By: Ram Chander Sankhla, Advocate | Former Chief Commissioner, GST & Customs| Managing Partner, Sankhla Law associates. | Mobile 9811917342

 

 

Adv. Rahul Sankhla, Partner at Sankhla Law Associates | Authors can be reached at www.rrsla.com 

IMPROPERLY, PROPER OFFICER IN GST

  1. Rule of law, Equity, Fairness, Justice, Fundamental Rights are some of the basic tenets of the Constitution of India. These basic principles ensure that the societies remain civilized, conduct themselves in a smooth and disciplined way, avoiding chaos and disturbances. In fact, such principles ensure the development and positive evolution of all concerned, ensuring peace and happiness all around. But for these principles, it will be almost impossible to progress, to evolve being human.

 

  1. Therefore, it is of utmost importance that the Authorities implementing various legal documents must adhere to these basic principles. They must function as per these principles then stray individuals.

 

  1. These principles lend solidity to the very foundation of lawful and stabilized society on which superstructure of progress, howsoever high can be easily built.

 

  1. As we all understand, Central Board of Indirect Taxes and Customs (in short CBIC) is one of such Government Authority, which helps in formulation and implementation of the Goods and Service Tax (in short GST) in India. So, it is of importance to understand, if there is propriety qua proper officer as defined and implemented in GST law.

 

  1. Before delving further, let us grasp few definitions under GST:

 

CGST Act:

Section 2: Definition,

(16) “Board” means the ‘Central Board of Indirect Taxes and Customs’ constituted under the Central Boards of Revenue Act, 1963;

(24) “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act;

(25) “Commissioner in the Board” means the Commissioner referred to in section 168;

(53) “Government” means the Central Government;

(91) “proper officer” in relation to any function to be performed under this Act, means the Commissioner or the officer of the central tax who is assigned that       function by the Commissioner in the Board.

 

Section 3: Officers under this Act. 

The Government shall, by notification, appoint the following classes of officers for the purposes of this Act, namely:””

(a) Principal Chief Commissioners of central tax or Principal Directors General of central tax,

(b) Chief Commissioners of central tax or Directors General of central tax,

(c) Principal Commissioners of central tax or Principal Additional Directors General of central tax,

(d) Commissioners of central tax or Additional Directors General of central tax,
(e) Additional Commissioners of central tax or Additional Directors of central tax,

(f) Joint Commissioners of central tax or Joint Directors of central tax,

(g) Deputy Commissioners of central tax or Deputy Directors of central tax,

(h) Assistant Commissioners of central tax or Assistant Directors of central tax, and

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

Provided that the officers appointed under the Central Excise Act, 1944 shall be deemed to be the officers appointed under the provisions of this Act.

Section 5: Powers of officers 

(1) Subject to such conditions and limitations as the Board may impose, an officer of central tax may exercise the powers and discharge the duties conferred or imposed on him under this Act.

(2) An officer of central tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him.

(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 central tax.

 

Section 168: Power to issue instructions or directions.

(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions.

(2) The Commissioner specified in clause (91) of section 2, sub-section (3) of section 5, clause (b) of sub-section (9) of section 25, sub-sections (3) and (4) of section35, sub-section (1) of section 37, sub-section (6) of section 39,  section 44, sub-sections (4) and (5) of section 52, [sub-section (1) of section 143, except the second proviso thereof] , clause (l) of sub-section (3) of section 158 and section 167 shall mean a Commissioner or Joint Secretary posted in the Board and such Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.

 

IGST Act:

Section 3: Appointment of officers.  The Board may appoint such central tax officers as it thinks fit for exercising the powers under this Act.

