Heard Mr. Srinivas Chaturveduala, learned counsel for the petitioner and Mr. B.Narasimha Sarma, learned Senior Standing Counsel for Central Goods and Services Taxes.

2. By filing this petition under Article 226 of the Constitution of India, petitioner has challenged legality and validity of the show cause notice dated 12.04.2021 issued by Additional Commissioner of Central Taxes and Customs, Hyderabad, Audit –I Commissionerate, Hyderabad.

3. By the impugned show cause notice, Additional Commissioner i.e., the respondent No.4 has called upon the petitioner to show cause as to why the product manufactured and supplied to various customers during the period from July, 2017 to March, 2019 should not be classified under the tariff heading 21069099 of Customs Tariff Act, 1975 made applicable to the Central Goods and Services Tax Act, 2017 (briefly ‘the CGST Act’ hereinafter).

3.1. By the said notice, petitioner has been called upon to show cause as to why an amount of ₹ 79,95,295.00 (Rupees seventy nine lakhs, ninety five thousand, two hundred and ninety five only) being the CGST not paid, should not be demanded under Section 74(1) of the CGST Act.

3.2. That apart, petitioner has also been called upon to show cause as to why an amount of ₹ 3,08,73,057.00 (rupees three crores, eight lakhs, seventy three thousand, and fifty seven only) being the Integrated Goods and Services Tax (IGST) not paid, should not be demanded and recovered from the petitioner under Section 74(1) of the CGST Act read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (briefly ‘the IGST Act’).

3.3. In addition, petitioner has been show caused as to why interest and penalty under the provisions of the aforesaid Acts should not be levied and imposed.

3.4. The impugned show cause notice has been issued under Section 74(1) of the CGST Act.

4. Basic contention of learned counsel for the petitioner is that it is the sine qua non that the officer who issues the show cause notice under Section 74(1) of CGST Act, has to be perforce a ‘proper officer’. He has referred to various provisions of the CGST Act and the documents annexed to the writ petition to contend that Additional Commissioner is not a ‘proper officer’ having jurisdiction to issue the impugned show cause notice. In support of his submissions, learned counsel for the petitioner has also placed reliance on a recent decision of the Supreme Court in CANON INDIA PRIVATE LIMITED vs. COMMISSIOENR OF CUSTOMS AIR 2021 SC 1699, which was in the context of the Customs Act, 1962.

5. On the other hand Mr. B. Narasimha Sarma, learned Senior Standing Counsel for respondents has also referred to various provisions of the CGST Act, as well as circular dated 05.07.2017 of the Central Board of Excise and Customs (briefly ‘the Board’ hereinafter), and circular dated 09.02.2018 of the said Board, to contend that Additional Commissioner i.e., the respondent No.4 is indeed the ‘proper officer’ in the present case, and therefore, there should be no interference with the impugned show cause notice on the ground that the notice issuing authority is not the ‘proper officer’.

6. We have given our due consideration to the respective submissions made at the Bar.

7. As already pointed out earlier, the impugned show cause notice has been issued by respondent No.4 alleging contravention of various provisions of the CGST Act, as well as the IGST Act, where-after, petitioner has been called upon to show cause as to why the quantified amount of CGST as well as Telangana Goods and Services Tax, besides IGST should not be recovered from the petitioner; in addition, as to why interest and penalty should not be levied and imposed on the petitioner.

8. Section 74 of the CGST Act deals with determination of tax not paid, or short paid, or erroneously refunded, or input tax credit wrongly availed, or utilized by reason of fraud, or any willful misstatement, or suppression of facts.

8.1. As per sub-section (1) thereof, 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 of or utilized by reason of fraud, or any willful-misstatement or suppression of facts to evade tax, he (proper officer) 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 utilized input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest and penalty.

8.2. Section 2(91) of the CGST Act, defines the expression ‘proper officer’. As per this definition, ‘proper officer’ means the Commissioner or the officer of the central tax, who is assigned that function by the Commissioner in the Board.  

