TMI Blog2021 (12) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... n the contrary, an officer of the Central Government may not be subdelegated such powers generally. He may be sub-delegated that power and he may act as a proper officer subject to the conditions as the State Government may by notification (under section 6 of the Act), specify, in that regard. Insofar as the present respondent-Deputy Commissioner is an officer under section 3 of the Act, section 6 of the Act has no application. Only with respect to officers appointed under the Central Act, the exercise of jurisdiction would be circumscribed by a notification that would have to be first issued by the State Government, before such jurisdiction may be created in their favour. Upon clear language of the provisions of the Act, the officers appointed under the Act would continue to be governed by the provisions of sections 3 and 4 read with section 2(91) of the Act and the general orders issued by the Commissioner in that regard, issued with reference to the power exercised under section 5 of the Act. Though any officer other than the person of the Customs could be appointed as a Custom Officer by virtue of section 4 of the Customs Act, such an officer could not hold any functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the Commissioner ) as defined under section 2 (24) of the Act, is vested with the jurisdiction over the entire State of Uttar Pradesh to exercise all powers and perform all or any function under the Act. The other officers, who may be subordinate to the Commissioner may derive their particular function-jurisdiction to initiate, continue and conclude any proceedings in the nature of adjudication proceedings only under a valid delegation of power made under section 5 (3) of the Act. Since no delegation of power existed in favour of the Deputy Commissioner, the adjudication proceedings initiated and concluded by that authority lacked inherent jurisdiction. Thus, relying upon the provisions of section 2 (91) read with sections 3, 4 and 6 of the Act, it has been submitted, in the absence of any notification issued, authorising the Deputy Commissioner to act as a proper officer under the Act, he could never claim any inherent jurisdiction to pass the impugned order. In that regard, heavy reliance has been placed on two decisions of the Supreme Court in Commissioner of Customs Vs Sayed Ali and another , reported in 2011 (3) SCC 537 and M/s Canon India Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate tax . It reads:- 104. State tax means the tax levied under this Act; 9. Then sections, 3, 4, 5 and 6 of the Act, read as below: Section 3. Officer under this Act.- The Government shall, by notification, appoint the following classes of officers for the purposes of this Act, namely:- (a) Principal Commissioner, Chief Commissioner or Commissioner of State tax (b) Special Commissioners of State tax, (c) Additional Commissioners of State tax, (d) Joint Commissioners of State tax, (e) Deputy Commissioners of State tax, (f) Assistant Commissioners of State tax, (g) State tax officers, and (h) any other class of officers as it may deem fit: PROVIDED that, the officers appointed under the Uttar Pradesh Value Added Tax Act, 2008 (U.P. Act No. 5 of 2008) shall be deemed to be the officers appointed under the provisions of this Act. Section 4. Appointment of officers.- (1) The Government may, in addition to the officers as may be notified under section 3, appoint such persons as it may think fit to be the officers under this Act. (2) The Commissioner shall have jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, wherever applicable, of any order passed by an officer appointed under this Act, shall not lie before an officer appointed under the Central Goods and Services Tax Act, 2017 (Act No. 12 of 2017). 10. Also, Section 74 of the Act, under which impugned proceedings were drawn and concluded, reads as under: Section 74.-Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful misstatement or suppression of facts (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund. (11) Where any person served with an order issued under sub-section (9) pays the tax along with interest payable thereon under section 50 and a penalty equivalent to fifty per cent. of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded. Explanation 1.- For the purposes of section 73 and this section,- (i) the expression all proceedings in respect of the said notice shall not include proceedings under section 132; (ii) where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded. Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed under the Act. At the same time, no jurisdiction or function assignment has been created or sub-delegated in favour of such officers or class of officers. 15. Then, section 4(1) of the Act, empowers the State Government to appoint a person as an officer under the Act, in addition to the class of officers specified under section 3 of the Act. Since, the Deputy Commissioner is an officer falling under the proviso to section 3 of the Act, section 4(1) of the Act has no relevance to the present controversy. Insofar as section 4(2) of the Act is concerned, it first specifies the territorial limits of the jurisdiction of the Commissioner , the Additional Commissioner and the Special Commissioner . The Commissioner has been vested with territorial jurisdiction over the entire State. Second, the Special Commissioner and the Additional Commissioner, would also have jurisdiction over the whole of the State of Uttar Pradesh so however, they may exercise that jurisdiction with respect to all or any of the functions that may be assigned /sub-delegated to them and where State Government so directs such jurisdiction may be exercised over any local area of the State. Crucially, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-delegation or to create that function assignment, and in face of the powers vested in the Commissioner under section 4(2) and 5(3) of the Act, we may test the true purport and scope of the Office Orders dated 01.01.2017 and 19.11.2018 to determine if such sub-delegation of power or necessary function assignment had been made, in accordance with law. 21. Clearly, the respondent-Deputy Commissioner is an officer of the State tax in view of the language of the proviso to section 3 of the Act. Even otherwise, there is no dispute to that, in the present petition. From a plain reading of section 2(91) of the Act the sub-delegation of function assignment is to be made by the Commissioner. Here, clearly, the Commissioner had himself issued the Office Orders dated 01.07.2017 and 19.11.2018. Paragraph 2 of the office order dated 01.07.2017 reads as below:- 22. Doubts, if any, to any as to overlapping jurisdictions (amongst the sub-delegates) came to an end upon issuance of the subsequent Office Order dated 19.11.2018. Therein, the pecuniary jurisdiction was dissected and distributed, exclusively, amongst the officers of the rank of Commissioner Tax Officer, Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner, by the legislature. Once that power is shown to exist and the same is seen to have been exercised, no fetters may be searched and attached to the exercise of that power and no challenge may arise thereto, de hors the statutory scheme, to defeat that exercise of power. 27. It is not the requirement of law that the source of power must necessarily be recited in the order passed in exercise of that power to validate the power exercised. It is enough that the source of power existed and it was exercised in the manner prescribed by law. Its recital in the order passed in exercise of that power would not lend or add to the legitimacy of the power exercised. It is not a spell that may cause a magical effect only upon its incantation in a ritualisticaly correct manner. 28. As to the further submission advanced by learned counsel for the petitioner on the strength of section 6 of the Act, we find, the same is misconceived. It has no applicability to the present facts. That provision would apply only to officers appointed under the Central Act. Those officers may act as proper officer under the Act subject to conditions as the State Government may notify in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in that decision. Dealing with the same and after taking notice of the provision of section 28 of the Customs Act, 1962 (hereinafter referred to as the Customs Act); the definition of proper officer given under section 2(34) of the Customs Act and, after taking note of the fact that the Collector of Customs, (Preventive) had not been assigned any function under section 28 of the Act it was held, the adjudication order passed by the Collector Customs (Preventive) lacked inherent jurisdiction. 32. Relevant to our discussion, in paragraph nos. 20, 21 and 24 of the report, it was held as under:- 20. From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a Customs Officer who has been assigned the specific functions of assessment and reassessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose inasmuch as the test contemplated under Section 2(34) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecially when they belong to different departments, cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer or his successor and not by another officer of another department though he is designated to be an officer of the same rank. In our view, this would result into an anarchical and unruly operation of a statute which is not contemplated by any canon of construction of statute. 15. It is obvious that the re-assessment and recovery of duties i.e. contemplated by Section 28(4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not the proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside. 16. At this stage, we must also examine whether the Additional Director General of the DRI who issued the recovery notice unde r Section 28(4) was even a proper officer. The Additional Director General can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Customs and Central Excise (i) .. (ii).. (iii).. (iv).. (v).. (vi) Section28; 19. It appears that a Deputy Commissioner or Assistant Commissioner of Customs has been entrusted with the functions under Section 28, vide Sl. No.3 above. By reason of the fact that the functions are assigned to officers referred to in Column (3) and those officers above the rank of officers mentioned in Column (2), the Commissioner of Customs would be included as an officer entitled to perform the function under Section 28 of the Act conferred on a Deputy Commissioner or Assistant Commissioner but the notification appears to be ill-founded. The notification is purported to have been issued in exercise of powers under sub-Section (34) of Section 2 of the Customs Act. This section does not confer any powers on any authority to entrust any functions to officers. The sub-Section is part of the definitions clause of the Act, it merely defines a proper officer, it reads as follows:- 2. Definitions In this Act, unless the context otherwise requires, - (34) proper officer , in relation to any functions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sen whether the Commissioner of Customs (Preventive)/Additional Director General, Directorate of Revenue Intelligence were officers falling within the class of Officers of Customs defined under section 3 of the Customs Act and whether there was any notification issued under section 6 of the Customs Act assigning any function to those officers. 35. Section 3 of the Customs Act reads as under: 3. Classes of officers of customs.- There shall be the following classes of officers of customs, namely:- (a) Principal Chief Commissioners of Customs; (b) Chief Commissioners of Customs; (c) Principal Commissioners of Customs; (d) Commissioner of Customs; (e) Commissioners of Customs (Appeals); (f) Joint Commissioners of Customs; (g) Deputy Commissioners of Customs; (h) Assistant Commissioners of Customs; (i) such other class of officers of customs as may be appointed for the purposes of this Act. 36. Though any officer other than the person of the Customs could be appointed as a Custom Officer by virtue of section 4 of the Customs Act, such an officer could not hold any function jurisdiction in his favour unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer of the State or the Central Government or a local authority may be entrusted any power, (under that enactment), either of the Board or any officer of the Customs, as may be notified by the Central Government and, not otherwise. 39. The Commissioner of Customs (Preventive), Mumbai [in the case of Commissioner of Customs Vs. Syed Ali others (Supra) ] and the Additional Director, Directorate of Revenue Intelligence [in the case of Canon India (Supra) ] were not officers of Customs (under section 5 of the Customs Act), in the first place. Hence, though appointed (clearly with reference to section 4 of the Act, no function came to be entrusted to them under the Customs Act, in absence of any sub-delegation made in their favour by a further notification under section 6 of that Act. That analogy and reasoning would arise and apply (in the context of the Act), to officers of the Central tax , only. It would not apply to functioning of officers of the State tax who may draw their function-jurisdiction from simple sub26 delegation under an administrative order issued by the Commissioner with reference to his powers to sub-delegate granted under section 5 of the Act, with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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