 

WHETHER BOARD HAS POWER TO ASSIGN THE FUNCTIONS AS PROPER OFFICER BY CLAUSE (91) OF SECTION 2, 3 AND 5 OF THE CGST ACT READ WITH SECTION 20 OF THE INTEGRATED GOODS AND SERVICES TAX ACT (IN SHORT IGST ACT) IN RELATION TO THE VARIOUS SECTIONS OF THE CGST ACT, 2017 OR THE RULES MADE THEREUNDER:

  1. Under section 2(91) CGST Act, “proper officer” in relation to any function to be performed under this Act means Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board. Thus, Board has no power to issue a circular giving it power to assign any function to a central tax officer, as it is neither proper officer, Commissioner nor Commissioner in the Board.

 

  1. Under section 3 of CGST Act, the government, by notification can appoint the classes of officers for the purposes of this Act ranging from ‘Principal Chief Commissioner of Central Tax/Principal Director General of Central Tax’ to ‘any other class of officers’, as it may deem fit. The Board is not a central tax officers as per section 3 of the CGST Act.

 

  1. Also, Board is not Central Government and vice-versa. This is for the simple reason that both the words have been defined differently (as quoted above) and in different sections of the CGST Act. Board is a statutory authority having its genesis under the Central Boards of Revenue Act, 1963, but the Central Government, is NOT.

 

  1. And, sub-section (2) of section 5 of the Central Goods and Services Tax Act, 2017 says that an officer of central tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him.

 

  1. Whereas, under section 3 of IGST Act, the Board has power to appoint such central tax officers as it thinks fit for exercising the powers under IGST Act.

 

  1. Thus, under section 3 of CGST Act, the government by notification Can appoint the classes of officers for the purposes of this Act. Under section 5 (1), the Board may impose certain conditions and limitations, subject to which, the central tax officer will exercise the power and duties as already conferred on them under this Act. This means, the Board under section 5 (1) can only prescribe certain conditions and limitations and not create the powers or duties to be conferred on any central tax officer under CGST Act. In other words, Board can prescribe limitations and conditions to the duties and powers already existing. In the name of prescribing limitations and conditions, no duties or powers can be conferred or created on any central tax officer under this Act, by the Board.

 

  1. Similarly, under sub-section 2 of section 5 of the CGST Act, a senior officer of Central Tax may exercise the powers and discharge the duties conferred or imposed under this act to any other officer of central tax subordinate to him. By this sub-section also, the Board cannot create any power or duties for any central tax officer to be performed under this Act.

 

  1. The word proper officer has also been defined under section 2 (91) of the CGST Act which means either ‘commissioner’ or ‘commissioner in the board’ who is so specified by the Board under section 168. In other words, wherever the word proper officer has been used, say, in section 73 of CGST Act, it is proper officer who will issue the Show cause Notice, that proper officer can only be as defined under section 2 (91) of the CGST Act and no one else. These proper officers cannot be defined under any other section or rules of this Act.

 

 

WHETHER NOTIFICATION NO. 02/2017–CT DATED 19 JUNE 2017 HAS BEEN ISSUED APPROPRIATELY:

  1. Notification No. 02/2017 – Central Tax dated 19 June 2017, issued in exercise of the powers under section 3 read with section 5 of the CGST Act, 2017 and section 3 of the IGST Act, defined jurisdiction of various rank of officers, as amended from time to time, in five Tables referred to in Para 2 to 5 of the said Notification. This notification stands issued by the Board.

 

  1. Table – I defines jurisdiction of Principal Chief Commissioner/Chief Commissioner of Central Tax in terms of Principal Commissioners/Commissioners of Central Tax, Commissioners of Central Tax (Appeals), Additional Commissioner of Central Tax (Appeals) and Commissioners of Central Tax (Audit); Table – II: Territorial Jurisdiction of Principal Commissioner/Commissioner of Central Tax; Table – III: Jurisdiction of Commissioner of Central Tax (Appeals) and Additional Commissioner of Central Tax (Appeals); Table – IV: Jurisdiction of Commissioner of Central Tax (Audit).

