In a recent ruling, the Madras High Court, upholding the ruling in the Tvl.Vardhan Infrastructure’s case, ruled that the in the absence of the Cross Empowerment notification, the counterparts department is barred from initiation proceedings against assessee allocated to Central Goods and Services Tax ( CGST ) or State Goods and Services Tax ( SGST ).
A single bench of Justice Senthilkumar Ramamoorthy observed that “After examining the provisions, this Court has concluded that in the absence of notification issued for cross empowerment, the authorities from the counterpart Department cannot initiate proceedings where an assessee is assigned to the counterpart.”
The Petitioner, Ram Agencies In this case submitted that despite a stay granted by the Principal Seat of the Court against the operation of a notification extending the period of limitation, the impugned order was still issued.
Furthermore, the petitioner challenged Order-in-Original No.24/2023-GST, dated 26.12.2023, on the grounds that they are assessed by State Tax Authorities, making the order by Central Tax Authorities contrary to established legal precedent, notably the ruling in Tvl.Vardhan Infrastructure vs. The Special Secretary, 2024.
The respondent’s Counsel acknowledged the petitioner’s assessment by State authorities but argued that the decision in Tvl.Vardhan Infrastructure’s case is distinguishable in light of a Division Bench decision in Kuppan Gounder P.G. Natarajan vs. Directorate General of GST Intelligence, New Delhi.
The High Court noted that the issue of cross-empowerment and jurisdiction concerning the initiation of proceedings when an assessee is allocated to either Central or State Tax Authorities was thoroughly examined by this Court in Tvl.Vardhan Infrastructure’s case. The conclusion drawn was that without a notification for cross-empowerment, counterparts cannot initiate proceedings against an assessee allocated to the other department.
Consequently, the impugned Order-in-Original No.24/2023-GST, dated 26.12.2023, was nullified. However, the State authorities are granted liberty to proceed against the petitioner in line with the observations made in Tvl.Vardhan Infrastructure’s case.
With these findings, the Writ Petition was allowed, without costs. Consequently, connected Miscellaneous Petitions were also closed.
Mr.A.Satheesh Murugan appeared for the Petitioner and Mr.N .Dilipkumar, standing counsel appeared for respondents.
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