Assessee cannot be adjudicated by the CGST, assigned to SGST authority or vice-versa

Introduction

In a recent ruling by the Hon’ble Madras High Court, the issue of jurisdictional authority in GST matters came under scrutiny. The case of Ram Agencies v. Assistant Commissioner of Central Tax sheds light on the intricacies surrounding the assignment of assesses to different tax authorities and the implications it holds for adjudication. This article delves into the details of the case, exploring its facts, the central issue, and the court’s verdict.

Facts of the Case

M/s. Ram Agencies, the petitioner in this case, found themselves in a legal conundrum when the Central Tax authorities issued an order concerning their assessment for the years 2017-18, 2018-19, and 2019-20. Despite being assessed by the State Tax authorities, as per the allocation by the Central Government, the petitioner faced proceedings initiated by the Central Tax authorities.

Adding to the complexity, the petitioner highlighted that the order was passed despite a stay granted by the Principal Seat of the Madras High Court against the operation of a notification extending the period of limitation. This stay was issued in response to W.P.No.33343 of 2023, filed on November 27, 2023.

Issue

The crux of the matter revolves around the jurisdictional authority to initiate proceedings against an assessee when they have been assigned to a different counterpart department. Specifically, the question arises: can proceedings be initiated by one counterpart department against an assessee assigned to the other counterpart department?

Held

In its verdict dated April 10, 2024, the Hon’ble Madras High Court examined the intricacies of cross-empowerment and jurisdictional authority. Referencing a prior case, Tvl. Vardhan Infrastructure’s case, the court reiterated that without a notification issued for cross empowerment, authorities from one counterpart department cannot initiate proceedings against an assessee assigned to the other counterpart department.

Consequently, the impugned Order-in-Original passed by the Assistant Commissioner of Central Tax was quashed due to the absence of such notification. However, the court granted liberty to the State authorities to proceed against the petitioner within their jurisdiction.