Femina Shopping Mall PVT LTD vs. The Assistant Commissioner Of GST And Central Excise

Facts

M/s.Famina Shopping Mail Pvt. Ltd. (Petitioner) filed a writ petition challenging proceedings dated 12.10.2021 issued by the Deputy Director, DGGI (Second Respondent). These proceedings demanded tax of Rs.47,41,748/- along with interest and penalty under Section 74(5) of the CGST Act, failing which a show cause notice under Section 74(1) would be issued. The Petitioner contended that the Second Respondent was not the proper officer or adjudicating authority as per Sections 73 and 74 of the CGST Act, citing Circular No.23/2021 dated 04.10.2021. The Respondents stated that an inspection on 06.06.2019 and 20.08.2019 revealed the Petitioner sold goods procured from local suppliers in their own packaged containers without discharging GST. A previous writ petition challenging a summon was disposed of with a direction to issue a show cause notice. The impugned proceedings were issued in Form GST DRC-01A as a pre-show cause notice.

Held

The Court held that the impugned proceedings are only a pre-show cause notice issued in Form GST DRC 01A. The Court found that as per Circular No.31/05/2018-GST dated 09.02.2018 issued by the Central Board of Indirect Taxes and Customs, officers of the Director General of G.S.T. (Intelligence) are empowered to issue show cause notices. Therefore, the Court was not inclined to accept the Petitioner's submission that the impugned proceedings were issued by an incompetent authority. The Court also noted that the impugned proceedings were issued to afford the Petitioner an opportunity to resolve the dispute by depositing the tax and interest at the pre-show cause notice stage, thereby reducing litigation. Consequently, the writ petition was dismissed, with liberty granted to the Petitioner to offer their explanation, if any, before the Second Respondent.

Key Issues

1. Whether the proceedings dated 12.10.2021 issued by the Deputy Director, DGGI, are liable to be quashed on the ground that the issuing authority is not the proper officer or adjudicating authority under Sections 73 and 74 of the CGST Act, as contended by the Petitioner, relying on Circular No.23/2021 dated 04.10.2021? Petitioner's arguments: The Petitioner argued that the Second Respondent is not the proper officer or adjudicating authority as contemplated under Sections 73 and 74 of the CGST Act. They relied on Circular No.23/2021 dated 04.10.2021 (State GST) and a similar circular from the Commissioner of Commercial Tax, Government of Tamil Nadu, stating that show cause notices can only be issued by the jurisdictional proper officer, not inspecting officers. Therefore, the impugned proceedings are illegal and liable to be quashed. Respondents' arguments: The Respondents argued that Circular No.23/2021 relied upon by the Petitioner is applicable to State GST officers and not binding on central tax officers. They cited CBIC Circular No.31/05/2018-GST dated 09.02.2018, which assigns powers to DGGI officers to issue show cause notices, making the Second Respondent the proper officer. They also submitted that the impugned proceedings are merely a pre-show cause notice (Form GST DRC 01A) to offer an opportunity for pre-notice dispute resolution.