The Gujarat High Court (Ahmedabad Bench) has held that Section 4 of the IGST Act itself authorizes officers appointed under the State GST Act or Union Territory GST Act to act as proper officers for the purposes of the IGST Act. A separate Central Government notification is not required unless the Government intends to prescribe exceptions or conditions to that statutory authorization. Therefore, State GST officers validly exercising assigned functions can invoke Sections 129 and 130 in relation to inter-State transactions governed by the IGST Act.
The Court also held that where the impugned orders are passed by State GST proper officers, the appellate remedy lies under Section 107 of the relevant State GST Act. Section 6(3) of the GGST Act does not make the petitioner remediless; rather, it indicates that the appeal must be filed before the State appellate authority and not before a Central officer.
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The Division Bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed that the controversy turned mainly on the interpretation of Section 4 of the IGST Act and Section 107 governing appeals. The Court noted at the outset that the petitioner was trying to bypass an available statutory appellate remedy by arguing that no appeal lay against the impugned orders. On Section 4, the Court said the language is clear and unambiguous. Officers appointed under the State GST Act or Union Territory GST Act “are authorised to be the proper officers” for the purposes of the IGST Act. The requirement of notification applies only where the Government wishes to specify exceptions or conditions; it is not a precondition for the very existence of cross-empowerment.
The Court observed that the statutory authorization already exists in Section 4 itself. If the Central Government intends to carve out exceptions or impose conditions, it may do so by notification on the Council’s recommendation. The Court referred to Notification No. 39 of 2017 dated Oct 13, 2017 as an example of such an exception-specific exercise in refund matters, but made it clear that this did not mean a notification was mandatory in every case.
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The Court further held that there was no requirement for the Central Government to issue a separate notification dividing powers among proper officers for IGST purposes. Once Section 4 confers authorization, the State tax administration can assign functions internally, and in Gujarat this had already been done by the Commissioner’s order dated June 23, 2017 specifying the proper officer’s section-wise under the GGST Act.
The Bench relied on the Punjab & Haryana High Court judgment in Bright Road Logistics vs. State of Haryana [(2023) 153 taxmann.com 353 (Punjab & Haryana)], which held that by virtue of Sections 4 and 20 of the IGST Act and the State Commissioner’s assignment order, State tax officers are competent to exercise powers under Sections 129 and 130 of the IGST Act. The Gujarat High Court found that the same reasoning squarely applied here. The Court also reiterated that Section 4 of the IGST Act is an unequivocal cross-empowerment provision that can be curtailed only by a specific notification. In the absence of such curtailment, officers appointed under the State Act remain proper officers for IGST purposes.
Briefly, the petitioner challenged a confiscation order in Form GST MOV-11 and the consequential summary order in Form GST DRC-07, whereby the demand confirmed was Rs. 88.68 lakhs in lieu of confiscation of goods and conveyance under Section 130 of the CGST Act read with Section 20 of the IGST Act. The petitioner also questioned the authority of Gujarat State GST officers to act as proper officers under the IGST Act.
The goods involved were pan masala and tobacco. The petitioner was the buyer and a registered GST dealer, while the seller, M/s Ram Trading Company, was also admittedly GST-registered. During transit, the consignment was intercepted and the driver produced the relevant e-invoices and e-way bills, after which the officer recorded the statement in Form GST MOV-01 and ordered physical and document verification. Thereafter, physical verification was carried out and the report in Form GST MOV-04 recorded that there was no discrepancy between the invoice quantity and the actual quantity found. However, later, the goods were detained through Form GST MOV-06 under Section 129(1) on the allegation that the accompanying documents had already been used earlier.
Subsequently, a confiscation show cause notice in Form GST MOV-10 was issued under Section 130 of the CGST Act read with Section 20 of the IGST Act. The notice proposed penalty and fine in lieu of goods and conveyance. After the petitioner filed a reply, the authority passed the confiscation order in Form GST MOV-11 confirming the penalty and fine demands.
