In what has brought clarity over the functioning of the Directorate General of Good and Services Tax Intelligence, the Gujarat High Court in a recent order said that DGGI officers are fully empowered to issue summons to taxpayers under the Central Goods and Services Tax Act, 2017 (CGST Act) issued by the Central Board of Indirect Taxes and Customs (CBIC).
The order has established what constitutes ‘proper officer’ who are selected by the CBIC for issuing summons in matters where inconsistencies are found in IGST refund claim or wrongful claim of input tax credit by the taxpayers.
The court order came on a writ petition filed by a taxpayer seeking quashing of a circular related to the assignment of functions to the officers as the ‘proper officers’ in relation to the various functions of the CGST Act and to get a refund of IGST credit paid under protest.
The taxpayer was aggrieved by what he conceived as institution of two parallel investigating proceedings, namely, the proceedings initiated by the DRI (Directorate of Revenue Intelligence) and the proceedings instituted vide the summons by DGGI.
The court analysed the definition of ‘proper officer’ under Section 2(91) of the CGST Act and the power to issue summons under Section 70 of the CGST Act and held that an officer of the DGGI is a proper officer and is entitled to issue summons.
The court also agreed with the Supreme Court’s decision that when a statute directs things to be done in a certain way, it must be done in that way only.
In the particular case, the high court said that there is no delegation of power as the CBIC, within its powers, assigned the officers of DGGI the functions of a poper officer.
Also, no parallel proceedings initiated by the office of the DRI and the DGGI as per the communication by the DRI was in relation to the inquiry in connection with double benefits, i.e., exemption of IGST on the input material imported under the advance authorisation/EOU scheme and the refund of IGST paid on the goods imported.
Whereas the summons issued by the DGGI were in relation to the inquiry on the refund of input tax credit (ITC) under the CGST Act.
Also, the court said that the payment made under protest shall be dealt with or adjusted by the concerned officer of the DGGI in accordance with the law.
The high court upheld the empowerment of officers of the DGGI to issue summons under the CGST Act. The court also permitted parallel proceedings considering that the subject matter of the enquiry by the DGGI and the DRI officers was different.
The CBIC had issued guidelines in the past to state that the provisions to issue summons should not be misused and summons should conceptually only be issued as a last resort when the taxpayers are uncooperative.