State GST Authorities can Exercise Cross-Empowerment u/s. 6 Only if Taxpayer is Allotted to State Jurisdiction: Andhra Pradesh HC [Read Order]

The Andhra PradeshHigh Court recently clarified that cross-empowerment under Section 6 of the Central Goods and Services Tax (CGST) Act, 2017 does not grant State GST authorities with unrestricted powers, and can be exercised only if the concerned assessee is allotted to the jurisdiction of the State authorities.

The writ petitioner Avanti Feeds Limited, a company engaged in the manufacture of aquatic feed, also imports inputs such as fish meal, soya and algal oil.

Avanti Feeds had claimed Integrated Goods and Services Tax (IGST) exemption on certain imports made during the assessment years from 2017-18 to 2022-23.

Subsequently, the 1st respondent Deputy Commissioner of State Tax, on the basis of an authorization issued by the Joint Commissioner, Sales tax, Rajamahendravaram, conducted inspection at the business place of Avanti Feeds on 11.11.2022.

The Deputy Commissioner of State Tax issued an intimation of tax and ascertained tax payable, effectively disputing the exemption claims and proposing tax liability, culminating in a show cause notice dated April 10, 2023.

Despite the petitioner being allotted to the jurisdiction of the Central tax authorities, the Deputy Commissioner of State Tax proceeded with the concerned proceedings.

Senior Counsel K. Vivek Reddy, appearing for Avanti Feeds submitted that once the taxpayer had been administratively assigned to the Central authorities, the State GST officer could not assume jurisdiction under the guise of cross-empowerment as under Section 6 of the GST Act.

The Government Pleader appearing for the Department opposed the petitioner’s arguments, contending that Section 6 of the Andhra Pradesh GST Act authorises officers under the State GST Act to issue any orders or proceedings under the CGST Act and that such cross-empowerment permits the State authorities to take up assessment in relation to the petitioner.

Justice R. Raghunandan Rao and Justice T.C.D. Sekhar noted that Section 6 of the CGST Act and Section 4 of the IGST Act empowers an officer under the APGST Act only if the tax payer has been allotted, administratively, to the State of Andhra Pradesh and such officer is the proper officer for such tax payer.

The Division Bench further noted that Section 6(2) of CGST Act stipulates that where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

In view of the same, the Court held that the Deputy Commissioner of State Tax could not claim the benefit of cross-empowerment under Section 4 of the IGST Act to assume jurisdiction in the present case.

The High Court also deliberated on the other issues raised, and set aside the impugned show cause notice dated April 10, 2023 as being without jurisdiction.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates