従業員は登録者や課税対象者ではないため、過料を科すことはできない。

Held by Hon’ble High Court of Bombay

In the matter of Shantanu Sanjay Hundekari Vs. Union of India(WRIT PETITION (L) NO. 30198 OF 2023)

The Petitioner is an employee of a Company M/s MLIPL, which is appointed as steamer agent of M/s Maersk. The petitioner was assisting M/s MLIPL against GST Compliance and was holding power of attorney to represent before tax authority on behalf of M/s Maersk. During the course of investigation, it was alleged that M/s Maersk has availed ineligible ITC and has made wrongful distribution of ITC. A SCN was issued to the petitioner asking to pay INR 1561 Crores equivalent to the tax alleged to be evaded by M/s. Maersk. Notice was issued under section 74 of CGST Act invoking Section 122(1A) and section 137 of CGST Act.

Hon’ble High Court anaylsised that Provisions of Section 122(1A) can be invoked against a taxable person who would be in a legal position, to retain the benefit of tax, and at whose instance, such transaction is conducted.  In the given case, the petitioner is merely an employee and cannot fall within the purview of the said provision, as the petitioner cannot be a ‘taxable’ or a ‘registered person’ within the meaning and purview of the CGST Act so as to retain such benefits as the provision ordains. Further, Show cause notice is issued under Section 74 of CGST Act. Section 74 is not a penal provision, whereas Section 137 falls under Chapter XIX which provides for ‘offences and penalties’.  Therefore, as to how such penal provision in Section 137 could be foisted against the petitioner, when the show cause notice is itself a demand cum show cause notice. Therefore, impugned show cause notice is rendered bad and illegal, deserving it to be quashed and set aside. 

Read Also: Amendments to the CGST Rules

1. 事案の概要

• In the given case, the petitioner is an individual who is an employee of the Company M/s. Maersk Line India Pvt. Ltd. (“MLIPL”).
• M/s MLIPL is a company having its principal place of business at Mumbai.  
• The petitioner was working as a Taxation Manager with M/s MLIPL. The Company was  appointed as Steamer agent of Maersk A/S (“Maersk”), a company incorporated in Demark.
• M/s Maersk is engaged in the shipping business involving containerized transportation of goods, through vessels across the globe. 
• The petitioner, as a Taxation Manager, rendered assistance to M/s Maersk in its compliance with taxation laws including the GST.  
• The petitioner also holds power of attorney to represent Maersk before the Tax Authorities.  However, the petitioner was not in-charge of the day-to-day business of Maersk. 
• The petitioner also assisted the investigations being conducted by the tax authorities in matter of M/s Maersk such as responding to the summons, presenting evidence and furnishing a list of witnesses whose statements could be recorded. 
• After such inquiry, the respondents made allegations that M/s Maersk has wrongly availed ITC of Rs.1561 crores. Further, M/s Maersk has also made a wrongful distribution of ITC.  
• The Petitioners are foisted with a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017 wherein they are required to pay an amount of INR 3731 Crores towards penalty.
• Such an amount is the tax amount stated to be defaulted by their employer.
• The petitioner has challenged the demand cum show cause notice issued by DGGI. As per SCN, the petitioners are called upon to show cause as to why a penalty equivalent to the tax alleged to be evaded by M/s. Maersk should not be imposed upon the petitioners.

Read Also: Refund of accumulated Input Tax Credit of Compensation Cess

2. 関連する法的抜粋

Relevant legal extract of the GST law is reiterated below for ready reference:

1. “Section 122.  Penalty for certain offences - 

….

(1-A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on. ……………..”

2. “Section 137.  Offences by companies 

(1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was incharge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. 

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 

…”

3. 原告の主張

The Petitioner has contended that:

• The petitioner has not personally availing the benefit of any ITC. Also, show cause notice does not allege that any personal benefit is achieved by the petitioner.
• Show Cause Notice is making allegations against M/s Maersk. 
• However, it has incidentally invokes the provisions of Section 122(1A) and Section 137 of the CGST Act to threaten imposition of penalty on the petitioner and to initiate prosecution against the petitioner, who is an individual.
• Since no personal benefit has been availed by the petitioner therefore, invoked provisions do not apply to the petitioner.
• M/s Maersk is a foreign company which does not have any employee or fixed establishment in India.
• Accordingly, solely for the purpose of representing and acting on behalf of M/s Maersk, the petitioner was given power of Attorney. 

• As per the department's allegation, credit should have been proportionately allocated among eleven different registrations of M/s Maersk in ten States.
• The petitioner was not the decision making authority on Maersk's businesses, and was not in-charge of or responsible for the business of M/s Maersk. The petitioner was merely representing the company before tax authority to provide factual information and data.
• All legal issues raised to the Petitioner were replied to by the petitioner as per the legal opinion obtained by M/s Maersk. 
• Further, the petitioner was neither a legal expert nor had any in-depth legal understanding of GST laws or its interpretation.  Thus, the role of the petitioner was essentially to assist and cooperate with the investigation authorities and provide clarification relating to distribution of input tax credit.
• The GST Council in its 38th meeting held on 18 December 2019 proposed insertion of sub-section (1A) to Section 122, to specifically address the cases of fake invoices. Provisions of Section 122(1A) was introduced with effect from 1 January, 2021.
• As per the provisions, a person shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed, or passed on, if he retains the benefit of certain fraudulent transactions, and when such transactions are conducted at his instance. 
• In the given case, the allegation is made against the petitioner in Show Cause Notice that the petitioner has “retained the benefit of the said evasion of GST by Maersk” and at the time of evasion of tax by Maersk, the petitioner was in-charge of and responsible for Maersk's business. 
• Grounds of issuance of show cause notice to the petitioner invoking Section 122(1A) and Section 137 of the CGST Act do not apply to the petitioner, absent a suggestion that any personal benefit was availed by the Petitioner.  
• Provisions of section 122(1A) of the CGST Act is not applicable as the basic ingredients primary benefit of the ITC was in any manner not availed by the petitioner. 
• If it claimed that the petitioner has retained the benefit of GST evasion, and that the petitioner was in-charge of and responsible to Maersk, for the conduct of its business, there was no basis as set out to support such allegation.  

