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AFR

Court No. - 21

Case :- WRIT TAX No. - 760 of 2021

Petitioner :- M/S Maa Geeta Traders

Respondent :- Commissioner Commercial Tax And Another

Counsel for Petitioner :- Pooja Talwar

Counsel for Respondent :- C.S.C.

Hon'ble Naheed Ara Moonis,J.

Hon'ble Saumitra Dayal Singh,J.

1.Heard Ms. Pooja Talwar, learned counsel for the petitioner, Mr.

Manu Ghildyal, learned Standing Counsel for the revenue.

2.By means of the present petition, challenge has been raised to the

ex-parte adjudication order dated 07.08.2021 passed by Deputy

Commissioner, Commercial Tax, Sector-I, Shajahanpur (hereinafter

referred to as the 'Deputy Commissioner), purportedly in exercise of

powers vested under section 74 (9) of the U.P. Goods and Services Tax

Act, 2017 (hereinafter referred to as the “Act”), for the tax

period/Financial Year 2018-2019.

3.Solitary ground pressed in the present petition is - lack of inherent

jurisdiction with the Deputy Commissioner to issue a notice, conduct

proceedings and pass the impugned adjudication order under section 74 of

the Act. In the first place, learned counsel for the petitioner submits, the

Commissioner, State Tax (hereinafter referred to as the “Commissioner”)

as defined under section 2 (24) of the Act, is vested with the jurisdiction

over the entire State of Uttar Pradesh to exercise all powers and perform

all or any function under the Act. The other officers, who may be

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subordinate to the “Commissioner” may derive their particular function-

jurisdiction to initiate, continue and conclude any proceedings in the

nature of adjudication proceedings only under a valid delegation of power

made under section 5 (3) of the Act. Since no delegation of power existed

in favour of the Deputy Commissioner, the adjudication proceedings

initiated and concluded by that authority lacked inherent jurisdiction.

Thus, relying upon the provisions of section 2 (91) read with sections 3, 4

and 6 of the Act, it has been submitted, in the absence of any notification

issued, authorising the Deputy Commissioner to act as a “proper officer”

under the Act, he could never claim any inherent jurisdiction to pass the

impugned order. In that regard, heavy reliance has been placed on two

decisions of the Supreme Court in Commissioner of Customs Vs Sayed

Ali and another, reported in 2011 (3) SCC 537 and M/s Canon India

Private Limited vs Commissioner of Customs, reported in AIR 2021 SC

1699.

4.Responding to the above, learned Standing Counsel for the revenue

submitted, section 5(3) of the Act has no application to the present facts

inasmuch as the Deputy Commissioner is an officer included in the list of

officers described under section 3 of the Act. Also, relying on the clear

language of the proviso thereto and referring to the Office Orders dated

01.07.2017 and 19.11.2018, both issued by the Commissioner, in exercise

of powers vested in that Authority under section 2(91) of the Act read with

section 4(2) of the Act, it has been submitted, the necessary function

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assignment contemplated under section 4 of the Act was complete and

valid in law, in favour of the Deputy Commissioner. No other officer could

act as the “proper officer” to initiate, conduct and/or conclude the

adjudication proceedings in the case of the petitioner, for the tax

period/Financial Year 2018-19. The decisions cited by learned counsel for

the petitioner are wholly distinguishable. In those cases, the issue had

arisen in a different statutory and fact context.

5.Having heard learned counsel for the parties and having perused the

record, by the impugned order, the inward supply received by the

petitioner against ten (10) invoices has been disbelieved. The ITC claim of

Rs. 2,92,500/- each, made under the Act and the Central Goods and

Service Tax Act, 2017 (hereinafter referred to as the 'Central Act') has been

rejected. Accordingly, penalty has been imposed.

6.Before proceeding further, it may be relevant to notice certain

provisions of the Act. Section 2 of the Act defines various words, terms

and, phrases used in the Act. Thus, the term “Commissioner” has been

defined in section 2 (24) of the Act. It reads:

“(24) “Commissioner” means the Commissioner of State tax

appointed under section 3 and includes the Chief Commissioner,

Principal Commissioner, Special Commissioner or Additional

Commissioner of State tax appointed under section 3;”

7.Similarly, section 2(91) of the Act defines the term “proper officer”.

It reads:

“(91) “proper officer” in relation to any function to be

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performed under this Act, means the Commissioner or the officer of

the State tax who is assigned that function by the Commissioner;”

8.Section 2(104) of the Act defines the term “State tax”. It reads:-

“104. “State tax” means the tax levied under this Act;”

9.Then sections, 3, 4, 5 and 6 of the Act, read as below:

“Section 3. Officer under this Act.-

The Government shall, by notification, appoint the following classes of

officers for the purposes of this Act, namely:-

(a) Principal Commissioner, Chief Commissioner or Commissioner of

State tax

(b) Special Commissioners of State tax,

(c) Additional Commissioners of State tax,

(d) Joint Commissioners of State tax,

(e) Deputy Commissioners of State tax,

(f) Assistant Commissioners of State tax,

(g) State tax officers, and

(h) any other class of officers as it may deem fit:

PROVIDED that, the officers appointed under the Uttar Pradesh

Value Added Tax Act, 2008 (U.P. Act No. 5 of 2008) shall be deemed to be the

officers appointed under the provisions of this Act.”

