Case Law Details
Ram Agencies Vs Assistant Commissioner of Central Tax (Madras High Court)
In absence of GST notification issued for cross-empowerment, authorities from counterpart Department cannot initiate proceedings where an assessee is assigned to counterpart.
Ram Agencies filed a petition challenging Order-in-Original No.24/2023-GST passed by the Assistant Commissioner of Central Tax regarding assessment years 2017-2018, 2018-2019, and 2019-2020. The petitioner contended that the order was passed despite a stay granted by the Principal Seat of the Court against the operation of a notification extending the period of limitation. Additionally, it was argued that since the petitioner was assessed by State Tax Authorities, the order by Central Tax Authorities was contrary to the law established in Vardhan Infrastructure vs. The Special Secretary.
The respondent’s counsel acknowledged that the petitioner was indeed assessed by State authorities following allocation by the Central Government, as per Circular No.1/2017-GST. However, they argued that the decision in Vardhan Infrastructure’s case was distinguishable in light of a Division Bench decision in Kuppan Gounder P.G. Natarajan vs. Directorate General of GST Intelligence, New Delhi. This case clarified the issue of cross-empowerment and concurrent jurisdiction between State and Central tax authorities. It stated that both authorities had the power to take enforcement action based on intelligence, irrespective of the allocation of the assessee.
The Division Bench decision referred to a clarification issued by the Central Board of Indirect Taxes and Customs (CBIC) stating that both State and Central tax administrations could take intelligence-based enforcement action in the entire value chain. This meant that if one authority initiated action against a taxpayer assigned to the other authority, the latter could proceed with the matter. Section 6(2)(b) of the CGST Act was also cited, stating that if proceedings were initiated by one authority on a subject matter, no proceedings could be initiated by the other authority on the same subject matter.
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