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The issue of cross-empowerment in GST has stirred debate as notices and proceedings challenge jurisdictional boundaries. Despite initial agreements, the implementation remains contentious, affecting taxpayers and authorities alike.

“Many notices regarding cross-empowerment are being issued today, wherein the jurisdiction lies with one authority but adjudication is being conducted by another.”

Ideally, when a taxpayer registers for GST, they are assigned to one authority, either the central administrative or state administrative authority. This means that the designated authority will adjudicate matters related to that specific taxpayer.

In recent time it has been observed that taxpayer who have been assigned either to the State Authorities or to the Central Authorities for administrative purposes under the provisions of the respective GST Enactments namely, the CGST Act, 2017, State GST Act, 2017 and IGST Act, 2017 are/were being subjected proceedings by their counterpart.

So, whether it is hold good in court of law…
Let’s analysis…

1. Even prior to the enactment of the respective GST Enactments 9th with effect from 01.07.2017, in the

2. GST Council meeting held on 16.01.2017, a decision was taken regarding cross-empowerment to ensure a single interface with authorities for the future GST Laws.

3. No.28 of the Minutes of the 9th GST Council Meeting held on 16.01.2017 discussed the issue regarding cross-empowerment.

Para.No.28 of the Minutes of the 9th GST Council Meeting held on 16.01.2017 is extracted as under:-

28. After further discussion, the Council agreed to the decisions as recorded below in respect of cross-empowerment to ensure single interface under GST.

i. There shall be a division of taxpayers between the Central and the State tax administrations for all administrative purposes;

ii. Of the total number of taxpayers below Rs. 1.5 crore turnover, all administrative control over 90% of the taxpayers shall vest with the State tax administration and 10% with the Central tax administration;

i. In respect of the total number of taxpayers above Rs. 1.5 crore turnover, all administrative control shall be divided equally in the ratio of 50% each for the Central and the State tax administration

ii. The division of taxpayers in each State shall be done by computer at the State level based on stratified random sampling and could also take into account the geographical location and type of the taxpayers, as may be mutually agreed;

iii. The new registrants shall be initially divided one each between the Central and the State tax administration and at the end of the year, once the turnover of such new registrants was ascertained, those units with turnover below Rs. 1.5 crore shall be divided in the ratio of 90% for the State tax administration and 10% for the Central tax administration and those units above the turnover of Rs.l.5 crore shall be divided in the ratio of 50% each for the State and the Central tax administration;

iv. The division of the taxpayers may be switched between the Centre and the States at such interval as may be decided by the Council;

v. The above arrangement shall be reviewed by the Council from time to time;

vi. Both the Central and the State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain.

vii. Powers under the IGST Act shall be cross empowered

viii. to the State tax administration on the same basis as under the CGST and the SGST Acts either under law or under Article 258 of the Constitution but with the exception that the Central tax administration shall alone have the power to adjudicate a case where the disputed issue relates to place of supply, or when an affected State requests that the case be adjudicated by the CGST authority and for such issues of export and import as may be discussed in the Law Committee of officers and brought back to the Council for decision;

ix. The territorial water within the twelve nautical miles shall be treated as the territory of the Union of India unless the Hon’ble Supreme Court decides otherwise in the ongoing litigation on the issue but the power to collect the State tax in the territorial waters shall be delegated by the Central Government to the States.”

4. In this regard Circular No.1/2017-GST (Council) dated 20.09.2017. Circular No.1/2017-GST (Council) dated 20.09.2017 was issued for a division of taxpayer base between the Centre and States to ensure a Single Interface under GST Enactments between Tax Officers and Central Tax Officers under GST/IGST and SGST Acts of 2017.

In this circular there is an para, reproduced below:

“Suitable notifications regarding cross-empowerment of State and Central Tax officers under CGST/IGST and SGST Acts respectively are being issued separately.”

It means for cross empowerment notification will be issue later.

