The Gujarat High Court has asked the Central Government and Directorate General of GST Intelligence to clarify what compelled DGGI to issue several show cause notices in the past and recoveries under these cases that are outside of its territorial jurisdiction.
The Gujarat High Court, on June 22, issued a notice to the North Block following a plea from pen manufacturer Flair Writing Industries. The plea challenges the powers of the Directorate General of GST Intelligence (DGGI) concerning its territorial jurisdictions.
Flair Writing Industries filed a plea challenging the Surat unit’s Directorate General of GST Intelligence for issuing notice for transactions in other states. The Gujarat High Court has asked the Union of India for a reply by July 13.
The company submitted in its plea that the Directorate General of GST Intelligence does not have the authority to issue a GST show cause notice for transactions in Maharashtra and Uttarakhand. This argument stems from the fact that the DGGI has issued several show-cause notices outside its designated territorial jurisdictions.
A quorum consisting of Justice Vipul M. Pancholi and Justice Deven M. Desai has issued notices to address the issue of a show cause notice issued by DGGI Surat, which seeks to tax transactions in Maharashtra and Uttarakhand because such actions are not permissible under the law.
The judgement comes in favour of Flair Writing Industries and teaches a lesson to the Goods & Services Tax (GST) apex intelligence and investigative agency, as the DGGI has issued notices in many such cases.
Abhishek A. Rastogi, who is arguing various writ petitions regarding the powers of issuing show cause notices by DGGI and DRI, stated that with our strong federal structure, powers must be exercised as per the defined parameters set by the Parliament. Hence, the definition of ‘the proper officer’ holds significant importance when determining the territorial jurisdiction of executive actions, such as those performed by DRI and DGGI.
Further Rastogi stated, “The territorial jurisdiction is very well defined under the governing GST laws and any jurisdictional overreach is subject to judicial review”.
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The company’s flagship brand, Flair, was launched in 1976. Its products are sold under principal brands Flair, Rudi Kellner, Hauser and Pierre Candin, and Landmark. It produces 63 lakh pieces per day.
At the same time, as per the top sources at DGGI said that the central agency will file the response stating its powers to issue show cause notices pan India. Further, the matter was carried out under Notification No. 14/2017-Central Tax, as amended, which grants the DGGI officials jurisdiction throughout the nation because the issue is related to the taxpayer possessing a GSTIN in various states.
Moreover, according to Circular No.169/01/2022-GST issued by the CBIC, certain central regions have designated their additional/joint commissioner of central tax as the authorised proper officer responsible for resolving DGGI cases.
In addition, if the primary business location of the notice receiver with the highest tax demand in the Show Cause Notice (SCN) falls within the jurisdiction of the Central Tax Zone, it may be adjudicated by the additional/joint commissioner in charge of DGGI case adjudication. Because the show cause notice was to be adjudicated by the additional/joint commissioner, Ahmedabad South, to oversee the SCN proceedings.
