CGST Officers Empowered to Act on Pre-GST Service Tax Matters: CESTAT Dismisses Jurisdictional Challenge [Read Order]

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dismissed the appeal in which one of the grounds was relating to the jurisdiction of the Assistant Commissioner and noted that the CGST officers are empowered to act on pre-GST service tax matters.

In this case, the assessee, the Rajasthan State Agriculture Marketing Board, had appealed against the order passed by the Commissioner (Appeasl) for confirming the demand of Rs. 14.23 lakhs under section 73(2) of the Finance Act,1994, along with interest under section 75 of the Finance Act, and imposed penalties under sections 77 and 78 of the Finance Act.

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Coming to the facts of the case, the appellant had issued 3 work orders to M/s. Laxmi Narayan Agarwal, the service provider. It was observed by the department that neither the service provider nor the appellant paid any service tax on these services.

During the investigation conducted by the department, it was observed that as per Notification No. 30/2012-ST (entry 9), in works contracts, service tax was to be shared equally between the service provider and recipient. Since the appellant, as service recipient, failed to pay their 50% share, a Show Cause Notice dated 02.02.2018 was issued, and later on the demand was confirmed by the Assistant Commissioner and upheld by the Commissioner (Appeals).

It is vital to note that several grounds were raised by the assessee in the appeal, and one of them was concerning the jurisdiction of the assistant commissioner.

The assessee’s counsel vehemently submitted that since the Assistant Commissioner was appointed under the CGST Act, the latter has no jurisdiction to decide the matter relating to the Service Tax. It was submitted that since the Assistant Commissioner is the Assistant Commissioner of CGST, he had no jurisdiction to issue the SCN or to pass an order in respect of service tax.

The revenue’s counsel strongly supported the impugned order.

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CESTAT, after referring to Sections 173 and 174 of the CGST Act, 2017, noted that the assessee’s counsel’s challenge to the Assistant Commissioner’s jurisdiction overlooked the savings clause in the CGST Act. Bench observed that after the repeal of the Finance Act, 1994, actions on rights or liabilities accrued earlier can still be taken by successor officers. CGST officers, as successors to service tax officers, are empowered to act under the saved provisions.

The bench concluded that if the assessee’s counsel’s submissions about jurisdiction are accepted, it would lead to utter confusion.

The tribunal further noted that “for instance, if any assessee succeeds in service tax appeal and has to get consequential relief, if the CGST officers are held to be not authorised under Service Tax law, nobody can grant a refund to the assessee because there are no more any service tax officers.”

Delhi CESTAT, comprising Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member), dismissed the assessee’s appeal.

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