5. To issue notification on cross empowerment the GST Council in its 22nd Meeting held on 06.10.2017 discussed the same

Agenda No.9 of the 22nd Meeting held on 06.10.2017 captures the deliberations. It is extracted below:-

Agenda item 9: Proposal for issuing notifications on cross-empowerment for ensuring single interface under GST

35. The Commissioner (GST Policy), CBEC stated that it was proposed to issue notification on cross-empowennent prepared in accordance with the decisions of the Council taken during its 9th Meeting (held on 16 January 2017) and 21st Meeting (held on 9 September 2017).

He stated that while there was a broad agreement for cross-empowerment under the CGST and SGST Acts, there was disagreement on the issue of cross-empowerment under the IGST Act in relation to the Place of Supply Rules.

The Secretary stated that notification of cross-empowerment was urgently required to enable refund to the taxpayers and this notification could be issued. He added that due to persistent differences on cross empowerment for the Place of Supply Rules issues under IGST, notification regarding cross empowerment in respect of other matters could be deferred. He stated that by cross empowering States and Central tax officers for giving refund, it would be ensured that only one officer issued an order of refund for both CGST and SGST. The Council approved the proposal to issue a notification by the Central Government and the State Governments cross empowering officers of the Central and State Government to sanction refund and that an order of refund passed by an officer of the Central or State.

Government shall cover both the central tax and the state tax and a similar notification to be issued under the IGST Act.

35.1 The CCT, Karnataka stated that the Council could also take a decision that till the division of taxpayers was effected between the Central administration and the State administrations, an officer of the Central and the State Government was authorised to process any refund claim filed by an applicant under his jurisdiction. The Secretary stated that division of taxpayers was likely to be done soon.

The CCT, Karnataka stated that a lot of ground work was still required to be done and data such as turnover details of migrated taxpayers, removing from it the data of turnover of taxpayers with centralised registration, etc, would take time and for such period, a taxpayer should be given the freedom to approach any tax administration for claiming refund. The Secretary stated that this could be permitted subject to a declaration being given by the applicant that the same refund claim has not been claimed from the other administration having jurisdiction over the applicant. The Council agreed to this suggestion.

36. For agenda item 9, the Council approved the following:-

i. To issue notifications by the Central Government and the State Governments, cross empowering officers of the Central and State Governments to sanction refund and that an order of refund passed by an officer of the Central or State Government shall cover both the Central tax and the State tax. Similar notification to be issued under the IGST Act by the Central Government;

ii. Until the division of taxpayers is effected between the Central and State administration, an officer of the Central and the State Government was authorised to process any refund claim filed by an applicant under his jurisdiction subject to a declaration being given by the applicant that the same refund claim has not been claimed from the other administration having jurisdiction over the applicant.”

6. To this notification No.39/2017-Central Tax on 13.10.2017 issued for above subject matter, later it amended by NN.10/2018 dated 23-01-2018.

7. In line with the decision of the 22nd GST Council Meeting held on 06.10.2017, a separate Model Notification was also circulated for the purpose of Section 6 of the respective GST Enactments for other purpose which would have entitled cross-empowerment for other purpose. However, Model Notifications which was circulated during September, 2017 immediately after the GST Enactments came into force with effect from 01.07.2017 have not been notified either under the CGST Act, 2017 or under the SGST Act, 2017. These Notifications remain as draft Notifications till date.

Text of the Draft Notifications that fell for deliberation during the 22nd GST Council Meeting held on 06.10.2017 are reproduced below:-

Notification No….. /2017 –State Tax… , the …. September, 2017

G.S.R….(E).-In exercise of the powers conferred by sub-section (1) of section 6 of the Goods and Services Tax Act, 2017 ( — of 2017) (hereinafter referred to as “GST Act”), and on the recommendations of the Council, the Government of ………. hereby specifies that the officers appointed under the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the “CGST Act”)who are authorized to be the proper officers for the purposes of the CGST Act (hereinafter referred to as “the said officers”)by the Commissioner in the Board, shall perform all or any of the duties and functions assigned to them, from time to time, as detailed in column (B) of the Schedule below, subject to the conditions specified in the corresponding entry in column (C) of the said Schedule;-

