2024(03)LCX0313

Tvl Vardhan Infrastructure

Versus

The Special Secretary

W.P.Nos. 34792, 29878, 30607, 30613, 30615 of 2019 decided on 11/03/2024

IN THE HIGH COURT OF JUDICATURE AT MADRAS

CORAM

THE HON'BLE MR.JUSTICE C.SARAVANAN

W.P.Nos.34792, 29878, 30607, 30613, 30615 of 2019 & W.P.Nos.3011, 3013, 3026, 3028, 4922, 8495, 8496, 11319 of 2020 & W.P.Nos. 2723, 2861, 2863, 2865, 11004, 11006, 11008, 12795, 12797, 16324 of 2021 and W.P.Nos.4490, 18575, 22552, 26586, 31013 of 2022 and W.P.No.12014 of 2023

and

W.M.P.Nos.35553, 30673, 30680, 30682 of 2019 & W.M.P.Nos. 3513, 3516, 3534, 3538, 5831, 10258, 10259, 13797, 13799 of 2020 & W.M.P.Nos.3055, 3200, 3201, 3199, 11649, 11652, 11654, 13594, 13596, 17292, 17289 of 2021 & W.M.P.Nos.4608, 17910, 21580, 25646, 30418 of 2022 and W.M.P.No.11864 of 2023.

W.P.No.34792 of 2019:-

Tvl.Vardhan Infraastructre,
No.3/2, Narasimmapuram,
Mylapore,
Chennai – 600 004,
Represented by its Partner, S.Manikandan ... Petitioner

Vs.

1. The Special Secretary,
Head of the GST Council Secretariat,
Office of the GST Council Secretariat,
5^th Floor, Tower-II, Jeevan Bharti Building,
Janpath Road, Connaught Police,
New Delhi – 110 001.

2. The Chairman,
Central Board of Indirect Taxes,
North Block,
New Delhi – 110 001.

3. The Additional Chief Secretary & Commissioner of State Taxes,
Chepauk,
Chennai – 600 005.

4. The Director General of GST Intelligence, South,
C-3, C-Wing, II Floor,
Rajaji Bhavan, Besant Nagar,
Chennai – 600 090.

5. The Senior Intelligence Officer,
Directorate General of GST Intelligence,
Chennai Zonal Unit,
Chennai.

6. The Assistant Commissioner (ST),
Arumbakkam Assessment Circle.                    ... Respondents

Prayer in W.P.No.34792 of 2019:- Writ Petition filed under Article 226 of the Constitution of India, for issuance of a Writ of Mandamus to direct the Respondents 4 & 5 to refrain from cross-empowerment of tax authorities under the provisions of Chapter XIV (inspection, search, seizure and arrest) of Central Goods and Services Tax Act, 2017 and Tamil Nadu Goods and Services Tax Act, 2017 till relevant notifications are issued in this regard pusuant to the recommendations of the first respondent, and until such time, to transfer all the proceedings initiated by the 5^th respondent to the 6 th respondent, who is the jurisdictional assessing officer, for taking further action.

COMMON ORDER

By this common order all these writ petitions are being disposed of.

2. In these Writ Petitions, a common issue arises for consideration as to whether the petitioners who are assigned to either the Central Tax Authorities or the State Tax Authorities under respective Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017) and/or Tamil Nadu Goods and Services Tax Act, 2017 (hereinafter referred to as TNGST Act, 2017) can be subjected to investigation and further proceeding by the counterparts under the respective GST Enactments.

3. Following Writ Petitions have been filed by the petitioners who have been assigned to the State Authorities. Proceedings have been initiated by the Central Authorities. Details of the respective Writ Petitions are as under:-

4. In the above mentioned writ petitions, the petitioners have challenged the impugned proceedings of the respondents namely the Central Authorities. Therefore, the petitioners have challenged the impugned proceedings of the respondents namely the Central Authorities on the ground they are without Jurisdiction

5. Following Writ Petitions have been filed by the petitioners who have been assigned to the Central Authorities. Proceedings have been initiated by the State Authorities. Details of the respective Writ Petitions are as under:-

6. In the above Writ Petitions, the petitioners are assessed by the Central Authorities under the CGST Act, 2017 and have thus challenged the notices issued under Sections 62 & 67 of the TNGST Act, 2017 and orders passed under Section 73 and 74 of the TNGST Act, 2017 by the respondents therein namely the State Authorities. Therefore, in the above mentioned writ petitions, the petitioners have challenged the impugned proceedings of the respondents namely the State Authorities.

