Recently circular issued by the Chief Commissioner of State Tax asking state officers to carry out enforcement action against the tax payers allotted to Central administration has been widely discussed in the press and in social media. I disagree with the view that such action directed by the Chief Commissioner is not correct and appears to me that there is no issue with regard to the visiting of the unit allotted to State by central officers and vice versa as division of units is only an administrative mechanism and CGSTA/SGSTA do not recognise such distribution for putting any bar on enforcement by either Central Tax Officers (CTOs) or State Tax Officers (STOs). Section 6 of CGSTA/SGSTA provides for such cross empowerment as discussed and finalized by 9th GST council. Further, it appears that from the phrase “…. Under intimation to the jurisdictional officers of state tax……” mentioned in Section 6(2)(a) indicate that GST law does envisage dual control on assessee by both Central and State tax officers in all aspects. Only issue appears to me is that there should be a notification/order under SGST Act declaring central tax officers as proper officers for different sections of SGST act and vice versa. Presently enforcement action like search/inspection and recording of statements are being done by officers of Central tax or State Tax are under powers derived from their acts read with proper officer order issued thereunder. But real problem comes when central tax officers require giving notice demanding both Central tax and state tax and state tax officer to demand both State tax and central tax or integrated tax. So this should be resolved may be by way of an order or notification to that effect retrospectively lest it is possible to litigate that the evidence gathered under the provisions of CGST Act alone are not valid for actions under SGSTA and it leads to avoidable litigation. Let us examine whether Section 6 of CGST Act /SGST Act takes care of this cross empowerment and no notification required. Said Sections read as:
Section 6 of CGSTA:
(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 sub-section (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 Act.
(Section 6 of SGST Act is also similar worded for empowerment of Central Tax Officers)
2. But it appears to me that though Section 6(2) provides for issuance of an order by central tax officer for state tax in terms of SGST Act but the words “….as authorised by the State Goods and Services Tax Act…..” indicates that for issuance of such order for state tax under SGST Act the proper officer of Central Tax should have been invariably authorized by the concerned SGST Act which is only possible when order/notification issued under SGSTA recognizing various officers of central tax officers as proper officers in tune with the orders of proper officers issued under CGST Act in respect of central tax officers. Further, issuance of Notification No. 11/2017 –Integrated Tax dated 13th October, 2017 and notfn no 39/2017-Central Tax,dt. 13-10-2017 empowering state officers to grant refund of IGST and CGST respectively, suggests that there is requirement of issuing proper notifications for declaring central/state officers as proper officers for state tax/central tax respectively. Similar notification was issued under SGST also empowering central officers to grant refund of state tax. Refund giving is not an order? I think YES.
3. Further, it appears to me from the phrase ‘…under intimation to the jurisdictional officers of state….’ mentioned in Section 6(2)(b) indicate that GST law does envisage dual control on assessee by both Central and State tax officers. I think allocation of units between State and Centre as per GST Council decision should be done by way of proper notification when two laws (CGSTA and SGSTA) and set of officers are involved and I think a formal approval in the form of a notification/circular citing the provision of GST law needs to issued and certain powers like refunds sanction, scrutiny , assessment etc should be exclusively entrusted to the officers of state or Central to whom the unit is allotted keeping in view of fact that there is division of units between the Central and State jurisdiction.
4. Further issue could be validity of evidence collected in Searches made and Statements recorded in terms of CGST Act to use for actions under SGSTA . It is felt that, to be safer side, it is advisable to retrospectively validate the actions of search, inspection or statement done under CGST Act deemed to have been validly done for the purpose of state tax demand/ deemed to have been done under the provisions of SGST Act/UTGSTA and vice versa.
Hence, it is wise to resolve this issue by way of suitable legal actions or proper clarification as we have already seen lot of litigation in respect of powers of DRI/DGCEI officers to demand central duties/taxes.
(Views expressed by the author are purely personal.)
(By C.Mallikarjun Reddy, Superintendent, Hyderabad GST zone; [email protected])
Author Bio
The provisions of Section 6(1) clearly says that the authorisation of Officers of State tax are subject to such conditions laid in the notification. Thus Section 6(1) is not a Blank Cheque permission. In order to fulfill the condition laid in this provision, Govt has issued notification empowering the Counterpart Officers in cases of granting refund. Similar Notification is required in other cases also even if if necessitates a retrospective effect.
Author made a valid point on the need to authorize officers of counterpart department ts to empower as proper officers for various Sections under SGST Act and CGST Act by issuing necessary notifications as required under Section 6 of the respective Acts.