“Section 4. Appointment of officers.-

(1) The Government may, in addition to the officers as may be notified

under section 3, appoint such persons as it may think fit to be the officers

under this Act.

(2) The Commissioner shall have jurisdiction over the whole of the State,

the Special Commissioner and an Additional Commissioner in respect of

all or any of the functions assigned to them, shall have jurisdiction over

the whole of the State or where the State Government so directs, over any

local area thereof, and all other officers shall, subject to such conditions

as may be specified, have jurisdiction over the whole of the State or over

such local areas as the Commissioner may, by order, specify.”

Section 5. Powers of officer.-

(1) Subject to such conditions and limitations as the Commissioner may

impose, an officer of State tax may exercise the powers and discharge the

duties conferred or imposed on him under this Act.

(2) An officer of State tax may exercise the powers and discharge the

duties conferred or imposed under this Act on any other officer of State

tax who is subordinate to him.

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(3) The Commissioner may, subject to such conditions and limitations as

may be specified in this behalf by him, delegate his powers to any other

officer who is subordinate to him.

(4) Notwithstanding anything contained in this section, an Appellate

Authority shall not exercise the powers and discharge the duties

conferred or imposed on any other officer of State tax.

Section 6. Authorisation of officers of central tax as proper officer in

certain circumstances.-

(1) Without prejudice to the provisions of this Act, the officers appointed

under the Central Goods and Services Tax Act, 2017 (Act No. 12 of 2017)

are authorised to be the proper officers for the purposes of this Act,

subject to such conditions as the Government shall, on the

recommendations of the Council, by notification, specify.

(2) Subject to the conditions specified in the notification issued under

sub- section (1),-

(a) where any proper officer issues an order under this Act, he shall also

issue an order under the Central Goods and Services Tax Act 2017 (Act

No. 12 of 2017), as authorised by the said Act under intimation to the

jurisdictional officer of central tax;

(b) where a proper officer under the Central Goods and Services Tax Act,

2017 (Act No. 12 of 2017) 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.

(3) Any proceedings for rectification, appeal and revision, wherever

applicable, of any order passed by an officer appointed under this Act,

shall not lie before an officer appointed under the Central Goods and

Services Tax Act, 2017 (Act No. 12 of 2017).

10.Also, Section 74 of the Act, under which impugned proceedings

were drawn and concluded, reads as under:

“Section 74.-Determination of tax not paid or short paid or erroneously

refunded or input tax credit wrongly availed or utilised by reason of

fraud or any wilful misstatement or suppression of facts

(1) Where it appears to the proper officer that any tax has not been paid

or short paid or erroneously refunded or where input tax credit has been

wrongly availed or utilised by reason of fraud, or any wilful misstatement

or suppression of facts to evade tax, he shall serve notice on the person

chargeable with tax which has not been so paid or which has been so

short paid or to whom the refund has erroneously been made, or who has

wrongly availed or utilised input tax credit, requiring him to show cause

as to why he should not pay the amount specified in the notice along with

interest payable thereon under section 50 and a penalty equivalent to the

tax specified in the notice.

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(2) The proper officer shall issue the notice under sub-section (1) at least

six months prior to the time limit specified in sub-section (10) for

issuance of order.

(3) Where a notice has been issued for any period under sub-section (1),

the proper officer may serve a statement, containing the details of tax not

paid or short paid or erroneously refunded or input tax credit wrongly

availed or utilised for such periods other than those covered under sub-

section (1), on the person chargeable with tax.

(4) The service of statement under sub-section (3) shall be deemed to be

service of notice under sub-section (1) of section 73, subject to the

condition that the grounds relied upon in the said statement, except the

ground of fraud, or any wilful misstatement or suppression of facts to

evade tax, for periods other than those covered under sub-section (1) are

the same as are mentioned in the earlier notice.

(5) The person chargeable with tax may, before service of notice under

sub- section (1), pay the amount of tax along with interest payable under

section 50 and a penalty equivalent to fifteen per cent. of such tax on the

basis of his own ascertainment of such tax or the tax as ascertained by

the proper officer and inform the proper officer in writing of such

payment.

(6) The proper officer, on receipt of such information, shall not serve any

notice under sub-section (1), in respect of the tax so paid or any penalty

payable under the provisions of this Act or the rules made there under.

(7) Where the proper officer is of the opinion that the amount paid under

sub- section (5) falls short of the amount actually payable, he shall

proceed to issue the notice as provided for in sub-section (1) in respect of

such amount which falls short of the amount actually payable.

(8) Where any person chargeable with tax under subsection (1)pays the

said tax along with interest payable under section 50 and a penalty

equivalent to twenty five per cent. of such tax within thirty days of issue

of the notice, all proceedings in respect of the said notice shall be deemed

to be concluded.

(9) The proper officer shall, after considering the representation, if any,

made by the person chargeable with tax, determine the amount of tax,

interest and penalty due from such person and issue an order.