7. The dispute in these Writ Petitions have arisen on account of the fact that the respective petitioners 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, TNGST Act, 2017 and IGST Act, 2017 are/were being subjected proceedings by their counterpart.

8. Submissions of the petitioners are that in the absence of a proper Notification under Section 6 of the respective GST Enactments for cross-empowerment, the impugned proceedings by the respective counterparts were without jurisdiction.

9. The CGST Act, 2017, GST Act, 2017 of the respective States, Integrated GST Act, 2017, UTGST Act, 2017, GST (Composition to States) Act, 2017 came into force on 01.07.2017.

10. The Integrated Goods and Services Tax Act, (Extension to Jammu & Kashmir) Act (Act 27 of 2017) was passed on 23.08.2017 with retrospective effect from 08.07.2017.

11. These enactments were enacted in the light of Constitution [101 Amendments (Act 2016)] which introduced a slew of amendments to the Constitution of India Constitution [101 Amendments (Act 2016)] amending the Constitution of India came into force with effect from 12.09.2016. Constitution [101 Amendments (Act 2016) also inserted Article 279 A to the constitution. Article 279 A to the constitution created the Goods and Services Tax Council (GST Council). Article 279A of the Constitution of India reads as under :-

12. These respective GST Enactments were enacted based on the model GST Law structured by the GST Council in its deliberations.

13.The GST Council had a difficult task to balance the concerns of the Trade and interest of the different States. To avoid multiple assessments and to avoid confusion, the GST Council had to arrive at a consensus with State and Central Government.

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

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

iii. 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;

iv. 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;

v. 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;

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

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

viii. 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;

ix. Powers under the IGST Act shall be crossempowered 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;

x. 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.”

16. At that stage, only the Model GST Laws were in circulation. It was not even in the form of Bills. It was in the form of a Model IGST Law, Model Central GST Law and Model State GST Law and Model State and Central GST Rules. At that time, the GST Council was yet to approve the Draft Model GST Acts, Draft Model IGST Act and Draft Model GST Rules for these future laws to enacted and passed.

17. After the Model GST law was approved by the GST Council, pursuant to the decisions taken in the 9^th GST Council Meeting held on 16.01.2017, first impetus for cross-empowerment was given after GST Bills were passed and enacted as respective GST Enactments with effect from 01.07.2018 vide 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 CGST/IGST and SGST Acts of 2017 respectively.

18. Text of Circular No.1/2017-GST (Council) dated 20.09.2017 bearing reference F.No.166/Cross Empowerment/GSTC/2017 containing the guide lines for Division of Tax payers between the Centre and State Authorities to ensure single interface for the purpose of tax administration under the respective GST Enactment reads as below:-

Subject: Guidelines for division of taxpayer base between the Centre and States to ensure Single Interface under GST-Regarding

Based on the decisions taken in the 9th Meeting of the GST Council held on 16 January, 2017 and 21st Meeting of the GST Council held on 9 September, 2017, the following criteria should be followed for the division of taxpayer base between the Centre and the States to ensure single interface:

i. 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;

ii. 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;

iii. 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;

2. Further, the broad guidelines for the purposes of computation of "Turnover as approved by the GST Implementation Committee in its meeting held on 31 August and 1 September, 2017 and subsequently by the GST Council in its 21st Meeting held on 9 September 2017 are as follows:-

i. For taxpayers registered only under VAT, the total annual State turnover under VAT (including inter-State sales, exports and exempt goods) shall be taken as the basis for division;

ii. For taxpayers registered under both VAT and Central Excise, the annual State turnover under VAT shall be taken as the basis for division as State-level Central Excise turnover is already included in it;

iii. For taxpayers registered only under Central Excise (and not under VAT), the total annual turnover declared in Central Excise returns shall be taken as the basis for division;

iv. For taxpayers registered only under Service Tax in a State on a stand-alone basis, the annual turnover of the Services declared in the Service Tax returns shall be taken as the basis for division;

v. For taxpayers registered only under Service Tax having centralized registration, the annual all-india turnover of the Services declared in the Service Tax returns shall be taken as the basis for division;

vi. For taxpayers registered under both VAT and Service Tax, the total non-overlapping turnover (total of VAT and Service Tax, excluding any turnover which is included in both) shall be calculated and used as the basis for division. The Service Tax turnover shall be on the basis of clauses (iv) and (v) as the case may be.