SCHEDULE

Serial No Duty or function or authority or scope of authority or power Conditions
1 All proceedings with respect to a registered person, excluding those referred in Sl. No 2, 3, 4 and 5 of this Schedule. Jurisdiction in respect of the said
registered person has been assigned to the said officers for the specified period in accordance with the recommendations of the Council.
(ii) all consequential proceedings including appeals arising from such proceedings
2 Inspection, search, seizure or any other proceeding under section 67 of the GST Actor intelligence-based enforcement action against any person including all consequential or incidental proceedings including appeals arising from such proceedings Such proceedings have not been initiated by the proper officer of the GST Act within one year from the date on which the said proceedings are initiated by the said officers. Explanation. -For the purposes of this clause, the period of one year shall be counted from the date of initiation of the said proceedings as
specified in the format for intimation of -such proceedings
3 Detention, seizure and release of goods and conveyances in transit under section 129 of the GST Actor of confiscation of goods or conveyances and levy of penalty under section 130 of the GST Act against any person and all consequential or incidental proceedings including appeals arising from such proceedings. No such proceedings have been initiated in respect of the said goods by the proper officer of GST Act.
4 All proceedings against a supplier or recipient of goods or services or both, who has remained unregistered although liable to be registered. No such proceeding has been initiated in respect of such person by the proper officer of GST Act.
5 Any proceedings arising out of
Chapter XX of the GST Act.
Except the issues related to or arising out of transitional provisions of the GST Act.

Explanation 1: Assignment of registered persons refers to the distribution of registered persons between the central and state tax administrations, for exercising all administrative controls regarding enforcement of the provisions of the SGST Act, in such proportions and following such methods, as the Council may decide from time to time.

Explanation 2: With respect to Sl. No. 2,3 & 4 of the said Schedule, information regarding intimation of proceedings in the format specified below should be furnished by the Commissioner to the jurisdictional Commissioner of the Central Goods and Services Tax Act on the common portal or manually with due acknowledgment till such time the facility for uploading the said information is not available on the common portal.

Format for intimation of proceedings

Serial No. GSTN No Date of initiation of proceedings Subject matter Under investigation Period under investigation
(1) (2) (3) (4) (5)

2.This notification shall come in force with effect from —

[To be published in the Gazette of India,
Extraordinary, Part II, Section 3, Sub-section (i)]
Government of India
Ministry of Finance
Department of Revenue Central
Board of Excise and Customs
Notification No….. /2017 –Integrated Tax

New Delhi, the …. September, 2017 G.S.R….(E).-In exercise of the powers conferred by section 4 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) (hereinafter referred to as the “IGST Act”), on the recommendations of the Council, the Central Government hereby specifies that the officers appointed under the respective State Goods and Services Tax Act, 2017 or the Union Territory Goods and Services Tax Act (14 of 2017), (hereinafter collectively referred to as “the said Acts”), and who are authorized to be the proper officers for the purposes of the said Acts(hereinafter referred to as “the said officers”) by the Commissioner of the said Acts, shall exercise their powers except in respect of the following purposes, namely:-

a) any disputed issues requiring determination of place of supply under Chapter V of the IGST Act;

b) where one of the states involved in an Inter-State transaction request that the case be adjudicated by the officer appointed under section 3 of the IGST Act;

c) refund of IGST paid on export of goods other than the supply of goods to SEZ unit or SEZ supplier;

d) any other purpose that is recommended by the Council from time to time:

2. The said officers shall perform the duties and functions assigned to them, from time to time, as detailed in column (B) of the Schedule below, subject to the conditions specified in the corresponding entry in column (C) of the said Schedule; –

SCHEDULE

Sl.No Duty or function or authority or scope of authority or power Conditions
1. All proceedings with respect to
registered persons, excluding
those referred at Sl. No. 2, 3, 4
and 5 of this Schedule.
Jurisdiction in respect of the said registered person has been assigned to the said officers for the specified period in accordance with the recommendations of the Council.

(ii) all consequential proceedings including appeals arising from such proceedings.

