This article aims to analyse the various provisions under GST of an Adjudicating Authority including its meaning and role under the act. The article also elaborates upon the essential elements of the principle of natural justice and judicial discipline along with the time and monetary limits for adjudication.
Adjudicatory Authority: Meaning
Every tax payer is obligated to comply and pay his taxes due to the Government on time. The first level of check at the department level is undertaken by the Adjudicating Authority in case of tax payment and procedure related matters. As the name suggests, the Adjudicating Authorities, ‘adjudicate’ the matter giving it a judicial perspective. The GST Act defines the phrase “adjudicating authority” (hereinafter referred as AA) under Sec. 2(4) as any authority competent to pass any order or decision under this Act, but does not include (i)the Board i.e CBEC, (ii) Revisional authority (iii) Authority for Advance Ruling (iv)Appellate Authority for Advance Ruling (v) Appellate Authority & (vi) the Appellate Tribunal. Such authorities are usually in the Rank of Additional/Joint/ Assistant Commissioner.
Role of Adjudicating Authority
The adjudication proceeding is carried by the departmental officers depending upon monetary limits and they discharge functions in the capacity of quasi-judicial officers. The officers vested with power of adjudication are expected to use it with utmost care and caution, free from any prejudice or bias or unfairness. It is very important on the part of the adjudicating officers to know and understand the facts of the case, examine these facts properly and to apply correctly the statutory provisions of the relevant legislation. The adjudicating officer should pass the final order after thorough verification of the relevant documents of the case, due study of the written submission filed by the parties and subsequent discussion in the personal hearing.
Essential Elements of Principles of Natural Justice
The AA after adjudicating the matter would pass an ‘Assessment Order’ either in favour/against the Assessee. Since the functions exercised by the AA have a judicial lens to them, impliedly the Principles of Natural Justice come into picture. These principles act as a check on the arbitrary exercise of power by the authority against the assessee which might hinder justice. The principles of natural justice are common law principles applicable in all cases of adjudicating process in judicial, quasi-judicial as well as administrative proceedings. Such principles are inherently present as there are no separate codes that define them. The principles of natural justice are based on the following essential elements:
(1)‘Audi alteram partem’ which necessarily means that both sides shall be heard in person by the adjudicator before a decision or an order is passed in the matter. The grant of adequate opportunity of personal hearing is the primary responsibility of any adjudicating authority or appellate authority before deciding a case as per the statutory provisions of tax laws. The same should be real, reasonable and effective and not merely an empty formality. The affected parties should have right to scrutinize the documentary evidence collected.
(2)‘Adjournments’ The minimum adjournment of personal hearing should be allowed as per the statutory provisions of tax laws. Both sides are permitted to take adjournment on reasonable grounds for the maximum of three occasions. However, there is no fetter in further adjournment of the matter if the authority feels that the matter needs to be adjourned in the interest of justice.
(3)‘Nemo judex in re sua’ the authority passing the orders should be free from bias and prejudice as they are impediments to a fair decision making process. According to Aiyar’s Judicial Dictionary ‘bias’ is the ‘predisposition to decide for or against one party without proper regard to true merits of the dispute.” A decision which not based on evidence is biased. Broadly, bias may be pecuniary, personal or official in nature. The decision so arrived at is in violation of the principle of natural justice. The Court must act honestly and impartially and not under the dictation of other persons. The decision of adjudicating authority should not be biased, arbitrary or based on mere conjectures, assumptions and presumption of the facts.
(4)‘No man should judge his own case’. This implies that the interested party cannot adjudicate his own case as there would be a conflict between his own interest and the duty cast on him which could prevent him from being impartial. The adjudicating authority should communicate the order within a reasonable time after grant of personal hearing. He is also expected to keep a ‘Record of Personal Hearing’ and to provide a signed copy of the same to the parties. In Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, it was held that power of review by the same person who passed the order is not inherent. It must be conferred by law either specifically or by necessary implication.
(5)‘Need for Show Cause Notice’ The person against whom the adjudication is being carried must have the ‘knowledge’ of the proceedings against him. The first step in adjudication should be Notice which must be clear and unambiguous so as to make an effective defense.The parties to a proceeding must have due notice of when the Court/authority will proceed in the matter. Adequate time should be given in the hearing notice and the notice must contain time, place and nature of hearing. The adjudication order should quantify the duty demanded and the order portion must contain the correct provisions of law under which duty is confirmed and penalty is imposed. The Board by Circular No. 31/05/2018-GST dated 9-2-2018 has clarified that DGGSTI shall exercise the powers only to issue show cause notices and the notice issued by them shall be adjudicated by the competent Central Tax officer of the Executive Commissionerate in whose jurisdiction the noticee is registered.