(10) The proper officer shall issue the order under sub-section (9) within

a period of five years from the due date for furnishing of annual return

for the financial year to which the tax not paid or short paid or input tax

credit wrongly availed or utilised relates to or within five years from the

date of erroneous refund.

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(11) Where any person served with an order issued under sub-section (9)

pays the tax along with interest payable thereon under section 50 and a

penalty equivalent to fifty per cent. of such tax within thirty days of

communication of the order, all proceedings in respect of the said notice

shall be deemed to be concluded.

Explanation 1.- For the purposes of section 73 and this section,-

(i) the expression “all proceedings in respect of the said notice” shall not

include proceedings under section 132;

(ii) where the notice under the same proceedings is issued to the main

person liable to pay tax and some other persons, and such proceedings

against the main person have been concluded under section 73 or section

74, the proceedings against all the persons liable to pay penalty under

sections 122, 125, 129 and 130 are deemed to be concluded.

Explanation 2.- For the purposes of this Act, the expression suppression

shall mean non-declaration of facts or information which a taxable

person is required to declare in the return, statement, report or any other

document furnished under this Act or the rules made thereunder, or

failure to furnish any information on being asked for, in writing, by the

proper officer.”

11.By virtue of section 74 (1) of the Act, a “proper officer” alone, may

issue a notice requiring any “person chargeable with tax”, to show cause

as to the subject matter of that proceeding. Again, by virtue of section 74

(9) of the Act, it is the “proper officer” alone, who may consider the reply

that may be submitted by the concerned “person chargeable with tax” and,

determine the amount of tax, interest or penalty due upon such person.

Therefore, it necessarily flows from section 74 of the Act, other than a

“proper officer” no other authority under the Act may pass such an order.

12.As to the description of a “proper officer”, by virtue of section 2(91)

of the Act it has to be either the “Commissioner” himself and/or the officer

of the “State tax”, who may have been assigned that function by the

Commissioner. Here, there is no dispute between the parties that the Office

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Orders dated 01.07.2017 and 19.11.2018 were issued by the

“Commissioner” as defined under section 2(91) of the Act. Its effect will

be examined a little later.

13.Thus, there would be no dispute between the parties, if the

“Commissioner” had himself issued the notice or passed the order giving

rise to the present petition. The issues that arise are whether there is any

function assignment/sub-delegation made in favour of the Deputy

Commissioner, with reference to section 74 of the Act and, whether the

assignment made, if any, validly confers jurisdiction on the Deputy

Commissioner.

14.Then, different provisions of the Act exist for different purposes.

section 3 of the Act defines the “classes of officers”, who may be

appointed under the Act. That provision does not create any function

assignment or sub-delegation in favour of any class of officers and it does

not define the function jurisdiction of any class of officers. However, it

does create a fiction of law. Thus, under the proviso thereto it includes, on

deemed basis, all officers appointed under the U.P. Value Added Tax Act,

2008, to be officers appointed under the Act. At the same time, no

jurisdiction or function assignment has been created or sub-delegated in

favour of such officers or class of officers.

15.Then, section 4(1) of the Act, empowers the State Government to

appoint a person as an officer under the Act, in addition to the class of

officers specified under section 3 of the Act. Since, the Deputy

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Commissioner is an officer falling under the proviso to section 3 of the

Act, section 4(1) of the Act has no relevance to the present controversy.

Insofar as section 4(2) of the Act is concerned, it first specifies the

territorial limits of the jurisdiction of the “Commissioner”, the “Additional

Commissioner” and the “Special Commissioner”. The Commissioner has

been vested with territorial jurisdiction over the entire State. Second, the

Special Commissioner and the Additional Commissioner, would also have

jurisdiction over the whole of the State of Uttar Pradesh so however, they

may exercise that jurisdiction with respect to all or any of the functions

that may be “assigned”/sub-delegated to them and where State

Government so directs such jurisdiction may be exercised over any local

area of the State. Crucially, by way of the third part of section 4 (2) of the

Act, all other officers i.e. officers subordinate to the rank of Special

Commissioner and Additional Commissioner shall have jurisdiction over

the whole of the State or over such local area as the Commissioner may by

order specify. Thus, so far as the respondent-Deputy Commissioner is

concerned, his territorial jurisdiction would arise under the third part of

section 4(2) of the Act, by an order of the Commissioner and subject to

conditions as may be specified by the Commissioner.

16.In view of the Office Orders dated 01.07.2017 and 19.11.2018, there

is no dispute raised in this petition to territorial jurisdiction of the

respondent-Deputy Commissioner. The dispute is confined to the function

assignment/sub-delegation if any, made in his favour. Prima-facie, section

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4(2) of the Act does not appear to directly deal with function

assignment/sub-delegation or creation of subject matter jurisdiction of the

Deputy Commissioner or any other authority. That provision speaks of but

does not itself provide for or specify/sub-delegate function jurisdiction in

favour of any officer under the Act.