3. The State Level Committees comprising Chief Commissioner/ Commissioner Commercial Taxes of respective States and jurisdictional Central Tax Chief Commissioners/Commissioners are already in place for effective coordination between the Centre and the States. The said Committees may now take necessary steps for division of taxpayers in each State keeping in view the principles stated above. Supplementary decisions, if any, may be taken by the said Committees to implement the decision of the GST Council, keeping in view the broad principles stated hereinabove.

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

19. After the above decision was taken for allocating 90% of those assessees whose turnover were below Rs.1.5 crores with the State Authorities and balance 10% with the Central Authorities and 50% each of those tax payers whose turn overs was above Rs.1.5 crores equally between the State Authorities and the Central Authorities under the respective GST Enactments, the GST Council in its 22^nd Meeting held on 06.10.2017 addressed the concern arising out of the gap between the issuance of Notifications under various GST Enactments of 2017 and IGST Act, 2017. Agenda No.9 of the 22^nd Meeting held on 06.10.2017 captures the deliberations. It is extracted below:-

“Agenda item 9: Proposal for issuing notifications on crossempowerment for ensuring single interface under GST

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

20. The provisions of the respective GST Enactments contemplates power of the Central Government and the State Government to issue notifications on the recommendations of the GST Councils to empower the Officers of the State Tax Officer or Union Territory Officer to issue Notifications under Section 6 of the CGST Act, 2017 the Central Tax Officers to be the “proper officer” under the respective GST Enactments.

21. Thus, the Central Government issued Notification No.39/2017- Central Tax on 13.10.2017. This Notification was later modified by Notification No.10/2018-CT dated 23.01.2018.

22. By this amending Notification No.10/2018-CT dated 23.01.2018, the words “except rule 96” was substituted with except sub rules (1) to (8) and sub rule (10) of rule 96”.

23. Text of Notification No.39/2017-Central Tax dated 13.10.2017 and amending Notification No.10/2018 dated 23.01.2018 are reproduced below:-

Note: * substituted with ‘except sub rules (1) to (8) and sub rule (10) of rule 96’ vide amendment in Notification No.10/2018-Central Tax dated 23.01.2018.

24. A similar Notification has also been issued by the State of Tamil Nadu in G.O.(MS).No.126, Commercial Taxes And Registration (B1) Department, dated 13.10.2017.

25. 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.

26. These Notifications remain as draft Notifications till date. They have not been notified. Text of the Draft Notifications that fell for deliberation during the 22^nd 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

Sl.No.	Duty or function or authority or scope of authority or power	Conditions
(A)	(B)	(C)
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.	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 ---

[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 requests 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
(A)	(B)	(C)
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.	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 ---”

27. 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.

28. Thus, there is no cross-empowerment.

29. The learned counsel for the petitioners relied on the following decisions:-

i. Pahwa Chemicals Pvt. Ltd., Vs. Commissioner of Central Excise, Delhi, 2005 (181) E.L.T. 339 (S.C.);

ii. Duncan Agro Industries Ltd., Vs. Union of India, 1989 (39) E.L.T. 211 (Del.);

iii. M/s.Muthu Metals represented by K.Bhommal, Proprietor, Madras – 3 Vs. State of Tamil Nadu represented by the Commissioner and Secretary to Govt., C.T. & R.E. Dept., Madras – 9 and others in W.P.Nos.4949 of 1986, etc., batch;

iv. Raghunath International Ltd., Vs. Union of India, 2012 (280) E.L.T. 321 (All.);

v. National Building Construction Co. Ltd., Vs. Union of India, 2019 (20) G.S.T.L. 515 (Del.);

vi. Yasho Industries Ltd., Vs. Union of India, Manu/GJ/1470/2021;

vii. Kuppan Gounder P.G.Natarajan Vs. Directorate General of GST Intelligence, New Delhi, 2022 (58) G.S.T.L. 292 (Mad.);

viii. Ambika Food Industries Pvt. Ltd., Vs. Union of India Rep. by its Secretary, Ministry of Finance Department of Revenue, 2021 SCC Online TS 3390;

ix. Ajay Verma Vs. Union of India and Ors., Manu/UP/1822/2022;

x. M/s.VGN Projects Estates Private Limited Vs. Assistant Commissioner (State Taxes) and another in W.P.No.2391 of 2023 and

xi. Tvl Metal Trade Incorporation Vs. The Special Secretary and others in W.P.No.3033 of 2023.

