‘PROPER OFFICER’ UNDER GST – NOTIFICATIONS AND CASE LAWS

[Dr. Sanjiv Agarwal]

Meaning of Proper Officer [Section 2(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.

According to section 2(91) of the CGST Act, 2017, ‘proper officer’ in relation to any function to be performed under this Act, means the Commissioner or the officer of goods and services tax who is assigned that function by the Commissioner in the Board.

As per section 2(91) of the CGST Act, 2017, in relation to any functions to be performed under this Act, proper officer shall mean:

●     Commissioner or the officer of Central tax

●     Who is assigned that function by the Commissioner in the Board.

It may be noted that in relation to CGST or IGST, an officer shall be the proper officer who has been assigned any function, to be performed, by the Board/Commissioner of CGST or IGST.

Such person shall be considered as proper officer for the function (s) assigned to him under the Act by the Commissioner in the Board. For example, an officer may be assigned adjudication of a particular show cause notice.

As per section 4 of the IGST Act 2017, the officers appointed under SGST or UTGST are authorised to be proper officers for IGST Act subject to exceptions and conditions as Government may specify by way of a notification. This shall be on the recommendations of GST Council. A similar provision exists in CGST Act, 2017 in section 6 that officers of SGST or UTGST can be appointed as proper officers under CGST Act. Also, in case of UTGST, the Administrator may, by order, authorize any officer to appoint officers of Union Territory tax below the rank of Assistant Commissioner of Union Territory tax for the administration of the Act.

CBIC Clarifications on powers and delegation, monetary limits etc. for Proper Officer

CBIC has issued clarifications and instructions from time to time in relation to proper officers viz-a-viz delegation and distribution of powers under various sections, monetary limits, jurisdiction etc. as summarized below:

S.No.	Circular No.	Date	Regarding	Comments
	01.01.2017-GST	26.06.2017	Functions of proper officer for provision relating to registration and composition levy under CGST Act, 2017 and CGST Rules, 2017	NIL
	03.03.2017-GST	05.07.2017	Functions of proper officer in relation to various section of act / rules other than registration and composition levy	Functions relating to section 74 omitted from Deputy / Assistant Commissioner and added to Superintendent to Central Tax vide Circular No. 31.05.2018-GST dated 09.02.2018
	31/05/2018-GST (Since amended vide Circular No. 169/01/2022-GST dated 12.03.2022)	09.02.2018	Empowering Superintendent of Central Excise to carry out functions under section 74 Omitting functions under section 74 from Deputy / Assistant Commissioner from Central Tax Providing monetary limits for functions of limits for proper officers for section 73 and 74	Functions relating to section 74 omitted from Deputy / Assistant Commissioner and added to Superintendent to Central Tax vide Circular No. 03/03/2017-GST dated 05.07.2017
	157/13/2021-GST	20.07.2021	Extension of limitation under section 168A of CGST Act, 2017  under GST law as per Supreme Court order dated 27.04.2021 IN RE COGNIZANCE FOR EXTENSION OF LIMITATION [2021 (5) TMI 564 - SC ORDER]	NIL
	Circular No. 169/01/2022-GST	12.03.2022	Appointment of proper officers for adjudication of notices issued by Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (DGGSTI)	Vide Notification No. 02/2022-Central Tax dated 11th March, 2022, para 3A has been inserted in the Notification No. 2/2017-Central Tax dated 19.06.2017, to empower Additional Commissioners of Central Tax/ Joint Commissioners of Central Tax of some of the specified Central Tax Commissionerates, with All India Jurisdiction for the purpose of adjudication of the show cause notices issued by the officers of the Directorate General of Goods and Services Tax Intelligence. The Central Tax officers of DGGSTI shall exercise the powers only to issue show cause notices.
	02/2021-22 GST Investigation	22.09.2021	Clarification on issuance of show cause notice in time bound manner under section 73 and 74 of CGST Act, 2017	Instructions to officers on issue of refund of tax wrongfully paid under section 77(1) of CGST Act, 2017 and its implementation

It may be noted that the latest clarification vide Circular No. 169/01/2022-GST is based on Notification No. 02/2022-Central Tax dated 11.03.2022 which notified the powers of Additional Commissioner or Joint Commissioner of Central Tax for passing an order or decision in respect of notices issued by the officers of Directorate General of Goods and Services Tax Intelligence.