17.Clause 1 of the Office Order dated 01.07.2017 first refers to and

provides that jurisdiction specification on the following terms:

Þ1& m0iz0 eky ,oa lsok dj vf/kfu;e 2017 ¼m0iz0 vf/kfu;e la[;k

1 lu~ 2017½ dh fofHkUu /kkjkvksa esa mfYyf[kr d`R; ds laca/k esa mfpr

vf/kdkjh ¼Proper Officer½ ukfer djus ds mn~ns'; ls vf/kfu;e dh

/kkjk 2 ¼91½ rFkk /kkjk 4¼2½ esa iznRr 'kfDr;ksa dk iz;ksx djrs gq, eSa]

vk;qDr] jkT; dj] mRrj izns'k jkT; ds vUrxZr jkT; dj [k.Mksa ds

vf/k{ks= dh HkkSxksfyd lhekvksa dks bl ifji= ds vuqyXud **d** ds

vuqlkj] jkT; dj ds e.Myksa dh HkkSxksfyd lhek bl ifji= ds

vuqyXud **[k** ds vuqlkj] jkT; dj ds lEHkkx ,oa tksau dh

HkkSxksfyd lhek bl ifji= ds vuqyXud **x** ds vuqlkj vo/kkfjr

djrk gw¡Aß

18.Insofar as section 5(3) of the Act is concerned, learned counsel for

the petitioner has vehemently urged, unless the Commissioner first sub-

delegates his specified powers, no function jurisdiction may arise in favour

of the respondent-Deputy Commissioner. Thus, it is her submission,

originally, all function jurisdiction vest in the Commissioner. He may sub-

delegate the same to other officers by specific orders. In absence of any

order issued under section 5(3) of the Act, the Deputy Commissioner

never acquired function jurisdiction under Section 74 of the Act.

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19.On a plain reading of section 5(3) of the Act, we find, the

Commissioner has been granted a general power to sub-delegate all or any

of his powers/functions to any other officer who may be subordinate to

him. It would include within its plain ambit, the sub-delegation of function

jurisdiction or the power to act as the “proper officer”, to adjudicate a

dispute under section 74 of the Act.

20.In absence of any other procedure or manner being prescribed under

the Act to effectuate or create that sub-delegation or to create that function

assignment, and in face of the powers vested in the “Commissioner” under

section 4(2) and 5(3) of the Act, we may test the true purport and scope of

the Office Orders dated 01.01.2017 and 19.11.2018 to determine if such

sub-delegation of power or necessary function assignment had been made,

in accordance with law.

21.Clearly, the respondent-Deputy Commissioner is an officer of the

“State tax” in view of the language of the proviso to section 3 of the Act.

Even otherwise, there is no dispute to that, in the present petition. From a

plain reading of section 2(91) of the Act the sub-delegation of function

assignment is to be made by the Commissioner. Here, clearly, the

“Commissioner” had himself issued the Office Orders dated 01.07.2017

and 19.11.2018. Paragraph 2 of the office order dated 01.07.2017 reads as

below:-

Þ2& m0iz0 eky ,oa lsok dj vf/kfu;e 2017 ¼m0iz0 vf/kfu;e

la[;k 1 lu~ 2017½ dh /kkjk 2 ¼91½ esa iznRr 'kfDr;ksa dk iz;ksx djrs

gq, eSa] vk;qDr] jkT; dj] mRrj izns'k] mDr vf/kfu;e dh fofHkUu

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/kkjkvksa ds LrEHk esa uhps vafdr rkfydk ds LrEHk 2 esa vafdr

vf/kdkfj;ksa dks muds lEeq[k LrEHk 3 esa vafdr vf/kfu;e dh /kkjkvksa

ds iz;kstu gsrq mfpr vf/kdkjh (Proper Officer) ukfer djrk gw¡%&

Ø0

la0

vf/kdkjh dk inuke m0iz0 eky ,oa lsok dj vf/kfu;e

2017 ¼m0iz0 vf/kfu;e la[;k 1 lu~

2017½

11- [k.M esa rSukr jkT; dj ds mi

vk;qDr

2- [k.M esa rSukr jkT; dj ds lgk;d

vk;qDr

3- [k.M esa rSukr jkT; dj vf/kdkjh

10] 35] 54] 61] 62] 63] 64] 65] 66]

67¼11½] 68] 70] 73] 74] 75] 76] 78]

79] 81] 123] 126] 127] 129] 130]

142

21- [k.M esa rSukr jkT; dj ds mi

vk;qDr

2- [k.M esa rSukr jkT; dj ds lgk;d

vk;qDr

25] 27] 28] 30] 60

3Tksu esa rSukr la;qDr vk;qDr dkjiksjsV

lfdZy

28] 29] 30] 60] 35] 54] 61] 62] 63]

64] 65] 66] 67¼11½] 68] 70] 71] 73]

74] 75] 76] 78] 79] 81] 123] 129]