In Pahwa Chemicals P Ltd v. CCE, it was held that notice can be issued, and demand can be confirmed by any Central Excise Officer. These statutory powers cannot be cut down their jurisdiction by issuing a circular. The circulars issued by Board are nothing more than administrative directions and cannot take away jurisdiction vested in Central Excise Officer under the Act. Same view was confirmed in Aeon’s Construction Products v. CCE, where it was held that CBE&C can limit or confer powers on officers of excise the powers of adjudication u/s 33, but power to issue SCN cannot be restricted either under sec 11A or under sec 33.
In Union of India v. Mangai Impex, the Delhi High Court held that any SCN issued without authority would lack jurisdiction and will not hold good in law & only proper officers under the Act have the authority to issue the same. The appeal regarding the decision of the case where the DRI and other officers issued SCN is pending before the Supreme Court and the same has been stayed. A number of cases have remain waiting for the decision of the SC.
(6) ‘Speaking Order’:- To give reasons for a decision ensures the considerations taken before deciding the matter and reduces arbitrariness as the order is ‘speaking for itself’ . The adjudication order must be a speaking order giving clear findings on all the points raised in the show cause notice, after due consideration of submissions made by the party and final decision in clear terms.The adjudication order should be in accordance with precedent judgment and not in violation of the principles of judicial discipline. Adjudication order must be dispatched by registered post acknowledgment due or Speed Post with POD option and the acknowledgment of delivery must be kept on record. The copy of POD must be provided to the parties on their request.
(7) ‘Cross Examination’:- The adjudicating authority should take a decision on request of the party for cross-examination considering the facts and circumstances of the case. In accordance with provisions of s.9D of Central Excise Act which are in pari materia to s.136 of the CGST Act, when any statement given by any person is relied upon by the AA, the first step should be to intimate the admission of the statements. The Noticee can seek for cross examination and an opportunity should be provided to the assessee to contest the contents of the statement. Before cross examination it shall be absolutely necessary to have an examination of the witness as has been held in a number of cases.
It is well settled that AA’s while acting in their quasi-judicial capacity must adhere to the principles of natural justice.The adjudicating officers should follow the principles of judicial discipline or precedent judgments before passing of any decision. The judicial discipline is a vital factor in adjudication proceedings. The adjudicating officers should be bound by the precedent judgments of the higher authorities in the identical cases, only then would the judicial decision be just, fair, right, substantial and universally acceptable. The judicial discipline is self-discipline and it is an inbuilt mechanism in the system itself under adjudication proceedings. This is the minimum discipline and decorum to be maintained by quasi-judicial/judicial fraternity. The principles of natural justice and judicial discipline are both sides of the same coin in adjudication proceedings.
Time limit for adjudication in cases of normal period of limitation
As per Section 73(10) of the CGST Act, 2017, the proper officer is required to issue the order within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized relates to any reason other than fraud or any willful misstatement or suppression of facts.
Time limit for adjudication in cases of invocation of extended period
As per Section 73(10) of the CGST Act, 2017, the proper officer shall issue the order within five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts.
Deemed conclusion of proceedings
As per Section 75(10) of the CGST Act, 2017, the adjudication proceedings shall be deemed to be concluded, if the order is not issued within three years as provided for in Section 73(10) ibid or within five years as provided for in sub-section (10) of Section 74 ibid.
Monetary Limits for adjudication
In pursuance of clause (91) of Section 2 of the CGST Act read with Section 20 of the IGST Act, the Board has assigned the officers mentioned in Column (1) of the Table below, the functions as the proper officers in relation to issue of show cause notices and orders under Sections 73 and 74 of the CGST Act and Section 20 of the IGST Act (read with Sections 73 and 74 of the CGST Act), up to the monetary limits as mentioned in columns (3), (4) and (5) respectively of the Table below. The Monetary limit is the amount of Tax not paid (or) short paid (or) erroneously (or) refunded or input tax credit of Integrated Tax wrongly availed (or) utilized for issuance of show cause notices and passing of orders.