 

  1. Whereas, Table – V bestows powers to Additional Commissioner or Joint Commissioner of Central Tax for passing an order or decision in respect of SCNs issued by the officers of DGGI (This Table was inserted vide Notification No. 02/2022 Central Tax dated 11 March 2022, specifying 10 no. of such Principal commissioners/Commissioners under whose jurisdictions these specially empowered Additional Commissioner or Joint Commissioner of Central Tax shall exist. Later, vide Notification No. 27/2024-Central Tax dated 25 November 2024, no. of such Principal commissioners/Commissioners were increased to 23).

 

  1. Though, vide corrigendum dated 29.07.2019 issued from F. No 349/52/2017-GST in the Notification No. 02/2017-Central Tax, dated the 19th June, 2017, for the words “the Central Board of Excise and Customs” the words “the Government” was substituted. Since, this corrigendum was not retrospective, it means the Notification No 02/2017-Central Tax, dated the 19th June, 2017 stand amended from 29.07.2019 onwards.

 

  1. In that scenario, can it be said that vide Table V, the Board has only prescribed conditions and limitations and has not created/bestowed the power of adjudication or order or decision in respect of SCN issued by DGGI. If Table V is, but creation of power or duties under CGST Act then the Board clearly lacks such power, hence, no jurisdiction. However, if such Table V can be described as nothing but prescribing conditions and limitations, then it squarely falls under section 5 of the CGST Act.

 

  1. Also, Whether, vide prospective corrigendum dated 29.07.2019, the defect in prescribing the jurisdiction for Principal Chief Commissioner, Commissioner etc., vide Table I to Table IV in Notification 2 of 2017 dated 19.07.2017 stand rectified Suo-moto. If not, the basis on which Table-V rests, crumbles leaving Table-V also getting crumbled.

 

  1. However, the common sense reading as clear from the plain words used in notification number 2 of 2017, as amended, clearly conveys the meaning that the Board has exercised the power beyond jurisdiction, being not conferred under section 5 of the CGST Act.

 

  1. Board has not only bestowed jurisdictions to Principal Chief Commissioner and Commissioners without any lawful authority but also, vide various notifications, as detailed above, has bestowed or created power of adjudication for Additional Commissioner/ Joint Commissioner, without such authority.

 

 

PROPER OFFICER CAN ONLY BE AS PER SEC. 2(91):

  1. It may also be mentioned that the proper officer under section 73 or 74 of the CGST Act is as per section 2 (91) of the CGST Act, which is either ‘commissioner’ or the officer of the central tax who is assigned that function by the Commissioner in the Board.

 

  1. Further, as per section 5 (2) a senior officer can exercise the power and discharge the duties of his subordinate. However, the Additional or Joint Commissioner is not senior to commissioner but otherwise.

 

  1. Therefore, in any view of the matter the Board has clearly acted without jurisdiction in violation of rule of law And, such notifications are non-est, being void ab-initio.

 

 

NOTIFICATION NO.14 OF 2017 CT DATED 01.07.2017 IS ALSO NON-EST:

  1. Similarly, vide notification no.14 of 2017 Central Tax dated 01.07.2017 issued under section 3 read with section 5 of the CGST Act and section 3 of the IGST Act, the Board appointed the officers in the DGGI, DGST and DG (audit) as specified in column 2 of the table attached with that notification as central tax officers and invested them with all the powers under the CGST Act, IGST Act and the rules there under, throughout the territory of India, as are exercisable by the central tax officers of the corresponding rank as specified in column 3 of that table.

 

  1. However, as seen from these notifications, the power has been bestowed by Board under section 3 and 5 of the CGST Act. The Government only, can, specify types of central tax officers under section 3, whereas Board can only prescribe conditions and limitations on the existing powers and duties under CGST Act. Board is not the central government for the purpose of CGST Act. Needless to mention that such investing of powers is clearly without jurisdiction in violation of rule of law, for the same reasons as explained above.

 

 

  1. Though, vide corrigendum dated 29.07.2019 issued from F. No 349/52/2017-GST in the Notification No. 14/2017-Central Tax, dated the 01.07.2017, for the words “the Central Board of Excise and Customs” the words “the Government” was substituted. Since, this corrigendum was not retrospective, it means the Notification No 14/2017-Central Tax, dated the 01.07.2017 stand amended from 29.07.2019 onwards.