The gist of Notification and Circular are given hereunder:

Gist of Notification No. 2/2022-Central Tax dated 11.03.2022

• CBIC has notified that specified Additional Commissioner (AC) of Central Tax or Joint Commissioner (JC) of Central Tax shall be vested with powers for passing an order or decision in respect of notices issued by the officers of Director General of Goods and Services Tax Intelligence (DGGSTI).
• This amends Notification No. 2/2017-Central Tax dated 19.06.2017.
• The officers (AC or JC), as the case may be, who are subordinate to the specified Principal Commissioner /Commissioner of Central Tax have been given this power to adjudicate and such power shall be exercisable throughout the territory of India.
• The specified ten Commissonerates are Ahmedabad South, Bhopal, Chandigarh, Chennai South, Delhi North, Guwahati, Rangareddy, Kolkata North, Lucknow and Thane.

Gist of Circular No. 169/01/2022-GST dated 12.03.2022

• Vide Notification No. 02/2022-Central Tax dated 11th March, 2022, para 3A has been inserted in the Notification No. 2/2017-Central Tax dated 19th June, 2017, to empower Additional Commissioners of Central Tax/ Joint Commissioners of Central Tax of some of the specified Central Tax Commissionerates, with All India Jurisdiction for the purpose of adjudication of the show cause notices issued by the officers of the Directorate General of Goods and Services Tax Intelligence.
• The Central Tax officers of DGGSTI shall exercise the powers only to issue show cause notices.
• A show cause notice issued by them shall be adjudicated by the competent Central Tax officer of the executive Commissionerate in whose jurisdiction the noticee is registered when such cases pertain to jurisdiction of one executive Commissionerate of Central Tax only.
• Such show cause notices may be adjudicated, irrespective of the amount involved in the show cause notice(s), by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction vide Notification No. 02/2022-Central Tax dated 11th March, 2022.
• Principal Commissioners/ Commissioners of the Central Tax Commissionerates specified in the notification will allocate charge of Adjudication (DGGI cases) to one of the Additional Commissioners/ Joint Commissioners posted in their Commissionerates (As per Table in Circular).
• Such show cause notice(s) may, accordingly, be made answerable by the officers of DGGSTI to the concerned Additional/ Joint Commissioners of Central Tax.
• In respect of a show cause notice issued by the Central Tax officers of Audit Commissionerate, where the principal place of business of noticees fall under the jurisdiction of multiple Central Tax Commissionerates, a proposal for appointment of common adjudicating authority may be sent to the Board.

It may be noted that proper officer are also designated and appointed under the State GST laws and are empowered based on monetary limits.

Judicial pronouncements under GST

• In M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS [2021 (3) TMI 384 - SUPREME COURT] Apex Court clarified on the scope and role of proper officer. Apex Court has ruled that the Additional Director General (ADG) of Directorate of Revenue Intelligence (DRI) is not the proper officer to issue Show Cause Notice (SCN) under section 28 (4) of the Customs Act, 1962. The Apex Court has concluded that the entire proceeding in the present case initiated by ADG (DRI) by issuing SCN, as invalid and without any authority of law. The Apex Court has set aside the subject SCN.

Apex Court ruled that it is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act. This Section empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on “the proper officer”. The obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer”. Thus, all future SCN’s shall be issued only by Jurisdictional Commissionerates. This may apply to other tax laws as well.

