed by the respondent in respect of the assessment years 2017-2018, 2018-2019 and 2019-2020. 2. The specific case of the petitioner is that the impugned order has been passed despite stay being granted by the Principal Seat of this Court against the operation of notification extending the period of limitation vide G.O.(Ms)Nos.9 and 56 and G.O.(Ms)Nos.41 and 1, which has been stayed in W.P.No.33343 of 2023, on 27.11.2023. 3. That apart, the impugned Order-in-Original No.24/2023-GST, https://www.mhc.tn.gov.in/judis made by the Central Government in terms of Circular No.1/2017-GST (Council), dated 20.09.2017 bearing reference F.No.166/Cross Empowerment/GSTC/2017. 5. The learned Standing Counsel for the respondent would submit that the decision rendered by this Court in Tvl.Vardhan Infraastructure's case [cited supra] is distinguishable in the light of the 2022 (58) G.S.T.L. 292 (Mad.), wherein it has been held as under:- ''27.Firstly, we need to take note of whether the State tax authorities and the Central tax authorities enjoy concurrent juri iction, the issue of cross- empowerment of the State tax authorities and the Central tax authorities. We have pointed out about the clarification relied on by the Revenue dated 05.10.2018. Thus, the ambiguity with regard to the initiation of enforcement action by the State and the Central authorities has been lingering for quite some time and the matter having been brought to the notice of the GST Council, in its meeting held during January 2017, it was decided that both the Central and State tax administrations have the power to take intelligence-based enforcement action in respect of the entire value chain. Based on such decision of the GST Council, the CBEC issued clarification dated 05.10.2018. Thus, this puts an end to the ambiguity and it is clear from the said clarification that if an intelligence-based enforcement action is taken _____________ Page No. 3 of 6 https://www.mhc.tn.gov.in/judis against a taxpayer, which is assigned to State tax authority, the Central tax authority is entitled to proceed with the matter and take it to the logical conclusions and the same principle is applicable vice versa. This circular was referred to in Siddhi Vinayak Trading Company (supra) and the challenge was rejected by referring to the above clarification issued by the CBEC. 28.Section 6(2)(b) of the CGST Act states that 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 the CGST Act on the same subject matter. The appellant's case rests upon the interpretation of the said provision. The key words occurring in Section 6(2)(b), viz., “subject-matter” are required to be interpreted to consider as to whether the challenge to the summons impugned in the writ petition was maintainable.''
The issue regarding cross-empowerment and the juri iction of the counterparts to initiate proceedings when an assessee has been allocated either to Central Tax Authorities or to the State Tax Authorities was examined in detail by this Court in Tvl.Vardhan Infraastructure's case [cited supra]. After examining the provisions, this Court has concluded that in the absence of notification issued for cross- empowerment, the authorities from the counterpart Department cannot initiate proceedings where an assessee is assigned to the counterpart. Therefore, the impugned Order-in-Original No.24/2023-GST, dated _____________ Page No. 4 of 6 https://www.mhc.tn.gov.in/judis
2023 passed by the respondent is quashed. However, liberty is given the State authorities to proceed against the petitioner in terms of the observations contained in the order passed by this Court in Tvl.Vardhan Infraastructure's case [cited supra].
This Writ Petition stands allowed with the above observation. No costs. Consequently, connected Miscellaneous Petitions are closed.
Index : Yes/ No 10.04.2024 Neutral Citation: Yes / No Speaking Order / Non-Speaking Order smn2 To The Assistant Commissioner of Central Tax, Thanjavur Division, Ponnagar, Medical College Road, Thanjavur – 613 007. _____________ Page No. 5 of 6 https://www.mhc.tn.gov.in/judis C.SARAVANAN
, J.
smn2
2024 _____________ Page No. 6 of 6 https://www.mhc.tn.gov.in/judis
Reproduced from the public record of the Madras High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.