30. I have considered the arguments advanced by the learned counsel for the petitioner and the respondent.

31. The Model Law which were in circulation before the respective Central GST Bill and the State GST Bill and Union Territory GST Bill were introduced in the Parliament and in the respective State Legislatures of the country are in slight variance.

32. The scheme of enactments as mentioned above makes it clear that the assessees whether assigned to the Central Tax Authorities or the State Tax Authorities as the case may be are required to file only one set of Return under Chapter-IX of the respective GST Enactments of 2017 r/w Chapter-VIII of the respective GST Rules. The returns that are contemplated under Chapter-IX of the respective GST Enactments and Chapter-VIII of the respective GST Rules are parimateria with each other.

33. The returns to be filed by the Assessee's under the respective GST Enactments are same. They capture all the details under the respective GST Enactments applicable to an assessee.

34. The returns are to be filed in the common portal as defined in Section 2(26) of the respective GST Enactments . As per Section 2(26) of the respective GST Enactments “Common portal” means the common goods and services tax electronic portal referred to in Section146. Section 2(26) and Section146 of the respective GST Enactments reads as under :-

35. The returns that are contemplated under these Rules are composite returns which will not only capture the tax liability under the CGST Act, 2017 but also TNGST Act, 2017 and IGST Act, 2017. The returns also capture the Input Tax Credit that are availed by an assessee under the respective GST Enactments.

36. That apart, the payment of tax whether under the CGST Act, 2017 or under TNGST Act, 2017 are at the same rate. The only difference that may arise at the time of payment of tax due to utilization of the Input Tax Credit (ITC) availed on the inward supplies and their cross utilization for discharging the tax liability in terms of Chapter-X of the respective GST Enactments r/w Chapter-IX of the respective GST Rules, 2017.

37. The utilization of Input Tax Credit under the respective GST Enactments are in terms of Sub-Section (4) to Section 49 of the respective Central and TNGST Enactments. They read as under:-

“49. Payment of tax, interest, penalty and other amounts-

(1)
(2)
(3)
(4) The amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and within such time as may be prescribed.”

38. Thus, the Input Tax Credit availed under the provisions of the Central GST Act, 2017 can be used for payment of Output Tax under the said Act or under the IGST Act, in such manner as may be and subject to such conditions as may be prescribed.

39. Similarly, the Input Tax Credit availed under the provisions of TNGST Act, 2017 can be utilised only for payment of Output Tax under the provisions of said IGST Act, 2017 in such manner and subject to such conditions and within such time as may be prescribed under the Rules.

40. However, powers of assessment has been vested with the proper officers to whom the assessee have assigned by virtue of Circular No.01/2017-GST (council) dated 20.09.2017 bearing reference: F.No.199/ Cross-Empowerment/GSTC/2017.

41. As per Section 49A of the CGST Act, 2017, Input Tax Credit availed on account of Central Tax, State Tax or Union Territory Tax can be utilized towards payment of Integrated Tax, Central Tax, State Tax or the Union Territory Tax as the case may be, only after the Input Tax Credit available on account of Integrated Tax Credit has been first available on such cases. Section 49A of the CGST Act, which was inserted with effect from 01.02.2019 and notified vide Notification No.2/2019-CT 29/1-2019 as amended by GST (Amendment) Act 2018 (31 of 2018) has to be read in conjunction with Rules 88 A of the CGST Rules, 2017 as inserted by Notification No.16/2019-CT dated 29.03.2019 with effect from 29.03.2019.

42. Section 49A of CGST Act, 2017 and Rule 88A of the CGST Rules, 2017 reads as under:-

43. A similar provision is absent under the TNGST Act, 2017 and TNGST Rules 2017.

44. As per Rule 86(2) of the CGST Rules,2017 , the electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the provisions of section 49 [or section 49A or section 49B].