127] 129] 130] 142

41- fo0vuq0'kk0 bdkbZ esa rSukr jkT;

dj ds mi vk;qDr

2- fo0vuq0'kk0 bdkbZ esa rSukr jkT;

dj ds lgk;d vk;qDr

3- fo0vuq0'kk0 bdkbZ esa rSukr jkT;

dj vf/kdkjh

68] 70] 126] 127] 129] 130

51- tksu esa rSukr jkT; dj ds la;qDr

vk;qDr ¼VSDl vkfMV½

2- tksu esa rSukr jkT; dj ds mi

vk;qDr ¼VSDl vkfMV½

3- tksu esa rSukr jkT; dj ds lgk;d

vk;qDr ¼VSDl vkfMV½

65] 66

61- lEHkkx esa rSukr jkT; dj ds la;qDr

vk;qDr ¼dk;Zikyd½

2- lEHkkx esa rSukr jkT; dj ds la;qDr

vk;qDr ¼fo0vuq0'kk0½

67] 68] 70] 71] 72

71- lpyny esa rSukr jkT; dj ds mi

vk;qDr

2- lpyny esa rSukr jkT; dj ds

lgk;d vk;qDr

3- lpyny esa rSukr jkT; dj

vf/kdkjh

67¼11½] 68] 70] 126] 127] 129] 130

22.Doubts, if any, to any as to overlapping jurisdictions (amongst the

sub-delegates) came to an end upon issuance of the subsequent Office

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Order dated 19.11.2018. Therein, the pecuniary jurisdiction was dissected

and distributed, exclusively, amongst the officers of the rank of

Commissioner Tax Officer, Assistant Commissioner and Deputy

Commissioner. The relevant part of that Office Order reads as below:-

Þ1- fMIVh dfe’uj ¼mik;qDr½& 50 yk[k ls vf/kd dj;ksX; foØ;/ku

okys fuekZrk bdkbZ rFkk 1 djksM- ls vf/kd dj;ksX; fcØh djus okyh

VªsfMax bZdkb;k¡A

2- vflLVsaV dfe’uj ¼lgk;d vk;qDr½& 15 yk[k ls 50 yk[k rd

dj;ksX; foØ;/ku okyh fuekZrk bZdkb;k¡ rFkk 25 yk[k ls 1 djksM-

rd dj;ksX; fcØh djus okyh VªsfMax bZdkb;k¡A

3- okf.kT; dj vf/kdkjh ¼jkT; dj vf/kdkjh½& 15 yk[k rd dj;ksX;

fo;/ku fuekZrk bZdkb;k¡ rFkk 25 yk[k rd dj;ksX; fcØh djus okyh

VªsfMax bZdkb;k¡Aß

23.The function-jurisdiction that have been sub-delegated and thus

assigned to the officers falling in the class of officers-Deputy

Commissioner, Assistant Commissioner and the Commerical Tax Officer

are clearly mentioned in Column-3 of the chart below paragraph 2 of the

Office Order dated 01.07.2017 (quoted above). Thereby, the function-

jurisdiction of adjudication under Section 74 has been assigned to the

officers of the above mentioned three classes (specified under Section 3).

The pecuniary jurisdiction of each of the three class of officers namely,

Commercial Tax Officer, Assistant Commissioner and Deputy

Commissioner has been delineated by the subsequent Office Order dated

19.11.2018. Thus, there is no overlapping jurisdiction. Both, pecuniary

and territorial jurisdiction are clearly demarcated and visible.

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24.Then section 5(3) is the source of the power to sub-delegate the

function-jurisdiction vested in the Commissioner, to be exercised in favour

of any officer subordinate to him. Neither there exists any procedure or

stipulation prescribed by law with respect to the mode or the manner in

which that power to sub-delegate may be exercised nor the Commissioner

was required to obtain any approval of the State Government in that regard

nor there exists any requirement in law prescribing issuance of a

notification etc. to evidence a valid sub-delegation made under section

5(3) of the Act.

25.Therefore, the fact, composite Office Orders 01.07.2017 and

19.11.2018 were issued by the Commissioner, makes no difference to the

validity of the power exercised. Non-recital of section 5(3) of the Act in

either of those orders is inconsequential and even extraneous to the valid

exercise of power made by the Commissioner. The power was admittedly

existing and it is seen to have been exercised. It is not shown to have been

exercised in contravention of any statutory provision or principle of law.

Hence, the validity of the power exercised would remain by established

firm and undoubted.

26.Section 5(3) of the Act provides the source of power to be exercised

by the Commissioner for the purpose of section 4 read with section 2(91)

of the Act. As noted above, the power under section 5(3) of the Act is a

general power of sub-delegation vested in the Commissioner, by the

legislature. Once that power is shown to exist and the same is seen to have

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been exercised, no fetters may be searched and attached to the exercise of

that power and no challenge may arise thereto, de hors the statutory

scheme, to defeat that exercise of power.

27.It is not the requirement of law that the source of power must

necessarily be recited in the order passed in exercise of that power to

validate the power exercised. It is enough that the source of power existed

and it was exercised in the manner prescribed by law. Its recital in the

order passed in exercise of that power would not lend or add to the

legitimacy of the power exercised. It is not a spell that may cause a

magical effect only upon its incantation in a ritualisticaly correct manner.

28.As to the further submission advanced by learned counsel for the

petitioner on the strength of section 6 of the Act, we find, the same is

misconceived. It has no applicability to the present facts. That provision

would apply only to officers appointed under the Central Act. Those

officers may act as “proper officer” under the Act subject to conditions as

the State Government may notify in that regard, and not otherwise.

