GST officials can initiate action on omissions and commissions by an SEZ unit - Gujarat HC

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In a very important development, the Gujarat High Court has ruled that *officials of GST department can initiate proceedings against a unit situated in the Special Economic Zone (SEZ)*. 


Infact it has also imposed a penalty on the unit for not cooperating with the process initiated by the Goods and Service Tax department.

The court in its judgement held a view that GST authorities are empowered to carry out proceedings in SEZ a division while dismissing a petition filed by RHC Global Exports Private Ltd.

Further, the Honourable High Court also held GST- Tax Department’s jurisdiction is unquestionable as the Central Government has already authorised those officers by virtue of a notification dated August 5, 2016. 

Further, provision under the State GST law indicates that where any proper officer issues an order under this Act, he is also issuing an order under the CGST Act as authorised by the Act, or under intimation to the jurisdictional officer of the Central Government, Cross Empowerment.

Therefore, it cannot be said that Tax officers were acting without the authority of law or jurisdiction. 

Further, by virtue of a circular dated July 7, 2017, the functions of proper officers under the CGST Act are also defined. 

Hence, once the Central Government has notified the functions of proper officers, the said functions shall be applicable to be carried out equally by the officers under the CGST Act and SGST Act.

Hence, it cannot be said there was a lack of authority on the part of the GST officers,  as contended, by the appellant.

The petitioner submitted that since the petitioner’s unit was within the area earmarked and is a SURSEZ unit, which is a distinctly foreign territory, administered under control and directions of the Development Commissioner and as such, is a tax-neutral or revenue-neutral area, it is outside the ambit of the provisions of the CGST Act, 2017 or the SGST Act, 2017. 

The state authorities are not empowered to initiate any action since every SEZ unit is a tax-neutral zone.

However, the honourable court did not buy this argument and  said it deemed it proper to dismiss the petitions with costs of Rs 10,000 for each petition to be paid to the Gujarat State Legal Service Authority within 10 days from the date of order.

Well......

SEZ - Safe Economic Zones  from the scanner of enforcing agencies - not any more ?


SRIVATSAN.R.

NACIN, Chennai

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