2. Inspection, search, seizure or any other proceedings under section 67 of the Central Goods and Services Tax Act, 2017 as made applicable to the Integrated Tax vide section 20 of the IGST Act or intelligence-based enforcement action against any person including all consequential or incidental proceedings including appeals arising from such proceedings. Such proceedings have not been initiated by the proper officer of central tax within one year from the date on which said proceedings are initiated by the said officers. Explanation. -For the purposes of this clause, the period of one year shall be counted from the date of initiation of the said proceedings as specified in the format for intimation of such proceedings.
3. Detention, seizure and release of goods and conveyances in transit under section 129 of the Central Goods and Services Tax Act, 2017 or of confiscation of goods or conveyances and levy of penalty under section 130 of the Central Goods and Services Tax Act, 2017 made applicable to the integrated tax vide section 20 of the IGST Act, against any person and all consequential or incidental proceedings including appeal arising from such proceedings. No such proceedings have been initiated in respect of the said goods by the proper officer of the central tax.
4. All proceedings against a supplier or recipient of goods or services or both, who has remained unregistered, although liable to be registered. No such proceedings have been initiated in respect of such person by the proper officer of the central tax.
5. Any proceedings arising out of Chapter XX of the Central Goods and Services Tax Act, 2017 made applicable to the integrated tax vide section 20 of the IGST Act. Except the issues related to or arising out of transitional provisions of the Central Goods and Services Tax Act, 2017.

Explanation 1: Assignment of registered persons refers to the distribution of registered persons between the central and state tax administrations, for exercising all administrative controls regarding enforcement of the provisions of the IGST Act, in such proportions and following such methods, as the Council may decide from time to time.

Explanation 2: With respect to Sl. No. 2, 3& 4 of the said Schedule, information regarding intimation of proceedings in the format specified below should be furnished by the Commissioner to the jurisdictional Commissioner of the respective State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act on the common portal or manually with due acknowledgment till such time the facility for uploading the said information is not available on the common portal:

Format for intimation of proceedings

Serial No. GSTIN No. Date of
initiation of
proceedings
Subject matter under investigation Period under
investigation
(1) (2) (3) (4) (5)

2. This notification shall come in force with effect from —”

8. During the aforesaid Meeting, it was highlighted that there was disagreement of issue under IGST Act in relation to place of supply rules. While the Secretary stated that investigation of cross-empowerment was urgently required to enable the tax payer and therefore, the notification can be issued. It highlighted that there was a persistent difference regarding the cross-empowerment for the Place of supply rules regarding IGST, Notification regarding the cross-empowerment in respect of other matters were to be deferred in 22nd GST Council Meeting held on 06.10.2017.

9. Thus, there is no cross-empowerment.

10. Section 6 of CGST Act, 2017 is reproduced below: –

Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances.

(1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify.

(2) Subject to the conditions specified in the notification issued under sub­section (1),–

(a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax;

(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

(3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an officer appointed under this Act shall not lie before an officer appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax 22 Act.

Thus, Section 6(1) of the respective GST Enactments empowers Government to issue notification on the recommendation of GST Council for cross-empowerment. However, no notification has been issued except under Section 6(1) of the respective GST Enactments for the purpose of refund although officers from the Central GST and State GST are proper officers under the respective GST Enactments.

11. Since, no notifications have been issued for cross-empowerment with advise of GST Council, except for the purpose of refund of tax under Chapter-XI of the respective GST Enactments r/w Chapter X of the respective GST Rules.

12. Thus, if an assessee has been assigned administratively with the Central Authorities, pursuant to the decision taken by the GST Council as notified by Circular No.01/2017 bearing Reference F.No.166/Cross Empowerment/GSTC/2017 dated 20.09.2017, the State Authorities have no jurisdiction to interfere with the assessment proceedings in absence of a corresponding Notification under Section 6 of the respective GST Enactments or vice-versa.

Conclusion: While the GST Council initially aimed for seamless cross-empowerment, the lack of notifications has left taxpayers and authorities navigating jurisdictional ambiguities. Resolving this burning issue is crucial for clarity and efficiency within the GST framework.

*****

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The details are gathered from recent case law Tvl.Vardhan Infraastructre.

CA Jai Maurya (7208677563)
215, Shree Samarth Plaza, RRT Road, Near Mulund Station, Mulund West, Mumbai-400080

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