CANON INDIA CASE UPDATE SERIES PART II: GST VS CUSTOMS ACT

In our previous update we discussed about CANON INDIA case wherein it was analyzed whether DRI was a proper officer under Customs Act, and thereby having authority to issue SCN under section 28. In this update, we shall discuss the same provision under GST and analyze whether it is pari-materia to the Customs Act or not.

Before proceeding further, it is pertinent to mention here that in the Canon India Case, the Hon’ble Supreme Court also commented on the fact whether the DRI can be considered as proper officer for the purpose of issuing SCN under section 28 of the Customs Act. It was held that as per notification no. 17/2002-Cus (N.T.) dated 07.03.2002, Additional Director General and Directorate General of Revenue Intelligence have been considered as Commissioner of Customs, Additional Directors or Joint Directors as Additional Commissioners or Joint Commissioners of Customs and Deputy Directors or Assistant Directors as the Deputy Commissioners or Assistant Commissioners of Customs. Moreover, the powers of various officers of Customs have been stated vide Notification No. 40/2012 dated 02.05.2012 which has been issued by exercising provisions contained in section 2(34) of the Customs Act, 1962. However, the Hon’ble Supreme Court pointed that the notification should have been issued by exercising powers contained in section 6 of the Customs Act, 1962 pertaining to entrustment of functions of Board and customs officers on certain other officers rather than referring to section 2(34) which merely defines the term ‘proper officer’ which further does not gives any authority to define powers of various customs officers. The definition of proper officer as given in section 2(34) of the Customs Act, 1962 reads as follows:-

(34) ‘proper officer’, in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the [Principal Commissioner of Customs or Commissioner of Customs].
The above stated important ratio holds relevance in arriving at the conclusion whether the analogy of the decision can be considered as applicable to GST law or not.

It is pertinent to mention here that the term ‘proper officer’ is also used in GST Law to refer to the person who is empowered to issue show cause notice for issuing demands. If we analyze GST Law, the relevant provisions are worth noting:-
Section 2(91) of the CGST Act, 2017 defines “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the Central tax who is assigned that function by the Commissioner in the Board.
Section 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 shall be deemed to be the officers appointed under the provisions of this Act.
5. Powers of officers under GST-
(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.
It is worth mentioning here that under GST Law, the notification no. 02/2017-Central Tax dated 19.06.2017 specifies jurisdiction of various officers under GST while notification no. 14/2017-Central Tax dated 01.07.2017 states powers of various officers such as Director General, Audit will exercise power vested with Chief Commissioner. Similarly, Additional Director General, Goods and Services Tax Intelligence will exercise power vested with the Commissioner and so on. It is pertinent to note that the above notifications have been issued by exercising powers contained in section 3 read with section 5 of the CGST Act, 2017 which pertain to powers of officers under GST. Therefore, the anomaly as pointed by the Apex Court with reference to notification issued under the Customs Act, 1962 appears to have been rectified in the GST regime. Therefore, in our opinion, under GST Law, the Deputy/Assistant Director Audit or Deputy/Assistant Director, Goods & Services Tax Intelligence can issue the show cause notice under the GST law. Therefore, it appears that there is remote possibility that the assessee may contend in GST Law that the show cause notice issued by Audit wing or Intelligence wing is not proper because officers of that wing are also empowered to issue show cause notice for raising demands. Hence the concept that the officer who can do assessment can only issue show cause notice for raising demand would not be applicable in GST regime.

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CANON INDIA CASE UPDATE SERIES PART II: GST VS CUSTOMS ACT

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