In this judgment, the Hon’ble Kerala High Court held that the authorities under the CGST and the SGST Act are already cross empowered under Section 6 of both the Acts and there is no requirement of a separate notification / circular.
The petitioner filed a writ petition for the quashing of the show cause notices issued under Section 74 of the CGST Act by the officers of the State GST Department, challenging thereby their jurisdiction to issue such notice until and unless conditions for exercise of such cross empowerment have been first specified by the government on the recommendations of the GST Council through a notification issued for such purpose. The petitioners relied upon the judgment of the Madras High Court in Tvl. Vardhan Infrastructure v. Special Secretary MANU/TN/2310/2024 in which has been held that in the absence of such an enabling notification, the proceedings initiated by the State GST Authority are to be seen as without jurisdiction.
The matter was first head by a single judge who considered he submissions of the petitioners and the judgment of the Madras High Court in the above case and referred the matter to a larger bench. The division bench in the present case held that the cross empowerment of the of the GST officers of the SGST/UGST Department is through the legislative mandate under Section 6(1) of the CGST Act. Such mandate, without any notification is unqualified and the government has power to qualify such powers by notification passed on recommendations of the GST Council.
The Court relied upon the case of the Delhi High Court in Indo International Tobacco Ltd. and Ors. v. Additional Director General, DGGI and Ors. (2022) 97 GSTR 414 (Delhi) holding that Section 6 is meant to give effect of harmonious convergence of the State and the Union for the same event of taxation.
W&B Comments: This issue of cross empowerment and multiple proceedings is quite common in GST. Multiple notices/letters are issued on the same issue by officers of CGST and SGST or CGST and DGGI, two officers of same department and even SCN by one officer and Audit Notice for same tax period by another officer. The taxpayer is forced to represent his case on identical facts before multiple officers. In such a scenario while the judgment of the Kerala High Court clarifies the matter, it is also important at the level of execution, i.e. GST portal the issues of cross empowerment do not create hassle.