Officers of Directorate General of GST Intelligence Duly Empowered to Issue Show Cause Notices: Kerala High Court Dismisses Writ Petitions Challenging Jurisdiction

In a significant judgment, the High Court of Kerala at Ernakulam, presided by Justice Dinesh Kumar Singh, dismissed the writ petitions filed by Asianet Digital Network Pvt Ltd, challenging the show cause notices issued by the Directorate General of GST Intelligence (DGGI) for alleged tax liabilities under the CGST and Service Tax laws.

The core issue addressed was the jurisdiction and authority of the officers of the Directorate General of GST Intelligence to issue show cause notices under the Central Goods and Services Tax Act, 2017, and the Finance Act, 1994. The petitioner argued that these notices were issued without jurisdiction, as they did not originate from the Central Excise Officer under whose jurisdiction the petitioner fell.

The petitioner, a Multi System Operator (MSO) registered for service tax, contested the calculation of tax liabilities on amounts collected from subscribers through local cable operators (LCOs). It was alleged by the DGGI that Asianet had underreported its taxable revenue by not including the amounts retained by LCOs.

Empowerment of DGGI Officers: The court observed that officers of the Directorate General of GST Intelligence are duly empowered under various notifications and circulars to issue such notices, thus rejecting the petitioner’s contention on jurisdictional grounds. [Paras 28-28.8]

Writ against Show Cause Notices: It was held that writ jurisdiction should not interfere with show cause notices unless they are devoid of jurisdiction, violate the law, or challenge the vires of an Act. The court found the notices to be legally sound. [Paras 29-31]

Rejection of Limitation Argument: The petitioner’s argument that the notices were barred by limitation was dismissed, with the court noting that this is a matter to be determined post-assessment. [Para 31]

On Audit and Tax Liability: The court considered the petitioner’s past audits and observed that the determination of tax liability, especially post-implementation of Digital Addressable Systems, was a complex issue that warranted detailed assessment. [Paras 27, 31]

Decision The court dismissed the writ petitions, emphasizing that the petitioner should pursue remedies under the Finance Act and allow the administrative process to assess the alleged discrepancies.

Date of Decision: 8^th April 2024

Asianet Digital Network Pvt Ltd v. Union of India and Others