Heard Sri Sambhu Chopra learned Advocate for the petitioner, Sri Manu Ghildyal learned counsel for respondent no. 2 and Sri Dinesh Kumar Misra learned counsel for respondent no. 1.

The challenge is to the order dated 8.9.2020 passed by the Deputy Commissioner, Division-4, Commercial Tax, Bareilly under Section 74 of the U.P. Goods and Services Tax Act, 2017 (In short as “the UPGST Act, 2017”) which is pari materia to Section 74 of the Central Goods and Services Tax Act, 2017 (In short as “the CGST Act”).

The basis of challenge is a circular dated 5.10.2018 issued by the Central Board of Excise and Customs (CBEC), wherein decision taken in 9th meeting of GST Council held on 16.1.2017 has been narrated. The circular dated 5.10.2018 is relevant to be extracted hereunder:-

“It has been brought to the notice of the Board that there is ambiguity regarding initiation of enforcement action by the Central tax officers in case of taxpayer assigned to the State tax authority and vice versa.

2. In this regard, GST Council in its 9th meeting held on 16.01.2017 had discussed and made recommendations regarding administrative division of taxpayers and concomitant issues. The recommendation in relation to cross-empowerment of both tax authorities for enforcement of intelligence based action is recorded at para 28 of Agenda note no. 3 in the minutes of the meeting which reads as follows:-

“viii. Both the Central and State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain”

3. It is accordingly clarified that the officers of both Central tax and State tax are authorized to initiate intelligence based enforcement action on the entire taxpayer’s base irrespective of the administrative assignment of the taxpayer to any authority. The authority which initiates such action is empowered to complete the entire process of investigation, issuance of SCN, adjudication, recovery, filing of appeal etc. arising out of such action.

4. In other words, if an officer of the Central tax authority initiates intelligence based enforcement action against a taxpayer administratively assigned to State tax authority, the officers of Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case to its logical conclusions.

5. Similar position would remain in case of intelligence based enforcement action initiated by officers of State tax authorities against a taxpayer administratively assigned to the Central tax authority.

6. It is also informed that GSTN is already making changes in the IT system in this regard.”

The contention of the learned counsel for the petitioner is that the notice/summons dated 30.10.2018 had been issued by the Central Tax Authority whereas adjudication under Section 74 of the Excise Act had been made by the State Authority. The contention is that once the Central Tax Authority had initiated action, the proceeding was required to be brought to its logical end by the same authority. The State Tax Authority could not have conducted the proceeding under Section 74 of the UPGST Act, 2017. Para ‘4’ of the above extracted circular has been placed before the Court to substantiate the said submissions.

It is then argued that the order passed under Section 74 of UPGST Act indicates that no opportunity much less reasonable opportunity had been accorded to the petitioner. The order impugned dated 8th September, 2020 had been passed exparte that too during the peak period of pandemic Covid-19.

It is further stated that the petitioner’s father was facing serious illness issues and was admitted in the Fortis Hospital at Gurugram in the month of September, 2020. The bills of the hospital concerned showing the admission of one Mr. N.C. Gupta on 8th September, 2020 and discharge on 16th September, 2020 as also the death certificate showing 11.11.2020 as the date of death of the petitioner’s father have been placed before the Court to assert that the order impugned had been passed in violation of the statute which provides for reasonable opportunity of hearing to the assessee.

Learned counsel for the respondent no. 2, however, defends the action taken by respondent no. 2 and submits that the petitioner has an alternative statutory remedy of appeal under Section 107 of the UPGST Act, 2017, which is the first appeal against the order of the Assessing Officer.

Dealing with the submissions of learned counsel for the parties, having carefully perused the summons dated 30.10.2018 (page ’27’ of the paper book) as also the order dated 8.9.2020 passed under Section 74 of the UPGST Act, 2017, this Court finds that the summons dated 30.10.2018 had been issued while initiating inquiry under Section 70 of the CGST Act, 2017 which is a “judicial proceeding” within the meaning of Sections 193 and 228 of the Indian Penal Code, for providing punishment for furnishing false evidence and interruption to any public servant in discharge of his duties. The said inquiry had been initiated as a result of search, seizure and arrest of the petitioner, where the Commissioner had reasons to believe that the petitioner had committed any of the offences specified in Section 132.

Whereas for determination of tax and penalty, the proceeding under Chapter XV had been initiated in accordance with the procedure prescribed under 74 of the Act.

It appears from the perusal of the order dated 8th September, 2020 that the show cause notice had been served under Section 74(2) of the Act and the date was fixed for submitting explanation/objections by the petitioner. The order impugned dated 8th September, 2020 records that the petitioner did not appear before the proper Officer.

As the proceedings for determination and levy of tax and penalty had been initiated by the State Tax Authority, this Court does not find substance in the challenge to the jurisdiction of respondent no. 2 to pass order for determination of tax and penalty to levy the same upon the petitioner, in view of the circular dated 5.10.2018.

In the considered opinion of the Court, the initiation of the proceeding for imposition of tax and penalty was with the issuance of the notice under Section 74 as contained in Chapter XV of UPGST Act and the inquiry under Section 70 of the Act was independent.

Further challenge to the merits of the order of assessment on the ground that no opportunity of hearing had been granted to the petitioner, it is open for him to file an appeal under Section 107 as contained under Chapter XVIII of the UPGST Act, 2017, as the dispute relating to service of notice under Section 74 of the Act would require a factual inquiry.

It goes without saying that all issues being raised by the petitioner herein including the issue of non-service of notice before passing the order under Section 74 of the Act shall have to be adjudicated by the appellate authority without being influenced by any of the observations made hereinabove.

In view of the above, the prayer in the writ petition to quash the order dated 8.9.2020 passed by the Deputy Commissioner, Division-4, Commercial Tax, Bareilly is hereby rejected.

The writ petition is dismissed, accordingly.