J And K Textorium PVT LTD Th Rajesh Kumar J And K Textile Park Industrial Area Kathua vs. Union Of INDIA Ministry Of Finance Deptt Of Revenue New Delhi And Others

Held

The Court held that intelligence-based enforcement actions, which do not arise from an audit of accounts or detailed scrutiny of returns, can be initiated by either the Central or State tax administrations, irrespective of the taxpayer's assignment, as per Section 6 of the CGST Act. The Court clarified that actions taken for gathering intelligence or evidence do not constitute 'proceedings' under Section 6(2)(b), and 'initiation of proceedings' refers to the formal commencement of adjudicatory proceedings via a show cause notice. The Court found no merit in the petitioners' challenge to the jurisdiction of the CGST authorities based on the intelligence-driven nature of the action. The judgment did not explicitly address the arguments regarding the Rs. 1 crore threshold for the Joint Commissioner's jurisdiction or the permissibility of bunching show cause notices, but the dismissal of the petitions implies these arguments were not accepted or were rendered moot by the primary finding on jurisdiction. The Court dismissed the petitions, stating that its conclusions on Section 6 were binding, but other opinions were prima facie and could be raised before the issuing authority.

Facts

The petitioners, companies and firms engaged in manufacturing and trading, challenged show cause notices issued by the Joint Commissioner, CGST Jammu, and their summaries. The notices alleged fraudulent availment and utilization of Input Tax Credit (ITC) based on intelligence inputs and search operations. The petitioners argued that the CGST authorities lacked jurisdiction as they were assigned to State Tax Authorities, that the Joint Commissioner lacked jurisdiction for amounts below Rs. 1 crore as per a circular, and that bunching of show cause notices for multiple assessment years was impermissible. The search operations revealed various discrepancies and irregularities across the petitioner companies.

Key Issues

1. Whether the issuance of a specific notification for cross-empowerment under Section 6 of the CGST Act, 2017 and SGST Act, 2017 is mandatory, and in its absence, whether a proper officer under the CGST Act can exercise jurisdiction over an assessee assigned to State Tax Authorities, and vice versa? 2. Whether the bunching of show cause notices under Section 74 of the CGST Act, 2017 is legally permissible? 3. Whether the Joint Commissioner is a competent authority to issue a show cause notice to an assessee when the amount involved is less than Rs. 1 crore under the CGST Act? Petitioner's arguments: The petitioners contended that the CGST authorities lacked jurisdiction due to the absence of a specific cross-empowerment notification and their assignment to State Tax Authorities. They also argued that the Joint Commissioner was not competent to issue notices for amounts below Rs. 1 crore, citing a circular, and that bunching of notices for multiple assessment years was impermissible under Section 74. The Revenue did not record specific arguments in the judgment.