Central Tax (1)
|Monetary limit (2)||Monetary limit (3)||Monetary limit (4)||Monetary limit(5)|
|Superintendent of Central Tax||Not exceeding Rupees 10 lakhs||Not exceeding Rupees 20 lakhs||Not exceeding Rupees 20 lakhs||Not exceeding Rupees 20 lakhs|
|Deputy/Assistant Commissioner of Tax||Above Rupees 10 lakhs and not exceeding Rupees 1 crore||Above Rupees 20 lakhs and not exceeding Rupees 2 crores||Above Rupees 20 lakhs and not exceeding Rupees 2 crores||Above Rupees 20 lakhs and not exceeding Rupees 2 crores|
|Additional/Joint Commissioner of Tax||Above Rupees 1 crore without any limit||Above Rupees 2 crores without any limit||Above Rupees 2 crores without any limit||Above Rupees 2 crores without any limit|
ADJUDICATING AUTHORITY UNDER GST
(1) The Superintendents of Central Tax is empowered to issue show cause notices and orders under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Section 73 of the CGST Act, 2017.
(2) The Deputy or Assistant Commissioner of Central Tax is authorized to issue show cause notice in terms of provisions in sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Section 74 of the CGST Act, 2017.
(3) All officers up to the rank of Additional/Joint Commissioner of Central Tax are assigned as the proper officer for issuance of show cause notices and orders under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Sections 73 and 74 of the CGST Act. Further, they are so assigned under the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the “IGST Act”) as well, as per Section 3 read with Section 20 of the said Act.
(4) The Central Tax officers of Audit Commissionerate’s and Directorate General of Goods and Services Tax Intelligence (hereinafter referred to as “DGGSTI”) shall exercise the powers only to issue show cause notices. A show cause notice issued by them shall be adjudicated by the competent central tax officer of the Executive Commissionerate in whose jurisdiction the noticee is registered. In case there is more than one noticee mentioned in the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by the competent central tax officer in whose jurisdiction, the principal place of business of the noticee from whom the highest demand of central tax and/or integrated tax (including cess) has been made lies.
(5) Notwithstanding anything contained in para 6 above, a show cause notice issued by DGGSTI in which the principal places of business of the noticees fall in multiple Commissionerate and where the central tax and/or integrated tax (including cess) involved is more than Rs.5 crores shall be adjudicated by an officer of the rank of Additional Director/Additional Commissioner (as assigned by the Board), who shall not be on the strength of DGGSTI and working there at the time of adjudication. Cases of similar nature may also be assigned to such an officer.
The right to appeal is a right given by the Statute and any person aggrieved by the Assessment order of the AA can file an appeal to the appellate authority. No appeal can lie against the following orders:
The time limit for the party to file an appeal before the AA is 3 months from the date of communication of the impugned order. But the AA may condone a delay of up to one month, if he is satisfied that there was enough cause for such delay.
All appeals from the Appellate Authority lie in the Appellate Tribunal. The Appellate Tribunal has the power to modify or give directions on any issues that has come from the Adjudicating authority or the Appeal proceeding against which appeal has been made. However, the tribunal cannot travel beyond the issues raised in such proceedings. In other words, the Tribunal cannot take the role of the Adjudicating Authority in terms of the provisions of the Act, which excludes Tribunal from the scope of Adjudicating Authority’. Thus, the AA lays the foundation for the case, beyond which no exercise of jurisdiction can be legitimately done.
 CIT v. Panna Devi Saraogi  78 ITR 728 (Cal.).
 E. Vittal v. Appropriate Authority  221 ITR 760 (AP).
 A. K. Kraipak v. UOI AIR 1970 SC 150.
 Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, AIR 1970 SC 1273 = (1971) 3 SCC 844.
 Biecco Lawrie Ltd v. State of West Bengal  10 SCC 32; Umanath Pandey v. State of UP  12 SCC 40.
 Pahwa Chemicals P Ltd v. CCE 2005 (181) ELT 339 (SC 3 member bench).
 Aeon’s Construction Products v. CCE 2005 (183) ELT 120 ( SC 3 member bench )
 Union Of India vs Mangali Impex Ltd 2016 (335) ELT 605 (Del.)
 Vipul Overseas v. Commissioner of Customs, 2017 TIOL 2478 HC Del CUS.
 Kishan Lal v. UOI  97 Taxman 556 (SC)
 Asstt. Commissioner Commercial Tax Department, Works Contract and Leasing Quota v. Shukla & Bros.  (4) JT 35.
 Jundal Drug v. UOI, 2916 (340) ELT 67 (P&H); G Tech Industries v. UOI, 2016 (339) ELT 209(P&H)
 Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri  26 ITR 1 (SC); Dhakeshwari Cotton Mills Ltd. v. CIT  26 ITR 775 (SC).