Query 1

Jurisdiction of State Officer under CSGT Act

Whether the State Officer has jurisdiction to act for search, seizure and imposing of penalty in respect of violation of Central enactment?

Reply

The issue as above is arising now and then.

Central Goods and Services Tax (GST), State Goods and Services Tax (SGST) and The Integrated Goods and Services Tax Act (IGST) are new Acts and collectively referred to as GST Act.

Being new Acts, various issues are cropping up. The one and foremost issue arising is about jurisdiction.

As per major policy under GST, jurisdictional proper officer has power to implement both, State and Central Acts. However, there are certain areas where still doubts are raised about jurisdiction, particularly jurisdiction of the State Officer about search, seizure and penalty under CGST Act.

As per policy, it appears that the proper officer has jurisdiction under both the Acts. However, now the said issue is also decided by Hon. Allahabad High Court in case of Godrej and Boyce Manufacturing Co. Ltd. v. State of U.P. and others. (58 GSTR 419)(All).

The issue has arisen from writ petitions challenging the proposal for levy of penalty due to infringement of e-way bill regulations when goods were in inter-state transport. One of the challenges was that the officer under SCGT has no power to deal with infringement under CGST Act.

Hon. High Court made reference to provisions of CGST Act about appointment of Officers. The sections 3, 4, 5 and 6 of the CGST Act are reproduced as under:

3. Officers under this Act.— The Government shall, by Notification, appoint the following classes of officers for the purposes of this Act, namely:—

(a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax,

(b) Chief Commissioners of Central Tax or Directors General of Central Tax,

(c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax,

(d) Commissioners of Central Tax or Additional Directors General of Central Tax,

(e) Additional Commissioners of Central Tax or Additional Directors of Central Tax,

(f) Joint Commissioners of Central Tax or Joint Directors of Central Tax,

(g) Deputy Commissioners of Central Tax or Deputy Directors of Central Tax,

(h) Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, and

(i) Any other class of officers as it may deem fit: PROVIDED that the officers appointed under the Central Excise Act, 1944 (1 of 1944) shall be deemed to be the officers appointed under the provisions of this Act.

4. Appointment of officers.—

(1) The Board may, in addition to the officers as may be notified by the Government under Section 3, appoint such persons as it may think fit to be the officers under this Act.

(2) Without prejudice to the provisions of sub-section (1), the Board may, by order, authorise any officer referred to in clauses (a) to (h) of Section 3 to appoint officers of Central tax below the rank of Assistant Commissioner of Central tax for the administration of this Act.

5. Powers of officers.—

(1) Subject to such conditions and limitations as the Board may impose, an officer of Central tax may exercise the powers and discharge the duties conferred or imposed on him under this Act.

(2) An officer of Central tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him.

(3) The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him.

(4) Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other officer of Central tax.

6. 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 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.”

Having dealt with the above provisions, Hon. High Court observed as under elaborately.

54. So far as, Writ Petition No. 87 of 2018 is concerned, here orders of seizure and show-cause notices are referable to Rule 138 as came into force on 29-6-2017 read with Government’s Notification dated 21-7-2017 and Commissioner’s Circulars dated 22-7-2017 and 9-8-2017. In this regard submission has been made that goods were transported from Bhiwandi (State of Maharashtra) to Gautam Budh Nagar and transaction being inter-State, provisions could not have been made by State Government of U.P. GST Act, 2017, hence Rule 138 of U.P. GST Rules, 2017 read with Notification dated 21-7-2017 and Commissioner’s Circulars dated 22-7-2017 and 9-8-2017 are ultra vires.

55. We have already discussed relevant provisions of various Statutes and it is evident that the provisions are pari materia. Officers of State are also competent for search, seizure and imposition of penalty in respect of violation of Central Enactments. Moreover, provisions relating to search and seizure are not for the purpose of imposition of a new liability but to regulate fiscal statutory provisions in order to avoid evasion of tax. Nothing has been placed on record to show that similar requirement of relevant documents was not provided by Central Government also in respect of inter-state transactions. There is also a principle that mere mention of a wrong provision will not make an order bad, if otherwise, power exists in the Statute. In the circumstances, we are not satisfied that the provisions made by Governor vide Rule 138 read with Government’s Notification dated 21-7-2017 and Commissioner’s Circulars dated 22-7-2017 and 9-8-2017 are ultra vires of any Statute.

Thus, the provision and power about state officer under CGST Act are upheld. Accordingly, it can be said that State officers have power to implement provision of CGST Act.