29.Thus, the statutory scheme appears to be - the legislature has first

recognised the Commissioner as the “proper officer” for all fuctions under

the Act. It also recognises the classes of officers who may be appointed

officers under the Act. Further, officers of the UP VAT Act have been

recognised as officers under the Act, on deemed basis. As to the officers of

the Central Government, the State Government has been delegated the

power (under section 4(1) of the Act) to appoint them officers under the

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Act. Second as to the functions to be performed by various officers under

the Act, the Commissioner may sub-delegate absolutely, any functions to

an officer of “State tax” [as defined under section 2(104) of the Act]. On

the contrary, an officer of the Central Government may not be sub-

delegated such powers generally. He may be sub-delegated that power and

he may act as a “proper officer” subject to the conditions as the State

Government may by notification (under section 6 of the Act), specify, in

that regard.

30.Insofar as the present respondent-Deputy Commissioner is an officer

under section 3 of the Act, section 6 of the Act has no application. Only

with respect to officers appointed under the Central Act, the exercise of

jurisdiction would be circumscribed by a notification that would have to

be first issued by the State Government, before such jurisdiction may be

created in their favour. Upon clear language of the provisions of the Act,

the officers appointed under the Act would continue to be governed by the

provisions of sections 3 and 4 read with section 2(91) of the Act and the

general orders issued by the “Commissioner” in that regard, issued with

reference to the power exercised under section 5 of the Act.

31.Hence, the decision relied upon by learned counsel for the petitioner

are found to be wholly distinguishable. In Commissioner of Customs Vs.

Syed Ali and Others (Supra), two conflicting orders of the Tribunal

existed. In the first set, the Customs, Excise and Gold (Control) Appellate

Tribunal had reasoned, the Commissioner of Customs (Preventive),

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Mumbai was not a “proper officer” under Section 2(34) of the Customs

Act, 1962. In the second set, a contrary view had been expressed by the

Central Excise and Service Tax Appellate Tribunal. Both sets of orders of

the Tribunal came to be examined by the Supreme Court in that decision.

Dealing with the same and after taking notice of the provision of section

28 of the Customs Act, 1962 (hereinafter referred to as the Customs Act);

the definition of “proper officer” given under section 2(34) of the Customs

Act and, after taking note of the fact that the Collector of Customs,

(Preventive) had not been assigned any function under section 28 of the

Act it was held, the adjudication order passed by the Collector Customs

(Preventive) lacked inherent jurisdiction.

32.Relevant to our discussion, in paragraph nos. 20, 21 and 24 of the

report, it was held as under:-

“20. From a conjoint reading of Sections 2(34) and 28 of the Act, it

is manifest that only such a Customs Officer who has been assigned

the specific functions of assessment and reassessment of duty in the

jurisdictional area where the import concerned has been affected, by

either the Board or the Commissioner of Customs, in terms of

Section 2(34) of the Act is competent to issue notice under Section

28 of the Act. Any other reading of Section 28 would render the

provisions of Section 2(34) of the Act otiose inasmuch as the test

contemplated under Section 2(34) of the Act is that of specific

conferment of such functions.

21. Moreover, if the Revenue’s contention that once territorial

jurisdiction is conferred, the Collector of Customs (Preventive)

becomes a “proper officer” in terms of Section 28 of the Act is

18

accepted, it would lead to a situation of utter chaos and confusion,

as much as all officers of Customs in a particular area be it under

the Collectorate of Customs (Imports) or the Preventive

Collectorate, would be “proper officer”. In our view, therefore, it is

only the officers of Customs, who are assigned the function of

assessment, which of course, would include reassessment, working

under jurisdictional Collectorate within whose jurisdiction the bills

of entry or baggage declarations had been filed and the

consignments had been cleared for home consumption, will have the

jurisdiction to issue notice under Section 28 of the Act.

24. Nothing has been brought on record to show that the Collector

of Customs (Preventive), who had issued the show cause notices was

assigned the functions under Section 28 of the Act as “proper

officer” either by the Board or the Collector/Commissioner of

Customs. We are convinced that Notifications Nos. 250-Cus. and

251 Cus., both dated 27.8.1983, issued by the Central Government

in exercise of the powers conferred by sub-section (1) of the Section

4 of the Act, appointing Collector of Customs (Preventive), etc. to be

the Collector of Customs for Bombay, Thane and Kolaba Districts in

the State of Maharashtra did not ipso facto confer jurisdiction on

him to exercise power entrusted to the “proper officers’ for the

purpose of Section 28 of the Act.”

(emphasis supplied)

33.Then in Canon India (Supra), a question arose whether the

Additional Director General, Revenue Intelligence had the authority to

issue a Show Cause Notice under section 28(4) of the Customs Act, 1962.

After taking note of the provisions of section 28(4) read with section 2(34)

and section 6 of the Customs Act, 1962, the Supreme Court reasoned, the

Additional Director General, Revenue Intelligence was not a “proper

19

officer”. In reaching that conclusion, the Supreme Court observed in

paragraph nos. 13, 15, 16, 18, 19, 20 and 21 of the report as under:-

“13. Where the statute confers the same power to perform an act on

different officers, as in this case, the two officers, especially when

they belong to different departments, cannot exercise their powers in

the same case. Where one officer has exercised his powers of

assessment, the power to order re-assessment must also be exercised

by the same officer or his successor and not by another officer of

another department though he is designated to be an officer of the

same rank. In our view, this would result into an anarchical and

unruly operation of a statute which is not contemplated by any

canon of construction of statute.

