2025 (6) TMI 582 - HC - GST

Prayer for quashing and setting aside the search authorization issued by respondent No.5 - prayer for quashing and setting aside the attachment orders and blocking of ITC as passed by the respondents - summons and attachment orders issued by the State Tax authorities without mentioning a Document Identification Number (DIN) - delegation of power by the Commissioner to subordinate officers - HELD THAT - Reliance placed by the petitioner on notification dated 05.07.2017 whereby the powers of the Commissioner are delegated to the Special Commissioner of State Tax and Additional Commissioner of State Tax for the purpose of said Act would not be applicable in the facts of the case when by order dated 15.01.2018 (page 106 of the petition) the Commissioner being a proper officer has assigned the function which is to be performed by him by the another proper officer and therefore it cannot be said that the impugned orders passed by the Assistant Commissioner of State Tax is without jurisdiction but the impugned orders are passed by the Assistant Commissioner while exercising powers assigned to him as per the order dated 15.01.2018. With regard to the contention raised on behalf of the petitioner on merits it is not in dispute that the petitioner has not filed any application raising objections against the satisfaction recorded by the respondent-authorities while passing impugned orders of provisional attachment. In such circumstances without entering into the merits of the matter the petitioners are relegated to file appropriate application raising objections against the satisfaction recorded by the respondent authority for passing provisional attachment in the facts of the case and as and when such application if any is made by the petitioner before the respondent authority the same shall be considered by the respondent-authority expeditiously and preferably within a period of two weeks from the date of receipt thereof. Petition disposed off.

Summary

The core legal questions considered in this case include:

1. Whether the summons and attachment orders issued by the State Tax authorities without mentioning a Document Identification Number (DIN) are valid and enforceable.

2. Whether the Assistant Commissioner of State Tax is a competent authority to issue provisional attachment orders under Section 83 of the Gujarat Goods and Service Tax Act, 2017 (GGST Act), or whether only the Commissioner has exclusive jurisdiction.

3. Whether the delegation of power by the Commissioner to subordinate officers, including the Assistant Commissioner, to pass provisional attachment orders is valid under the relevant statutory provisions and notifications.

4. Whether the petitioners have made out a prima facie case to quash the search authorization, attachment orders, and blocking of Input Tax Credit (ITC) on the grounds of alleged procedural and jurisdictional irregularities.

5. Whether the Circular No. 37/2019 issued by the Central Board of Indirect Taxes and Customs (CBIC), mandating the inclusion of DIN in summons and notices, is applicable to State Tax authorities under the GGST Act.

Issue-wise Detailed Analysis:

1. Validity of Summons and Attachment Orders Without DIN

Legal Framework and Precedents: The petitioners relied on Circular No. 37/2019 issued by the CBIC, which mandates mentioning a DIN in all summons, arrest memos, inspection notices, and letters issued during investigations by Central Tax authorities, except in exigent circumstances. The petitioners contended that absence of DIN renders such communications invalid.

Court's Interpretation and Reasoning: The Court examined the applicability of this Circular to State Tax authorities. It observed that the Circular is addressed specifically to Central Tax officers and not to State Tax authorities. The GGST Act operates independently from the Central Goods and Services Tax Act, and notifications or circulars issued by the Central Board do not automatically bind State Tax authorities unless a similar circular is issued by the State Government or State Tax authority.

Key Findings: No evidence was presented to show that the State Tax authority had issued a similar circular mandating DIN on summons or orders. The Court noted the absence of any mechanism for issuance of DIN by the State Tax authorities.

Conclusion: The Court held that Circular No. 37/2019 is not applicable to State Tax authorities under the GGST Act, and therefore, the absence of DIN on summons and attachment orders does not invalidate them.

2. Competence of Assistant Commissioner to Pass Provisional Attachment Orders Under Section 83

Legal Framework and Precedents: Section 83(1) of the GGST Act empowers the Commissioner to provisionally attach property, including bank accounts, to protect Government revenue during certain proceedings. The petitioners argued that only the Commissioner can pass such orders and that the Assistant Commissioner lacks jurisdiction.

The petitioners relied on a notification dated 05.07.2017, which delegated powers to the Special Commissioner and Additional Commissioner but not to the Assistant Commissioner. They also referred to an order dated 15.01.2018 specifying "proper officers" authorized to perform functions including provisional attachment, contending that the Assistant Commissioner was not authorized.

Court's Interpretation and Reasoning: The Court analyzed the definition of "proper officer" under Section 2(91) of the GGST Act, which includes the Commissioner and officers assigned functions by the Commissioner. The Court noted that the Commissioner, exercising powers under Section 5(3) of the Act, had assigned functions including provisional attachment to Deputy Commissioners and Assistant Commissioners by the order dated 15.01.2018.