4. 被申立人の主張

The respondent contended that:

• There was responsibility fastened on the petitioner in regard to the affairs of M/sMaersk. Hence, the petitioner cannot disown his involvement in the loss of revenue.
• The petitioner had tendered statements on behalf of M/s Maersk as its power of attorney holder and as a Senior Tax Operations Manager.
• Hence, the petitioner ought to have taken responsibility for the compliance of the statutory provisions of the GST laws. In this case, there was certainly connivance of the petitioner in the evasion of tax by M/s Maersk, as the petitioner was assigned the work of compliance under GST law.
• The company is not coming forward to clear the tax dues and therefore, the show cause notice was rightly pressed against the petitioner, as the petitioner would be equally responsible for his actions, although in the capacity as a power of attorney holder. 

5. Analysis by Hon’ble High Court

The Hon’ble High Court has made following analysis:

• As per show cause notice, the allegation against the petitioner is in his capacity as a Senior Tax Operations Manager of M/s Maersk.  
• He is called upon to show cause as to why penalty should not be imposed upon him under Section 122(1A) of the CGST Act, 2017 where M/s Maersk had committed offences under Section 122(1)(i) of the Act.
• It is alleged that the petitioner has committed offences which led to the evasion of the GST by M/s Maersk, for the reason that the invoices raised by M/s Maersk on its supplies were not in accordance with the provisions of GST law.
• It is alleged that the benefit of the said evasion of GST  was retained by the noticees (which includes the petitioner).  At the time of evasion of tax by M/s Maersk, the petitioner and the other employees were in charge of, and were responsible to Maersk for the conduct of the business of Maersk.
• The petitioner and other employees were very well aware about the willful omission and commission from the tax department resulting in tax (GST) evasion by M/s Maersk. Therefore, the petitioner and such other employees had rendered themselves liable to proceedings under Section 137(1) and Section 137(2) of the CGST Act, 2017.
• The question before the Court is whether the provisions of Section 122(1-A) of the CGST Act as also Section 137(1) and 137(2) would stand attracted to issue the impugned SCN against the petitioner, who is merely an employee of MLIPL and a power of attorney of Maersk. 

1. Applicability of Section 122(1A) of CGST Act:

• CGST法第122条(1A)項は、同条第1項(i)、(ii)、(vii)または(ix)号に該当する取引から利益を得ており、かつ当該取引の当事者である者（必然的に課税対象者となる）に対し、「脱税額、または利用もしくは転嫁された仕入税額控除と同額の過料を科す」と規定している。
• したがって、第(1-A)項は課税対象者に適用される。
• 立法者の意図は明らかであり、第122条(1-A)項の適用範囲に含まれる者は必然的に課税対象者であり、かつCGST法第122条(1)項に規定される取引から利益を得ている者である。
• さらに、第122条(1-A)項は、当該取引から利益を得ていない者、および／または当該取引の当事者ではない者には適用されない。
• 関連規定によれば、当該条項の対象となり得るのは、税務上の利益を享受し得る法的地位にあり、かつ当該取引の当事者である課税対象者のみである。
• これらの基本的要素を欠く場合、発行されたいかなる理由説明要求書（ショー・コーズ・ノーティス）も違法となる。
• 本件において、申立人は単なる従業員であり、同条項の適用範囲には含まれない。申立人は、同条項が定める利益を享受し得るCGST法上の「課税対象者」または「登録者」には該当しないためである。
• したがって、申立人に対して第122条(1-A)項を適用する余地はない。

2. CGST法第137条の適用可能性

• 次に、CGST法第137条の適用について述べる。第137条は「会社による違反」に関する規定である。第(1)項は、CGST法に基づく違反が会社によって行われた場合、違反時に会社の業務運営について責任を負う立場にあった者、および当該会社は、その違反について有罪とみなされ、それに応じて訴追および処罰の対象となると規定している。
• 第122条(1-A)項の規定と併せて、第137条がどのように申立人に対する適用根拠となり得るのかは理解しがたい。特に、本件の理由説明要求書はCGST法第74条に基づいて発行されているためである。
• 第74条はCGST法第15章「要求および回収」に属し、「詐欺、意図的な虚偽の陳述、または事実の隠蔽による、未納、過少納付、誤った還付、または不当に利用された仕入税額控除の税額決定」について規定している。
• 第74条は罰則規定ではないのに対し、第137条は「違反および罰則」を定めた第19章に属している。
• したがって、理由説明要求書自体が税額の要求を伴うものであるにもかかわらず、第137条のような罰則規定をいかにして申立人に適用できるのか疑問である。
• 仮に第137条が申立人に適用可能であると仮定しても、第137条に基づく手続きは、第74条に基づく要求を伴う理由説明要求書において回答を求めるべき性質のものではない。そのような手続きは、必然的に第134条の適用を伴う訴追の性質を帯びるためである。
• 管轄権を混同すべきではなく、ましてや理由説明要求書において当局自身が会社側の責任であると認めている金銭的債務を、申立人に負わせることは許されない。
• 以上の理由から、理由説明要求書の内容を検討すれば、CGST法第74条に基づき、第122条(1-A)項や第137条を申立人に適用するための基本的な管轄要件や構成要件を満たしていないことは明らかである。

6. Order

高等裁判所は、当該理由説明要求書は不当かつ違法であり、取り消されるべきであると判示した。