15. It is obvious that the re-assessment and recovery of duties i.e.

contemplated by Section 28(4) is by the same authority and not by

any superior authority such as Appellate or Revisional Authority. It

is, therefore, clear to us that the Additional Director General of DRI

was not “the” proper officer to exercise the power under Section

28(4) and the initiation of the recovery proceedings in the present

case is without any jurisdiction and liable to be set aside.

16. At this stage, we must also examine whether the Additional

Director General of the DRI who issued the recovery notice unde r

Section 28(4) was even a proper officer. The Additional Director

General can be considered to be a proper officer only if it is shown

that he was a Customs officer under the Customs Act. In addition,

that he was entrusted with the functions of the proper officer under

Section 6 of the Customs Act. The Additional Director General of

the DRI can be considered to be a Customs officer only if he is

shown to have been appointed as Customs officer under the Customs

Act.

18.The next step is to see whether an Additional Director General

20

of the DRI who has been appointed as an officer of Customs, under

the notification dated 7.3.2002, has been entrusted with the

functions under Section 28 as a proper officer under the Customs

Act. In support of the contention that he has been so entrusted with

the functions of a proper officer under Section 28 of the Customs

Act, Shri Sanjay Jain, learned Additional Solicitor General relied on

a Notification No.40/2012 dated 2.5.2012 issued by the Central

Board of Excise and Customs. The notification confers various

functions referred to in Column (3) of the notification under the

Customs Act on officers referred to in Column (2). The relevant part

of the notification reads as follows:-

“[To be published in the Gazette of India, Extraordinary, Part II,

Section 3 Sub-section (ii)] Government of India Ministry of Finance

(Department of Revenue) Notification No.40/2012-Customs (N.T.)

New Delhi, dated the 2nd May, 2012 S.O. (E). – In exercise of the

powers conferred by sub-section (34) of Section 2 of the Customs

Act, 1962 (52 of 1962), the Central Board of Excise and Customs,

hereby assigns the officers and above the rank of officers mentioned

in Column (2) of the Table below, the functions as the proper officers

in relation to the various sections of the Customs Act, 1962, given in

the corresponding entry in Column (3) of the said Table: -

Sl.

No.

Designation of the officersFunctions under Section of the

Customs Act, 1962

1 2 3

1 Commissioner of Customs (i) Section 33

2 Additional Commissioner

or Joint Commissioner of

Customs

(i) Sub-section (5) of Section

46; and

(ii) Section 149

3 Deputy Commissioner or

Assistant Commissioner of

Customs and Central

Excise

(i) ..

(ii)..

(iii)..

(iv)..

(v)..

(vi) Section28;

21

19. It appears that a Deputy Commissioner or Assistant

Commissioner of Customs has been entrusted with the

functions under Section 28, vide Sl. No.3 above. By reason of

the fact that the functions are assigned to officers referred to

in Column (3) and those officers above the rank of officers

mentioned in Column (2), the Commissioner of Customs would

be included as an officer entitled to perform the function

under Section 28 of the Act conferred on a Deputy

Commissioner or Assistant Commissioner but the notification

appears to be ill-founded. The notification is purported to

have been issued in exercise of powers under sub-Section (34)

of Section 2 of the Customs Act. This section does not confer

any powers on any authority to entrust any functions to

officers. The sub-Section is part of the definitions clause of the

Act, it merely defines a proper officer, it reads as follows:-

“2. Definitions – In this Act, unless the context otherwise

requires, -

… (34) ‘proper officer’, in relation to any functions to be

performed under this Act, means the officer of customs who is

assigned those functions by the Board or the [Principal

Commissioner of Customs or Commissioner of Customs]. “

20. Section 6 is the only Section which provides for entrustment of

functions of Customs officer on other officers of the Central or the

State Government or local authority, it reads as follows:-

“ 6. Entrustment of functions of Board and customs officers on

certain other officers – The Central Government may, by

notification in the Official Gazette, entrust either conditionally

or unconditionally to any officer of the Central or the State

22

Government or a local authority any functions of the Board or

any officer of customs under this Act.

21. If it was intended that officers of the Directorate of Revenue

Intelligence who are officers of Central Government should be

entrusted with functions of the Customs officers, it was imperative

that the Central Government should have done so in exercise of its

power under Section 6 of the Act. The reason why such a power is

conferred on the Central Government is obvious and that is because

the Central Government is the authority which appoints both the

officers of the Directorate of Revenue Intelligence which is set up

under the Notification dated 04.12.1957 issued by the Ministry of

Finance and Customs officers who, till 11.5.2002, were appointed by

the Central Government. The notification which purports to entrust

functions as proper officer under the Customs Act has been issued

by the Central Board of Excise and Customs in exercise of non-

existing power under Section 2 (34) of the Customs Act. The

notification is obviously invalid having been issued by an authority

which had no power to do so in purported exercise of powers under

a section which does not confer any such power.