45. As per Rule 86(2) of the TNGST Rules, 2017, the electronic credit ledger shall be debited to the extent of discharge of any liability in accordance with the provisions of Section 49.

46. As per Section 88A of the TNGST Rules, 2017, Input tax credit on account of integrated tax shall first be utilised towards payment of integrated tax, and the amount remaining, if any, may be utilised towards the payment of central tax and State tax or Union territory tax, as the case may be, in any order. Provided that the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully

47. As per Rule 49A of the TNGST Rules, 2017, a bill of supply referred to in clause (c) of sub-section (3) of section 31 shall be issued by the supplier containing the following details, namely:-

(a) name, address and Goods and Services Tax Identification Number of the supplier;

(b) a consecutive serial number not exceeding sixteen characters, in one or multiple series, containing alphabets or numerals or special characters -hyphen or dash and slash symbolised as “-” and “/” respectively, and any combination thereof, unique for a financial year;

(c) date of its issue;

(d) name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient;

(e) Harmonised System of Nomenclature Code for goods or services;

(f) description of goods or services or both;

(g) value of supply of goods or services or both taking into account discount or abatement, if any; and

(h) signature or digital signature of the supplier or his authorised representative: Provided that the provisos to rule 46 shall, mutatis mutandis, apply to the bill of supply issued under this rule: Provided further that any tax invoice or any other similar document issued under any other Act for the time being in force in respect of any nontaxable supply shall be treated as a bill of supply for the purposes of the Act.

48. Under Section 3 of the respective Central and State GST Enactments of 2017, both the Central Government and the State Government have appointed a “class of officers” for the purpose of enforcement of the respective GST Enactments of 2017. Section 3 of the CGST Act, 2017 and the TNGST Act, 2017 read as under:-

49. Apart from the officers mentioned above under Section 4(1) of the respective Central GST Act, 2017 and TNGST Act, 2017, the Board (the Central Board of Indirect Taxes and Customs [CBIC]) as defined in Section 2(16) of the CGST Act, 2017 and the Government as defined in Section 2(53) of TNGST Act, 2017, can appoint such officers as they may deem fit to be the officers under these GST Enactments.

50. Without prejudice to the provisions of sub-section (1) to Section 4, the Board under Section 4(2) of the CGST Act, 2017 may, by an order, authorize any officer referred to in clauses (a) to (h) of section 3 to appoint any officers of the Central Tax below the rank of Assistant Commissioner of Central Tax to be the Central Tax Officer for the administration of the CGST Act, 2017.

51. Thus, the Board can authorize any officer referred to in clauses (a) to (h) of Section 3 of CGST Act, 2017 to appoint any officers of the Central Tax below the rank of Assistant Commissioner of Central Tax to be the Central Tax Officer for the administration of the CGST Act, 2017 alone. Thus, under Section 4(2) of the CGST Act, 2017, these can be only a linear delegation.

52. Similarly, under Section 4(2) of the TNGST Act, 2017, the Commissioner has jurisdiction over the whole of State. The Additional Commissioner shall have jurisdiction over the whole of the State in respect of all or any of the functions assigned to them. Where the State Government so directs, the Additional Commissioner shall have jurisdiction, over any local area thereof. Again Such delegation is only to officers appointed under TNGST Act, 2017. Here also the delegation is linear.

53. Under Section 4(2) of the TNGST Act, 2017, all other officers shall have jurisdiction over the whole of the State or over such local areas as the Commissioner may, by an order, specify, in respect of all or any of the functions assigned to them, subject to such conditions as may be specified. Thus, the Commissioner has power to delegate powers under the Act to other Officer specified in Sub-clause (c) to (f) to Section 3 of the TNGST Act, 2017. There is no cross-empowerment under Section 4(2) of the TNGST Act, 2017.

54. Thus, neither the Board under Section 4(1) and (2) of CGST Act, 2017 nor the Government and/or the Commissioner under Section 4(1) and (2) of SGST Act, 2017 can appoint such officers in addition to the officer notified under Section 3 of the respective Act. Thus, the Board can appoint and delegate only to Central Tax Officers appointed under the CGST Act, 2017 for CGST Act, 2017 and the Government and/or the Commissioner can appoint and delegate only to State Tax Officers appointed under the TNGST Act, 2017 for TNGST Act, 2017.

