M/S. Thangamayil Jewellary LTD. vs. The Addl.Director General Of

Held

The Court held that the impugned show cause notice was not lacking in jurisdiction. It reasoned that Section 174(2)(e) of the CGST Act, 2017, explicitly states that the repeal of earlier enactments shall not affect any investigation, inquiry, adjudication, or other legal proceedings. Such proceedings may be continued or enforced as if the Acts had not been repealed. This saving clause allows for the institution and continuation of proceedings even after the repeal, in respect of liabilities incurred under the repealed Act. The Court invoked the doctrine of implied powers, citing Bidi, Bidi Leaves and Tobacco Merchants' Association v. State of Bombay (AIR 1962 SC 486), to hold that when a statute confers a jurisdiction or imposes a duty, it also confers by implication the power to do all acts essentially necessary for its execution. The Court found that the assignment of adjudication to the Additional Director General (Adjudication), Mumbai, for cases involving more than Rs. 5.00 crores was in line with the circulars and office orders issued by the Central Board of Excise and Customs. Therefore, the second respondent was held to have the territorial jurisdiction to adjudicate the matter. The Court clarified that it had only decided the issue of jurisdiction and left all other contentions of the petitioner open.

Facts

The petitioner, M/s. Thangamayil Jewellery Ltd., challenged a show cause notice dated June 26, 2020, issued by the Additional Director General of GST Intelligence, Coimbatore Zonal Unit. The notice proposed to levy central excise duty, interest, and penalty on the petitioner for alleged non-payment/short payment of duty on gold coins cleared between March 1, 2016, and June 30, 2017. The petitioner was directed to show cause before the Additional Director General (Adjudication), DGGI, Mumbai. The petitioner contended that the show cause notice was issued without jurisdiction, as the adjudication was assigned to a different Commissionerate contrary to law. The respondents argued that the notice was validly issued under the powers conferred by relevant notifications and office orders.

Key Issues

1. Whether the show cause notice issued by the first respondent is without jurisdiction, considering the assignment of adjudication to the second respondent, contrary to Section 174 of the Central Goods and Services Tax Act, 2017? Petitioner's argument: The petitioner argued that the show cause notice was issued without jurisdiction. They contended that the circulars and office orders relied upon by the respondents were issued under the Central Excise Act, 1944, which was repealed by Section 174 of the CGST Act, 2017. Since the repeal provision did not expressly save the subordinate legislation, these circulars ceased to exist, rendering the assignment of adjudication invalid. They relied on the Supreme Court decision in Air India v. Union of India (1995) 4 SCC 734. Revenue's argument: The respondents argued that the authority of the first respondent to issue the show cause notice was supported by Notification No. 14/2017-Central Tax. They further contended that Office Order No. 574/CE/41/2020/INV14352, which assigned adjudication to ADG (Adj), Mumbai for cases involving Central Excise duty/Service Tax amount of Rs. 5.00 crores, was valid. They also cited Circular No. 994/01/2015-CX and Circular No. 1000/07/2015-CX, which empowered the Director General, CEI to issue general orders assigning show cause notices to a particular ADG (Adjudication).