The Court reviewed prior judicial pronouncements, including a decision in Nathalal Maganlal Chauhan vs. State of Gujarat, which discussed the principle of delegation and the "Carltona principle" allowing delegation of powers by a superior officer to subordinate officers who are responsible to the superior.

The Court distinguished earlier observations in Valerius Industries case, which had held such delegation invalid, by considering them per incuriam in light of Supreme Court decisions endorsing implied delegation principles.

Key Findings: The Commissioner is a proper officer who can delegate powers to subordinate officers. The Assistant Commissioner, acting under such delegation, is competent to pass provisional attachment orders.

Conclusion: The Court held that the provisional attachment order passed by the Assistant Commissioner is valid and within jurisdiction, as the Commissioner had properly delegated the power to him.

3. Merits of the Petitioners' Case Regarding Transactions and Tax Evasion Allegations

Legal Framework and Facts: The petitioners contended that their transactions involved "Bill to Ship To" and "Bill from Dispatch From" arrangements, where title to goods changes hands multiple times during movement, which may have caused issuance of duplicate E-Way bills inadvertently. They argued that this was a misunderstanding and no tax evasion or revenue loss occurred.

Court's Reasoning and Treatment of Competing Arguments: The Court noted that the petitioners had not filed any formal objection or application challenging the satisfaction note or the provisional attachment orders. The respondents submitted that the investigation was ongoing, and the petitioners had not exhausted statutory remedies.

Application of Law to Facts: The Court refrained from adjudicating the merits of the tax evasion allegations at this stage, emphasizing that the petitioners should first raise objections before the respondent authority as per the statutory procedure.

Conclusion: The Court declined to interfere with the provisional attachment orders on merits at this stage and directed the petitioners to file appropriate applications before the respondent authority, which shall be considered expeditiously.

4. Applicability of Circular No. 37/2019 to State Tax Authorities

Legal Framework: Circular No. 37/2019 issued by the CBIC mandates DIN in communications during investigations by Central Tax authorities.

Court's Reasoning: The Court emphasized the separate legislative and administrative frameworks governing Central and State GST laws. It noted that no similar circular was issued by the State Tax authority and that the petitioners failed to demonstrate any binding effect of the Central Circular on State authorities.

Conclusion: The Circular No. 37/2019 is not applicable to State Tax authorities under the GGST Act, and absence of DIN does not invalidate the summons or attachment orders issued by them.

5. Delegation of Powers Under Section 5(3) of the GGST Act

Legal Framework: Section 5(3) empowers the Commissioner to assign functions to proper officers. The Commissioner issued an order dated 15.01.2018 delegating functions including provisional attachment to Deputy Commissioners and Assistant Commissioners.

Court's Reasoning and Precedents: The Court held that such delegation is valid and consistent with administrative law principles, including the Carltona doctrine, which permits delegation to responsible subordinates.

Conclusion: The delegation of power by the Commissioner to the Assistant Commissioner to pass provisional attachment orders is lawful and valid.

Significant Holdings:

"The Commissioner himself is a proper officer and as such, once the one proper officer has assigned the functions while exercising power conferred under subsection (3) of section 5 of the Act, to other proper officer, it cannot be said that the delegation of assignment of the powers by the Commissioner by impugned order dated 15.01.2018 is contrary to the provisions of the GST Act."

"Although there is no specific challenge to the order dated 15th January 2015 passed by the Commissioner of State Tax delegating his power under Section 83 to the subordinate officers, yet, we are of the view that by virtue of such order, such impugned order of provisional attachment cannot be defended." (Earlier observation held per incuriam)

"It is an accepted principle of administrative law that the repository of power must exercise that power personally. However, there are two exceptions to this principle: (1) Legislation provides for the power to delegate or authorise; (2) Implied power to authorise, often termed the 'Carltona principle'."

"Circular No. 37 of 2019 cannot be said to be applicable to the communications including the summons, notices or any order issued by the State Tax authority."

"The Assistant Commissioner of State Tax has passed the order of provisional attachment while exercising powers assigned to him as per the order dated 15.01.2018 and therefore, it cannot be said that the impugned orders passed by the Assistant Commissioner of State Tax is without jurisdiction."

"The petitioners are relegated to file appropriate application raising objections against the satisfaction recorded by the respondent authority for passing provisional attachment in the facts of the case and as and when such application if any is made by the petitioner before the respondent authority, the same shall be considered expeditiously and preferably within a period of two weeks from the date of receipt thereof."