Introduction
In the case of Rasathe Garments v. State Tax Officer (ST) (Inspn.),[i] the Hon’ble High Court of Madras (‘HC’) dismissed the writ petition ('WP'). It held that there is no embargo under goods and services tax (‘GST’) on the inspecting officer to issue a show cause notice or adjudicate the issue as long as such officer is a proper officer under s. 2(91) of the Central Goods and Services Tax Act, 2017 (‘CGST’).
Brief Facts
The state tax officer (ST) (Inspn.) (‘Respondent’) inspected the premises of the Rasathe Garments (‘Petitioner’). Based on the inspection and statement recorded by the Petitioner, the Respondent issued the show cause notice (‘SCN’) in Form GST DRC-01 on 25.09.2023 to the Petitioner.
Consequently, the Petitioner filed the WP contending that as per circular no. 23/2021[ii], when the inspection is completed, and adjudication is initiated through the issuance of notices, the inspecting officers have to handle such cases. In cases where the inspection is completed, but the inspecting officers do not initiate adjudications, the inspection reports have to be sent to the jurisdictional officer for further action. Thus, the aforesaid circular provided the proper procedure for adjudication. However, the commissioner of commercial taxes later withdrew the circular vide circular no. 13/2022-TNGST.
Therefore, the Petitioner challenged the circular no. 13/2022-TNGST,[iii] stating that there was a scope of patent bias since the inspecting officer was acting as adjudicating officer and, thus, contended that SCN dated 25.09.2023 is liable to be quashed
The Respondent contended that being a proper officer under s. 2(91) of the Tamil Nadu Goods and Services Act, 2017 (‘TNGST’) it had issued the SCN. Thus, since the Respondent was a proper officer, there was no embargo on the Respondent to issue SCN and adjudicate the issue. Further, the Respondent contended that as per circular no. 13/2022-TNGST[iv], a proper officer could issue an SCN in Form GST DRC-01.
Held
The HC, while dismissing the WP, observed as under:
The HC observed that there is no embargo under the GST law on the inspecting officer to issue SCN and to adjudicate the issue as long such officer is a proper officer under the definition of s. 2(91) of the TNGST.
Further, the HC relied on circular no. No. 13/2022-TNGST[v] observed that the circular eliminates the scope of bias by clarifying the position of the inspecting officer acting as adjudicating officer.
Consequently, the HC directed the Respondent to transfer the notice to the jurisdictional proper officer within 2 weeks for adjudication in accordance with circular no. 13/2022-TNGST and stated that the proper officer should pass the appropriate order within 90 days and the Petitioner can file a reply within a period of 30 days. Hence, the HC dismissed the petition.
Conclusion
The HC interpreted the scope of the inspecting officer under the GST law and affirmed that the Inspecting officer is not obligated to issue an SCN or adjudicate an issue under GST law when such an officer falls under the ambit of a proper officer under s. 2(91) of the TNGST. The HC, in the present case, did not find any merit in the Petitioner's arguments.
End Notes
[i] [2024] 163 taxmann.com 641 (Madras) dated 03.06.2024.
[ii] Circular No.PP2/GST-15/54/2021, 04.10.2021
[iii] Supra.
[iv] Supra.
[v] Supra.
Authored by Purvi Garg, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.
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