55. These provisions are pari materia with Section 4 of the Customs Act, 1962 and Section 12(E) of the Central Excise Act, 1944.

56. Section 4 of the respective GST Enactments namely CGST Act, 2017 and TNGST Act, 2017 and the corresponding Sections from the Model Law are reproduced below:-

57. Section 5 of the Central GST Act, 2017 and TNGST Act, 2017 circumscribes the powers of the officers mentioned in Section 3 and 4 of the respective GST Enactments. Section 5 of the respective GST Enactments read slightly differently from Section 6 of the respective Model CGST Act and Model State GST Act. These provisions are reproduced below:-

58. For the sake of clarity Section 6 of the respective Model GST Laws are reproduced below:-

59. Thus, the delegation only is to the officers under the respective GST Enactments, unlike in Section 6 of the Model GST Laws which contemplated wide powers with the Board/Commissioner under the respective Model GST Laws to delegate the powers to officers from their counterpart Department.

60. Section 6 of the respective Central GST Act, 2017 and TNGST Act, 2017 are relevant for cross-empowerment. It read slightly differently from Section 7 of the respective Model Central and State GST laws which were in circulation in February, 2016. Section 6 of the respective GST Enactments and the corresponding provisions from the Model GST Law are reproduced below:-

61. 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.

62. 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, impugned proceedings are to be held without jurisdiction. Consequently, the impugned proceedings are liable to be interfered in these writ petitions.

63. 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.

64. Similarly, if an assessee has been assigned to the State 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 officers of the Central GST cannot interfere although they may have such intelligence regarding the alleged violation of the Acts and Rules by an assessee.

65. The manner in which the provisions have been designed are to ensure that there is no cross interference by the counterparts. Only exception provided is under Section 6 of the respective GST enactement. Therefore, in absence of a notification for cross-empowerment, the action taken by the respondents are without jurisdiction. Officers under the State or Central Tax Administration as the case may be cannot usurp the power of investigation or adjudication of an assesse who is not assigned to them.

66. Therefore, the proceedings initiated by the respondents so far against the respective petitioners by the Authorities other than the Authority to whom they have been assigned to are to be held as without jurisdiction. Therefore, the impugned proceedings warrants interference.

67. At the same time, it is noticed that there is possibly case made out against each of the petitioners and since same power ought to have been exercised by the respective counterparts of the respondents, namely the Central Authority/State Authority as the case may be, to whom the respective petitioners have been assigned, proceedings should be initiated against each of the petitioners by the Authority to whom they have been assigned for the purported loss of Revenue under the respective GST Enactments.

68. Therefore, while quashing the impugned proceedings, there shall be a direction to the Central Authority/State Authority as the case may be to whom the respective petitioners have been assigned for administrative purpose to initiate appropriate proceedings afresh against them strictly in accordance with the provisions of the respective GST Enactments and GST Enactments Rules and Circular issued thereunder. The time between the initiation of the proceedings impugned in these writ petitions and time during the pendency of the present writ petitions till the date of receipt of this order shall stand excluded for the purpose of computation of limitation.

69. These writ petitions are disposed with the above observations. No costs. Consequently, connected miscellaneous petitions are closed.

Neutral Citation : Yes/No
Internet : Yes/No
Index : Yes / No

. .2024

To
1. The Special Secretary,
Head of the GST Council Secretariat,
Office of the GST Council Secretariat,
5^th Floor, Tower-II, Jeevan Bharti Building,
Janpath Road, Connaught Police,
New Delhi – 110 001.

2. The Chairman,
Central Board of Indirect Taxes,
North Block,
New Delhi – 110 001.

3. The Additional Chief Secretary & Commissioner of State Taxes,
Chepauk,
Chennai – 600 005.

4. The Director General of GST Intelligence, South,
C-3, C-Wing, II Floor,
Rajaji Bhavan, Besant Nagar,
Chennai – 600 090.

5. The Senior Intelligence Officer,
Directorate General of GST Intelligence,
Chennai Zonal Unit,
Chennai.

6. The Assistant Commissioner (ST),
Arumbakkam Assessment Circle.

C.SARAVANAN, J