 

  1. Though the vital question remains, i.e. whether, vide prospective corrigendum dated 29.07.2019, the defect in Notification No 14/2017-Central Tax, dated the 01.07.2017 stand corrected and validated qua jurisdictions assigned prior to 29.07.2019.

 

 

  1. The list of such notifications may be endless. For the sake of clarity, only two notifications have been discussed to show the primal illegality.

 

 

CIRCULAR 3/3/2017-GST AND LATER CIRCULARS ASSIGNING VARIOUS FUNCTIONS TO PROPER OFFICER ARE ALSO SUFFER FROM LACK OF JURISDICTION:

 

  1. The irony is that such state of affairs does not get stopped there. Board has issued CIRCULAR NO.3/3/2017-GST, DATED 5-7-2017, in apparent exercise of the powers conferred by clause (91) of section 2 of the Central Goods and Services Tax Act, 2017 (12 of 2017) read with Section 20 of the Integrated Goods and Services Tax Act (13 of 2017) and subject to sub-section (2) of section 5 of the Central Goods and Services Tax Act, 2017 assigning various functions under Various sections of CGST Act to various officers, as PROPER OFFICER. Because of various reasons as detailed supra, this circular is also ultra vires as Board has no jurisdiction/authority to issue such circular, under CGST Act.

 

  1. The later circular CIRCULAR NO. 31/05/2018-GST, DATED 9-2-2018 has further amended earlier circular of 05.07.2017. This circular dated 9th February, 2018 has also been issued under section 2 (91) of the CGST Act, and section 5 (2) of the CGST Act by the Board. As explained earlier, the Board has no power to issue such circular under these sections of the CGST Act prescribing monetary limits for issuance of show cause notices and orders under sections 73 and 74 of the CGST Act.

 

 

  1. Vide CIRCULAR NO. 31/05/2018-GST, DATED 9-2-2018 Some more functions were assigned to Superintendent under section 74 of the CGST Act. It was also directed that the officers up to the rank of Additional/ Joint Commissioner of central tax are assigned as the proper officer for issuance of show cause notices and orders under sub sections (1), (2), (3), (5), (6), (7), (9) and (10) of sections 73 and 74 of the CGST Act read with sub-section (2) of section 5 of the CGST Act. Needless to say, that such directions are ultra vires as Board has no authority/jurisdiction to issue such circulars.

 

  1. Vide this CIRCULAR NO. 31/05/2018-GST, DATED 9-2-2018 (para 7), it has further been stated that “Principal Commissioners/ Commissioners of the Central Tax Commissionerates specified in the said notification will allocate charge of Adjudication (DGGI cases) to one or more Additional Commissioners/ Joint Commissioners posted in their Commissionerates.” It is not clear from where the Board has got this power to direct Commissioners to appoint one of the Additional/Joint Commissioner as Adjudicating Authority in SCN issued by DGGI. It is though clear that no such power exits under section 2 (91) of the CGST Act, and section 5 (2) of the CGST Act to the Board. Thus, this circular is ultra vires being without jurisdiction.

 

  1. There is later CIRCULAR NO. 239/33/2024-GST [F. NO. CBIC-20016/2/2022-GST], DATED 4-12-2024, amending above circulars’, continuing same illegality.

 

 

SUGGESTION:

It is high time that the Honourable Board looks into these basic issues and take corrective actions, lest another CANNON type chaos arises, like a Phoenix

DISCLAIMER:  The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect the official policy or position of any other individual, organization, employer or Firm. The information provided in this article is accurate and true to the best of the author’s knowledge, but there may be omissions, errors, or mistakes. The authors shall not be liable for any damages, losses, or injuries arising from the use of or reliance on the information presented in this article. Readers are advised to verify any information provided here and to consult with appropriate professionals for specific advice tailored to their individual circumstances.

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