9. Though learned counsel for the respondents had referred to Sections 3 to 5 of the CGST Act, it would not be necessary for us to delve deep into the aforesaid provisions, because those provisions deal with appointment of class of officers, and not specifically with the appointment of ‘proper officer’. Nonetheless we may mention that as per sub-section (2) of Section 5 of CGST Act, the officer of central tax may exercise the powers and discharge the duties conferred or imposed under the CGST Act, on any other officer of central tax, who is subordinate to him.

10. As per Circular No.3/3/2017 – GST dated 05.07.2017 of the Board, which has been issued in exercise of powers conferred by clause (91) of Section 2 of the CGST Act, read with Section 20 of the IGST Act, and subject to sub-section (2) of Section 5 of the CGST Act, the Board has assigned the officers mentioned in column No.2 of the appended table, the functions of ‘proper officer’ in relation to various sections of the CGST Act. We find that at Sr.No.3 Deputy or Assistant Commissioner of Central Tax have been designated as ‘proper officer’ for discharging functions under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Section 74.

10.1. Admittedly Deputy or Assistant Commissioner of Central Tax are officers subordinate to Additional Commissioner.  

11. In terms of Board’s Circular No.31/05/2018-GST dated 09.02.2018, more particularly in paragraph No.4 thereof, it is clarified that all officers up to the rank of Additional / Joint Commissioner of Central Tax are assigned as the ‘proper officer’ for issuance of show cause notices and orders under sub-sections (1), (2), (3), (5), (6), (7), (9) and (10) of Sections 73 and 74 of the CGST Act, corresponding to Section 3 read with Section 20 of the IGST Act. As per the table appended thereto, Additional or Joint Commissioner of Central Tax have been assigned functions as the ‘proper officer’, and the monetary limit of the said officers for issuance of show cause notice and orders under Sections 73 and 74 of the CGST Act and Section 20 of the IGST Act, in the case of central tax and integrated tax not paid, or short paid, or erroneously refunded, or input tax credit of central tax and integrated tax wrongly availed of or utilized, is above ₹ 2,00,00,000.00 (Rupees two crores).

12. Admittedly the monitory limit in the present case is above ₹ 2,00,00,000/- (Rupees two crores). In such circumstances, and having regard to the above, it cannot be said with any degree of certainty that respondent No.4 is not the ‘proper officer’ competent to issue the impugned show cause notice.

13. Insofar the decision in Canon India Private Limited (supra) is concerned, the main issue confronting the Supreme Court was whether after clearance of the cameras on the basis that they were exempted from levy of basic customs duty, the proceedings initiated by the Directorate of Revenue Intelligence for recovery of duty not paid under Section 28(4) of the Customs Act, 1962, are valid in law? It was in that context that the question which arose for consideration was, whether the Directorate of Revenue Intelligence had the authority in law to issue a show cause notice under Section 28(4) of the Customs Act, 1962 for recovery of duties allegedly not levied, nor paid when the goods had been cleared for import by a Deputy Commissioner of Customs, who had decided that the goods were exempted. Thus the question was as to whether in the context of Section 28(4) of the Customs Act, 1962 the Directorate of Revenue Intelligence could be construed as the ‘proper officer’.

13.1. Therefore, the issue before the Supreme Court in Canon India Private Limited (supra) was completely different and distinct from what is being canvassed by learned counsel for the petitioner to support his contention that respondent No.4 is not the ‘proper officer’ under Section 74(1) of the CGST Act.

14. Thus in the light of the above, we are not inclined to entertain the writ petition. However, for the ends of justice, we grant further three weeks time to the petitioner to file reply to the show cause notice dated 12.04.2021. If any such reply is filed within the aforesaid period of three weeks, the same shall be considered by the authority in accordance with law.

15. All discussions made in the present order is only in response to the contention of the petitioner that respondent No.4 is not the ‘proper officer’. We have not expressed any opinion on merits and all contentions are kept open.

16. Subject to the above observations, writ petition is dismissed.

17. Interlocutory applications pending, if any, shall stand closed. No order as to costs.