Allahabad HC Holds That the State Officer Has No Inherent Lack of Jurisdiction; Enacts CGST Sec 6

The Allahabad High Court has held in a recent ruling that Section 6 of the Central Goods and Services Tax Act (CGST) Act is enacted to avoid the possibility of conflicting orders. It further held that the state officer has no inherent lack of jurisdiction in the impugned order.

The petitioner, Ajay Verma, was engaged in the business of lubricants. He petitioned that as per the division of work, his case for the tax period of July 2017 to March 2018 had been assigned to a central tax officer. However, he said that a state tax officer issued the show-cause notice for assessment under Section 73 of the CGST Act. The petitioner had submitted a reply to the show-cause notice but had not raised an objection to the jurisdiction on the grounds of assignment of the case to a central tax officer. 

Thereafter, the respondent passed the impugned assessment order and created a certain demand against the petitioner. The petitioner then filed a writ petition and challenged the show-cause notice and assessment order solely on the grounds that it is without jurisdiction.

The High Court observed that the case had been assigned to the central officer, but the state officer issued the show-cause notice. However, the petitioner did not bring it to the respondent’s notice that his case was assigned to a central officer. He, in fact, did not raise any objection to the jurisdiction but had participated in the proceedings and submitted his reply to his jurisdiction. In fact, it was only after the respondent passed the assessment order that it came to their notice that the case was assigned to a central officer. The respondent then wrote letters to the central officer, and the latter informed via letters that as per the Act, the proceedings will be completed by the officer who initiated it, i.e. the respondent (state officer).

The High Court further observed that under Section 6 of the CGST Act and Uttar Pradesh Goods and Services Tax (UPGST) Act, the proper officer under the UPGST Act is also a proper officer under the CGST Act and is within his territorial jurisdiction. Similarly, a proper officer appointed under the CGST Act is a proper officer under the UPGST Act and within his territorial jurisdiction. Hence, to avoid the possibility of conflicting orders, a provision has been made in Section 6 of the CGST Act and UPGST Act. The provision states that when a proper officer under the CGST Act passes an order, he shall intimate the same to the jurisdictional officer under the state or Union Territory Act and vice versa. This cross empowerment removes the possibility of conflicting orders.

The division bench of the Allahabad High Court dismissed the writ and held that the impugned show-cause notice and the assessment order do not suffer from any inherent lack of jurisdiction. If the petitioner had objected to it during the initial stages or during the course of assessment proceedings, then the position could have been rectified by the respondent by informing the central officer to complete the assessment.

For any clarifications/feedback on the topic, please contact the writer at athena.rebello@cleartax.in