Officers Of DGGI Are "Central Excise Officers"; Can Issue Show Cause Notices And Adjudicate Service Tax Demand: Madras High Court

The Madras High Court has ruled that officers of the Directorate General of GST Intelligence (DGGI) are "Central Excise Officers" for the purpose of Rule 3 of the Service Tax Rules, 1994 since they are vested with the powers of Central Excise Officers by the Central Board of Excise and Customs (CBEC). The Single Bench of Justice C. Saravanan, while considering a bunch of writ petitions, held that that the definition of "Central Excise Officer" in Section 2(b) of Central Excise Act, 1944 is expansive and that any person, including an officer of the State Government, who is invested by the CBEC with any of the powers of a Central Excise Officer under the Central Excise Act, is a "Central Excise Officer". Writ petitions were filed before the Madras High Court challenging the Notification No. 22/2014, dated 16.09.2014, issued by the Central Board of Excise and Customs (CBEC) (presently the Central Board of Indirect Taxes and Customs), vide which the CBEC appointed officers from the Directorate General of Audit, Directorate General of Central Excise Intelligence and from the Directorate General of Service Tax as "Central Excise Officers". The CBEC invested the said officers with all the powers under Chapter V of the Finance Act, 1994 and the Rules made thereunder, to be exercised by them pan India, as exercisable by the Central Excise Officers. The petitioners, including M/s. Redington (India) Limited, also challenged the Show Cause Notices issued by the officers of the Directorate of Central Excise Intelligence (now called The Directorate of GST Intelligence) to recover the service tax allegedly evaded by the petitioners under the provisions of the Finance Act, 1994, on the ground that the said officers had no jurisdiction to issue the said Show Cause Notices. The petitioners submitted before the Madras High Court that the said Notification was ultra vires Rule 3 of Service Tax Rules, 1994. The petitioners averred that there is no other Notification under Rule 3 of the Service Tax Rules, 1994 that confers powers on the said officers and that the said Notification is the only source of authority that empowers officers belonging to the Director General of Goods and Service Tax Intelligence to issue Show Cause Notices and adjudicate service tax demands under Section 73 of the Finance Act, 1994. The petitioners contended that the power to issue the said Notification, as well as the power to appoint jurisdictional 'Central Excise Officers', emanates from Rule 3 of the Service Tax Rules. The petitioner added that Rule 3 of the Service Tax Rules empowers the CBEC to appoint such 'Central Excise Officers' as it thinks fit for exercising the powers under the Finance Act, 1994, within such 'local limits' as it may assign to them and in respect of 'specified taxable services. The petitioners argued that the Finance Act, 1994 only contemplates a specific and particular Central Excise Officer, and not just "any" Central Excise Officer, who can issue and adjudicate a Show Cause Notice under Section 73 of the Finance Act. The petitioners averred that the Central Excise Officer, as contemplated under Section 73 of the Finance Act, 1994, is the officer within whose jurisdiction the assessee obtains registration, pays taxes, files returns and complies with all other formalities and compliances under the Finance Act. Hence, the petitioner submitted that the officers belonging to the Directorate General of Goods and Service Tax Intelligence do not have the jurisdiction to issue the said Show Cause Notices. The Court observed that Section 73 of the Finance Act, 1994 provides a machinery for recovery of Service Tax not levied or paid, or short-levied or short-paid, or erroneously refunded. The Court noted that the "Central Excise Officers" were given the task to perform the functions under Chapter V of the Finance Act, 1994, and it is the Central Excise Officers who can issue Show Cause Notices under Section 73 of the Finance Act, 1994 to an assessee where any service tax is not levied or paid, or is short-levied or short-paid, or is erroneously refunded. The Court observed that it is also the "Central Excise Officer" who can adjudicate such Show Cause Notices. The Court observed that as per the Rule 3 of the Service Tax Rules, 1994, CBEC may appoint such "Central Excise Officers" as it thinks fit for exercising the power under Chapter V of the Finance Act, 1994 "within such local limits" as it may assign to them. The Court noted that the expression 'Central Excise Officers' has been defined in Section 2(b) of the Central Excise Act, 1944, which includes within its ambit any person, including an officer of the State Government, who has been invested by the CBEC with any of the powers of a Central Excise Officer under the Central Excise Act. Thus, the Court held that the definition of "Central Excise Officer" in Section ...

Officers Of DGGI Are "Central Excise Officers"; Can Issue Show Cause Notices And Adjudicate Service Tax Demand: Madras High Court

Parina Katyal

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