Siddhi Vinayak Trading Company VS Union Of India

In this case, Sri Sambhu Chopra, a learned Advocate, represents the petitioner. The respondents are represented by Sri Manu Ghildyal for respondent no. 2 and Sri Dinesh Kumar Misra for respondent no. 1. The petition challenges an order dated 8.9.2020 issued by the Deputy Commissioner of Division-4, Commercial Tax, Bareilly. This order was made under Section 74 of the U.P. Goods and Services Tax Act, 2017 (UPGST Act, 2017), which corresponds to Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The challenge is based on a circular dated 5.10.2018 issued by the Central Board of Excise and Customs (CBEC). This circular references a decision made in the 9th meeting of the GST Council held on 16.1.2017. The circular addresses concerns about the initiation of enforcement actions by Central tax officers on taxpayers assigned to State tax authorities and vice versa.

The key points from the circular include:

1. Both Central and State tax administrations are empowered to take intelligence-based enforcement action on the entire value chain.

2. Officers from both Central and State tax authorities are authorized to initiate such enforcement actions irrespective of which authority the taxpayer is administratively assigned to.

3. The authority that initiates the enforcement action is responsible for completing the entire process, including investigation, issuance of Show Cause Notices (SCNs), adjudication, recovery, and filing appeals.

4. If Central tax officers initiate enforcement against a taxpayer assigned to State tax authorities, they will handle the case to its conclusion without transferring it to the State tax authority, and vice versa for State tax officers.

The petitioner argues that the enforcement action and subsequent order by the Deputy Commissioner did not align with the guidelines and clarifications provided in the CBEC circular dated 5.10.2018.

In this case, Sri Sambhu Chopra, an advocate representing the petitioner, and Sri Manu Ghildyal and Sri Dinesh Kumar Misra, representing respondents 2 and 1 respectively, are involved in challenging an order dated September 8, 2020, passed by the Deputy Commissioner of Division-4, Commercial Tax in Bareilly. The order was issued under Section 74 of the U.P. Goods and Services Tax Act, 2017 (UPGST Act), which aligns with Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The basis for the challenge is a circular dated October 5, 2018, issued by the Central Board of Excise and Customs (CBEC), which references a decision from the 9th GST Council meeting held on January 16, 2017. This circular addresses the issue of enforcement actions by Central tax officers on taxpayers assigned to State tax authorities and vice versa. The relevant part of the circular explains that both Central and State tax administrations have the power to conduct intelligence-based enforcement actions on the entire taxpayer base, regardless of the administrative assignment. Once such an action is initiated by either authority, that authority is responsible for completing the entire process, including investigation, adjudication, recovery, and appeal.

The petitioner’s counsel argues that since the initial notice/summons dated October 30, 2018, was issued by the Central Tax Authority, the adjudication should have been conducted by the same authority. Instead, the State Tax Authority carried out the proceedings under Section 74 of the UPGST Act, 2017, which contradicts the circular’s directives.

Additionally, it is argued that the order under Section 74 was issued without providing a reasonable opportunity for the petitioner to be heard. The impugned order was passed ex parte during the peak of the COVID-19 pandemic, which further exacerbated the situation as the petitioner’s father was seriously ill and hospitalized from September 8, 2020, until his discharge on September 16, 2020, and later passed away on November 11, 2020. Hospital bills and the death certificate have been submitted to the court to support the claim that the order was issued in violation of statutory requirements for reasonable opportunity of hearing.

In the case at hand, Sri Sambhu Chopra, the learned advocate for the petitioner, along with Sri Manu Ghildyal and Sri Dinesh Kumar Misra, representing respondents no. 2 and 1 respectively, presented arguments before the court. The petitioner challenges an order dated September 8, 2020, issued by the Deputy Commissioner, Division-4, Commercial Tax, Bareilly under Section 74 of the U.P. Goods and Services Tax Act, 2017 (UPGST Act), which aligns with Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The challenge hinges on a circular issued by the Central Board of Excise and Customs (CBEC) on October 5, 2018. This circular references decisions made during the 9th meeting of the GST Council on January 16, 2017, concerning the cross-empowerment of tax authorities. Specifically, it clarifies that both Central and State tax officers are authorized to initiate intelligence-based enforcement actions on any taxpayer, regardless of administrative assignment. The initiating authority is empowered to complete all subsequent procedures, including investigation, adjudication, and recovery.

The petitioner argues that the summons dated October 30, 2018, was issued by the Central Tax Authority, but the adjudication under Section 74 was conducted by the State Authority. According to the circular, the Central Tax Authority should have completed the proceedings it initiated. Additionally, the petitioner contends that no reasonable opportunity for a hearing was provided before the order dated September 8, 2020, was passed ex-parte, during the peak of the COVID-19 pandemic. The petitioner’s father was seriously ill and hospitalized during this period, which further impeded the petitioner’s ability to respond. Hospital bills and a death certificate were submitted as evidence of the petitioner’s inability to participate in the proceedings.

Respondent no. 2’s counsel defends the action, suggesting that the petitioner has an alternative remedy through an appeal under Section 107 of the UPGST Act, 2017.

Upon reviewing the summons dated October 30, 2018, and the order dated September 8, 2020, the court noted that the summons initiated an inquiry under Section 70 of the CGST Act, 2017. This section pertains to judicial proceedings under the Indian Penal Code for false evidence and interference with public servants. The inquiry was a result of search, seizure, and arrest operations, with the Commissioner believing that the petitioner had committed violations.

In summary, the petitioner challenges the jurisdiction and procedure followed in adjudicating their case, citing the CBEC circular and asserting a lack of due process and reasonable opportunity for defense during a critical period of personal crisis.