(emphasis supplied)

34.Thus, at the surface it appears, the Supreme Court had principally

reasoned, unless there existed a specific exercise of power made by the

competent authority to assign the function of adjudication, no function

jurisdiction could have been assigned/sub-delegated in favour of the

Commissioner of Customs (Preventive) or the Additional Director

General, Directorate of Revenue Intelligence. At the same time, it cannot

be accepted as the true reasoning of the aforesaid decisions. In fact, in

23

those decisions issue had arisen whether the Commissioner of Customs

(Preventive)/Additional Director General, Directorate of Revenue

Intelligence were officers falling within the class of Officers of Customs

defined under section 3 of the Customs Act and whether there was any

notification issued under section 6 of the Customs Act assigning any

function to those officers.

35.Section 3 of the Customs Act reads as under:

“3. Classes of officers of customs.- There shall be the following

classes of officers of customs, namely:-

(a) Principal Chief Commissioners of Customs;

(b) Chief Commissioners of Customs;

(c) Principal Commissioners of Customs;

(d) Commissioner of Customs;

(e) Commissioners of Customs (Appeals);

(f) Joint Commissioners of Customs;

(g) Deputy Commissioners of Customs;

(h) Assistant Commissioners of Customs;

(i) such other class of officers of customs as may be appointed for

the purposes of this Act.”

36.Though any officer other than the person of the Customs could be

appointed as a Custom Officer by virtue of section 4 of the Customs Act,

such an officer could not hold any function jurisdiction in his favour

unless a specific entrustment/sub-delegation were first made in his favour

by issuance of a notification under section 6 of that Act. Therefore, the

Commissioner of Customs (Preventive) and the Additional Director

General, Directorate of Revenue Intelligence though became Customs

24

Officers by virtue of Notification dated 02.05.2012 read with earlier

Notification dated 07.03.2002 yet, in the absence of any further

notification issued under section 6, (it was reasoned), they could not act as

a “proper officer” to adjudicate a dispute under section 28 of the Customs

Act, 1962.

37.Similarly, in the context of the Act, any officer of the Central

Government who may become an officer under Act by virtue of his

appointment thus made, under section 4(1) of the Act, would remain

dependent on a further notification that may be issued under section 6 of

the Act, regarding function assignment/sub-delegation made in his favour,

by the State Government, before he may act as a “proper officer”, under

Act. However, that requirement and condition of law would not attach to

an officer of the “State tax”. As noted above, undisputedly, the respondent-

Deputy Commissioner is an officer of the State Tax whose function

assignment has been made in terms of section 2(91) read with sections

4(2) and 5(3) of the Act, by virtue of Office Order dated 01.07.2017 read

with further Office Order dated 19.11.2018.

38.Thus, similar to the two methods of function assignment/delegation

prescribed under the Customs Act, under the Act as well, there exist two

different methods to create function assignment/delegation in favour of

officers of “State tax” and officers of “Central tax” (i.e. officers appointed

under Central Act). As noted above, function assignment/jurisdiction in

favour of officers of the “State tax” may be created by the

25

“Commissioner” by issuing an order/communication in exercise of his

powers of sub-delegation vested under section 5(3) of the Act. However,

function assignment/jurisdiction in favour of the officers of the Central

Act, may be created and such officers may act as “proper officer” subject

to conditions as may be notified by the State Government which alone has

the power to cause the sub-delegation in favour of those officers. Under

section 5 of the Customs Act, the Board may authorise any officer of

Customs to exercise the powers under that Act. Yet, any other officer of

the State or the Central Government or a local authority may be entrusted

any power, (under that enactment), either of the Board or any officer of the

Customs, as may be notified by the Central Government and, not

otherwise.

39.The Commissioner of Customs (Preventive), Mumbai [in the case

of Commissioner of Customs Vs. Syed Ali & others (Supra)] and the

Additional Director, Directorate of Revenue Intelligence [in the case of

Canon India (Supra)] were not officers of Customs (under section 5 of

the Customs Act), in the first place. Hence, though appointed (clearly with

reference to section 4 of the Act, no function came to be entrusted to them

under the Customs Act, in absence of any sub-delegation made in their

favour by a further notification under section 6 of that Act. That analogy

and reasoning would arise and apply (in the context of the Act), to officers

of the “Central tax”, only. It would not apply to functioning of officers of

the “State tax” who may draw their function-jurisdiction from simple sub-

26

delegation under an administrative order issued by the “Commissioner”

with reference to his powers to sub-delegate granted under section 5 of the

Act, without any gazette notification of such order.

40.Thus no defect exists in the exercise of power made by the Deputy

Commissioner. The challenge raised in the present petition thus fails.

Accordingly, the writ petition is dismissed. No order as to costs.

41.It is left open to the petitioner to test the merits of the impugned

order dated 07.08.2021 before the statutory forum of appeal, if that cause

exists. Such appeal, if any, may be filed within a period of four weeks

from today. If filed within time granted, the same may be heard and

decided on its own merits without any objection to its limitation.

Order Date :- 15.11.2021

Sazia/Saurabh