Case Law Details
Tvl. Sri Paranjothi Traders Vs State Tax Officer (Intelligence) (Madras High Court)
The Madras High Court ruled in the case of Tvl. Sri Paranjothi Traders vs State Tax Officer (Intelligence) regarding the authority of intelligence officers to pass assessment orders under the GST Act. This case marked the second litigation round, following an earlier judgment that quashed the original orders due to procedural violations. The petitioner argued that subsequent orders issued by the intelligence officer were invalid, citing a Circular by the Principal Secretary/Commissioner of Commercial Taxes, which clarified the transition to a new system where adjudication should be handled by jurisdictional officers. The court, referencing a similar case (M/s. Rasathe Garments), clarified that the GST Act does not prohibit intelligence officers from issuing show cause notices or adjudicating cases if they meet the definition of a “proper officer” under Section 2(91) of the Act. Despite the petitioner’s concerns, the court found no prejudice in the orders passed by the intelligence officer and dismissed the petitions. However, the petitioner was granted the liberty to file a statutory appeal within 30 days, ensuring that the appeal would be considered on merits by the Appellate Authority in compliance with Section 107 of the GST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This is a second round of litigation before this Court. Earlier, the assessment orders passed on 02.03.2020 by the Officer of the same rank as the respondent herein were challenged before this Court in W.P. (MD)No.8161 of 2020 etc. batch [M/s. Srinithi Enterprises Pvt. Ltd. Rep. by its Director vs. The State Tax Officer (Intelligence), Ajudication – I, Madurai]. The said Writ Petitions were disposed of on 31.08.2020 at the time of admission, with the following observation:-
“4.A reading of the above provision shows that after the explanation is received from the writ petitioners, the authority must apply their mind and if they contemplate an adverse decision, then they must provide an opportunity of hearing. Therefore, issuing a personal hearing notice even prior to the receipt of the explanation cannot be said to be compliance of the aforesaid statutory requirements. That stage would arise only after the authority prima facie considers the explanation and contemplates an adverse decision.
5. Since there is a clear violation of the aforesaid requirement, the orders impugned in the writ petitions stand quashed and the writ petitions are allowed. The matters are remitted to the file of the respondents to pass orders afresh in accordance with law. The respondents will issue personal hearing notice to the writ petitioners herein and thereafter pass orders afresh. No costs. Consequently, connected miscellaneous petitions are closed.”
Thereafter, the impugned orders have been passed on 04.08.2023 and have been suo motu rectified by the respondent vide orders dated 14.08.2023 for the Assessment Years 2017-2018 and 2018-2019 and for the Assessment Year 2019-2020 on 08.08.2023.
2. The case of the petitioner is that the issue now stands clarified by the Circular issued by the Principal Secretary/Commissioner of Commercial Taxes, vide Circular No.23/2021 [PP2/GST-15/54/2021], dated 04.10.2021. It is submitted that in the light of the above clarification, the impugned orders which have been passed subsequently are liable to be quashed.
3. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Additional Government Pleader for the respondent.
4. Already, a similar issue came up for consideration before this Court in M/s. Rasathe Garments, Rep. by its Partner The State Tax Officer (ST) (Inspn.), Office of the Deputy Commissioner (Inspn.), Tirunelveli [W.P.(MD)Nos.25548 and 26389 of 2023, decided on 03.06.2024]. The relevant portions of the said order read as under:-
“12. In my view, there is no embargo under the Scheme of the respective GST Enactments on the inspecting officer to issue Show Cause Notice. In fact, there is also no embargo on such officer to adjudicate the issue as long as such officer also satisfies the definition of a “proper officer” in Section 2(91) of the respective GST enactments which reads as under:-
“2. In this Act, unless the context otherwise requires,—
(91) “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the State tax who is assigned that function by the Commissioner;”
13. However, with a view to eliminate the scope of bias, the inspecting officer acting as a adjudicating officer has been discharged. The impugned circular has clarified the position in Paragraphs 3 and 4. Therefore, there are no merits in the challenge to the impugned Show Cause Notice in Form GST DRC-01 dated 25.09.2023 and the impugned Circular No.13/2022-TNGST dated 08.11.2022.
14. Therefore, these Writ Petitions are disposed of by directing the second respondent State Tax Officer (ST) (Inspn.) to transmit the aforesaid Notice to the jurisdictional proper officer for adjudication in accordance with Paragraphs 4 and 5 of the impugned Circular No.13/2022-TNGST dated 08.11.2022. This exercise shall be carried out by the second respondent State Tax Officer (ST) (Inspn.), within a period of 2 weeks from today.
15. The proper officer shall pass appropriate orders on merits and in accordance with law within a period of 90 days thereafter. The petitioner shall file reply, if any, within a period of 30 days from today. Needless to state, the petitioner shall be heard before the order is passed.
16. In the result, these Writ Petitions stand disposed of. No costs. Consequently, connected Miscellaneous Petitions are closed.”
5. The relevant portion of the Circular issued by the Principal Secretary/Commissioner of Commercial Taxes, vide Circular No.23/2021 [PP2/GST-15/54/2021], dated 04.10.2021, reads as under:-
“14. The transition provision to the new system will be as follows:
For the Inspection completed and adjudication initiated as on 04.10.2021, by way of issue of Notice etc., such cases have to be pursued by the inspecting officers themselves and in those cases where inspections completed and adjudication have not been initiated by the inspecting officers, inspection reports as stated in para 5.2 and 5.3 must be sent to the jurisdictional officer for further action.”
6. In my view, the petitioner cannot be said to have been prejudiced merely because the Officer from the Intelligence Department has passed the order. The Officer who investigated and passed the order also is different from the Officer who has passed the impugned order although from the same Department.
7. As mentioned in M/s. Rasathe Garments’s case [cited supra], the scheme of the Act also does not contemplate an embargo on an Intelligence Officer from passing the order. In this case, there was a specific direction by this Court in the earlier round vide order dated 31.08.2020 in W.P.(MD)No.8161 of 2020 etc. batch and the content of which has been extracted above.
8. Under these circumstances, I am inclined to reject the Writ Petitions. However, liberty is given to the petitioner to file a statutory appeal before the Appellate Authority within a period of 30 days from the date of receipt of a copy of this order, subject to the petitioner complying with the other requirements of Section 107 of the respective GST Enactments. In case, such an appeal is filed, the Appellate Authority shall entertain the appeal and dispose the same on merits and in accordance with law.
9. These Writ Petitions are dismissed with the above liberty. No costs. Consequently, connected Miscellaneous Petitions are closed.
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