05 Jun Legal Clash: Femina Shopping Mall vs GST Commissioner – Key Insights
Introduction
The case of Femina Shopping Mall Pvt Ltd v. The Assistant Commissioner O. W.P.(MD)No.19284 of 2021 presents a significant legal battle in the realm of Goods and Services Tax (GST) compliance and enforcement. This article delves into the details of the case, examining the legal arguments presented by both sides, the court’s reasoning, and the final judgment delivered by the Madurai Bench of the Madras High Court on March 14, 2024.
Facts of the Case
Background of the Petitioner
- Petitioner: Femina Shopping Mall Pvt. Ltd., represented by its Director, S.M.I. Mohamed Abubacker.
- Location: 107, A. Williams Road, Cantonment, Tiruchirappalli - 620 001.
- Nature of Business: Operates a departmental store.
Events Leading to the Case
- Inspection Dates: June 6, 2019, and August 20, 2019.
- Findings: The petitioner sold goods procured locally in their own packaged unit containers without discharging the appropriate GST.
- Initial Summon: Issued on June 26, 2019, which led to a writ petition by the petitioner.
Impugned Proceedings
- Date: October 12, 2021.
- Issued by: The second respondent, Deputy Director, Director General of GST Intelligence, Trichy Regional Unit.
- Demand: Payment of Rs.47,41,748/- along with interest and penalty under Section 74(5) of the CGST Act.
Issue
The core issue revolves around the legality and jurisdiction of the proceedings initiated by the second respondent. The petitioner argues that the proceedings were initiated by an unauthorized officer, contrary to the stipulations of the CGST Act and related circulars.
Arguments Presented
Petitioner’s Arguments
- Improper Officer: The second respondent is not the designated proper officer to issue the impugned proceedings.
- Circular Reference: Cited Circular No. 23/2021 dated October 4, 2021, which stipulates that only the jurisdictional proper officer can issue show cause notices.
- Legal Inconsistency: The impugned proceedings were arbitrary, illegal, and without jurisdiction.
Respondents’ Arguments
- Legitimate Authority: Cited Circular No. 31/05/2018-GST dated February 9, 2018, by CBIC, which allows officers of the Director General of GST Intelligence to issue show cause notices.
- Pre-Show Cause Notice: The impugned proceedings were merely a pre-show cause notice (Form GST DRC-01A) aimed at resolving the dispute before formal adjudication.
- State vs. Central Authority: Clarified that the circular relied upon by the petitioner applies to State GST officers and not to central tax officers.
Court’s Reasoning and Judgment
Examination of Submissions
- Inspection and Findings: The court noted that inspections revealed non-payment of appropriate GST for the period from September 22, 2017, to August 20, 2019.
- Applicability of Circulars: The court acknowledged the difference in applicability between state and central circulars.
Conclusion
- Jurisdiction: The court concluded that the second respondent had the authority to issue the pre-show cause notice.
- Nature of Proceedings: Emphasized that the impugned proceedings were a pre-show cause notice, not a final adjudication.
- Dismissal: The writ petition was dismissed, granting the petitioner the liberty to offer an explanation before the second respondent.
Held
The Madurai Bench of the Madras High Court dismissed the writ petition, affirming the jurisdiction of the second respondent to issue the pre-show cause notice. The petitioner was directed to present their explanation to the second respondent, ensuring an opportunity for due process.
Conclusion
The case of Femina Shopping Mall Pvt Ltd v. The Assistant Commissioner underscores the complexities of GST compliance and the procedural nuances in tax enforcement. The court’s decision reaffirms the authority of the central tax officers and the procedural steps involved in adjudicating GST disputes.
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