The judgement delivered by the High Court of Judicature at Madras, presided over by Hon’ble Mr. Justice C. Saravanan, addressed the issue of cross-empowerment of tax authorities under the Central Goods and Services Tax Act 2017 (CGST Act) and Tamil Nadu Goods and Services Tax Act 2017 (TNGST Act). The court considered a batch of writ petitions challenging the jurisdiction of the Central and State tax authorities over taxpayers assigned to one but subjected to actions by the other.
The court examined the recommendations of the GST Council, the constitutional amendments that enabled the GST regime, and the division of taxpayer base between the central and state governments to ensure a single interface under GST. The court noted the issuance of Circular No.1/2017-GST for the division of taxpayer base and highlighted the lack of subsequent notifications for cross-empowerment, except for specific provisions like refunds.
The core issue revolved around whether taxpayers assigned to either the State or Central authorities could be investigated and proceeded against by their counterparts, in the absence of proper notifications for cross-empowerment as per Section 6 of the respective GST Acts. The court highlighted the constitutional framework, GST Council recommendations, and the intended single interface for tax administration under GST, acknowledging the confusion and procedural lapses in cross-empowerment.
The judgement scrutinized various legal provisions, rules, and guidelines relevant to the administration and enforcement of GST. It emphasized the need for clear guidelines and notifications for cross-empowerment to avoid jurisdictional disputes and ensure seamless tax administration. The decision aimed to address the lacunae in the current framework and underscored the necessity for coherent and unified tax administration under the GST regime.
In conclusion, the High Court’s decision called for clarity and appropriate actions to rectify the issues of cross-empowerment, ensuring taxpayers are subjected to actions by the appropriate authorities, and reinforcing the principle of a single interface under GST. The judgement underscored the importance of adhering to the constitutional and statutory framework, following the GST Council’s recommendations, and ensuring a harmonious and efficient tax administration system.