Andhra Pradesh High Court Rules Only Customs Authorities Have Jurisdiction to Assess IGST on Imported Goods; State GST Officers Barred

The Andhra Pradesh High Court, in a significant judgment delivered by Justices R. Raghunandan Rao and T.C.D. Sekhar, addressed the jurisdictional competence of State GST authorities to initiate proceedings for assessment and collection of IGST on imported goods. The case arose from a challenge by a company engaged in manufacturing aquatic feed, which had imported certain inputs and claimed exemption from IGST for the assessment years 2017-18 to 2022-23. The petitioner was administratively allotted to the Central jurisdiction under the GST regime.

The dispute began when the Deputy Commissioner of State Tax, acting on an authorization, inspected the petitioner’s premises and subsequently issued an intimation under Section 73(5) of the GST Act, questioning the petitioner’s exemption claims and classification of goods. The petitioner responded on merits, but a subsequent show cause notice and reliance on a central circular prompted the writ petition, challenging both the notice and the validity of the circular.

The petitioner contended that only customs authorities have jurisdiction to assess IGST on imports, as per the IGST Act and the Customs Act, and that State GST officers cannot exercise such powers, especially where the taxpayer is under Central jurisdiction. The petitioner also argued that the impugned circular was ultra vires and had already been struck down by the Madras High Court.

The State, in response, argued that Section 6 of the APGST Act cross-empowered State officers to act under the CGST and IGST Acts, relying on GST Council discussions and notifications. The State also contended that the writ petition was premature, being against a show cause notice.

The High Court, after a detailed analysis of the statutory framework, held that the IGST on imported goods is to be levied and collected in accordance with Section 3 of the Customs Tariff Act, at the point when customs duties are levied under Section 12 of the Customs Act. The Court emphasized that the definition of ‘assessment’ under Section 2(2) of the Customs Act includes the determination of all duties, taxes, and cesses payable on imported goods, whether under the Customs Act or any other law, including the IGST Act. The Court relied on Supreme Court and Kerala High Court precedents to reinforce that only customs authorities are competent to assess and collect IGST on imports.

On the issue of cross-empowerment, the Court clarified that Section 6 of the CGST Act and Section 4 of the IGST Act empower State GST officers to act under the IGST Act only if the taxpayer is administratively allotted to the State. In this case, as the petitioner was allotted to the Centre, the State officer could not claim jurisdiction under cross-empowerment provisions.

The Court further noted that the impugned circular had already been struck down by the Madras High Court, and following the Supreme Court’s ruling in Kusum Ingots, such a decision has pan-India effect, rendering the circular inoperative nationwide.

Accordingly, the High Court allowed the writ petition, setting aside the show cause notice issued by the State GST officer as being without jurisdiction in relation to the assessment of IGST on imported goods. The Court also set aside the notice on other grounds, including impermissible clubbing of multiple years, and clarified that relevant authorities may proceed under the law if further tax liability arises. No order as to costs was made.

This judgment establishes a clear legal principle that only customs authorities have jurisdiction to assess and collect IGST on imported goods, and State GST officers cannot initiate such proceedings, particularly where the taxpayer is under Central jurisdiction.