• In M/S. SANGEETHA JEWELLERS VERSUS THE DEPUTY ASSISTANT COMMISSIONER ST 1 [2020 (11) TMI 916 - ANDHRA PRADESH HIGH COURT], where it was alleged that seizure of silver ornaments in transit was made by Deputy Assistant Commissioner who was not a proper officer, it was held that such officer was a proper officer under section 63 of the CGST Act, 2017.

Section 68(3) of the CGST Act confers power on “the Proper Officer” to intercept any conveyance on the way and require the person in-charge of the said conveyance to produce the documents prescribed under sub-section (1) of Section 68 and the devices for verification in which case the said person shall be liable to produce the same and also allow the inspection of goods. While so, in the Gazette Notification No. 37, the Chief Commissioner of State Tax notified certain officers as “Proper Officer” occurring in different sections of the SGST Act. In Serial No.23, certain officers viz., (i) Goods and Service Tax Officer (ii) Deputy Assistant Commissioner (iii) Assistant Commissioner (iv) Deputy Commissioner and (v) Joint Commissioner having jurisdiction and/or (i) Deputy Assistant Commissioner (ii) Assistant Commissioner and (iii) Deputy Commissioner as authorised by the additional Commissioner/Commissioner in case of State Enforcement Wing are authorised as “Proper Officers” to act under Section 68(3).

• In M/S MAA GEETA TRADERS VERSUS COMMISSIONER COMMERCIAL TAX AND ANOTHER [2021 (12) TMI 119 - ALLAHABAD HIGH COURT] , on an issue of jurisdiction in adjudication by Deputy Commissioner of State Tax, court observed that section 5(3) is the source of the power to sub-delegate the function-jurisdiction vested in the Commissioner, to be exercised in favour of any officer subordinate to him. Neither there exists any procedure or stipulation prescribed by law with respect to the mode or the manner in which that power to sub-delegate maybe exercised nor the Commissioner was required to obtain any approval of the State Government in that regard nor there exists any requirement in law prescribing issuance of a notification etc. to evidence a valid sub-delegation made under section 5(3) of the CGST Act. Non-recital of section 5(3) of the CGST Act in the orders is inconsequential and even extraneous to the valid exercise of power made by the Commissioner. The power was admittedly existing and it is seen to have been exercised. It is not shown to have been exercised in contravention of any statutory provision or principle of law. Hence, the validity of the power exercised would remain by established firm and undoubted.

It was held that as to the description of a "proper officer", by virtue of section 2(91) of the Act it has to be either the "Commissioner" himself and/or the officer of the "State tax", who may have been assigned that function by the Commissioner. In the instant case, there was no dispute between the parties that the Office Orders dated 1-7-2017 and 19-11-2018 were issued by the "Commissioner" as defined under section 2(91) of the Act. Its effect will be examined a little later. Thus, there would be no dispute between the parties, if the "Commissioner" had himself issued the notice or passed the order giving rise to the present petition. The issues that arise are whether there is any function assignment/sub-delegation made in favour of the Deputy Commissioner, with reference to section 74 of the Act and, whether the assignment made, if any, validly confers jurisdiction on the Deputy Commissioner.

It was further held that only with respect to officers appointed under the Central Act, the exercise of jurisdiction would be circumscribed by a notification that would have to be first issued by the State Government, before such jurisdiction may be created in their favour. Upon clear language of the provisions of the Act, the officers appointed under the Act would continue to be governed by the provisions of sections 3 and 4 read with section 2(91) of the Act and the general orders issued by the "Commissioner" in that regard, issued with reference to the power exercised under section 5 of the Act.

The court observed and held that the Commissioner of Customs (Preventive), Mumbai [COMMISSIONER VERSUS SYED ALI - 2011 (9) TMI 947 - SC ORDER ] and the Additional Director, Directorate of Revenue Intelligence [in M/S CANON INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CUSTOMS - 2021 (3) TMI 384 - SUPREME COURT] were not officers of Customs (under section 5 of the Customs Act), in the first place. Hence, though appointed (clearly with reference to section 4 of the Act, no function came to be entrusted to them under the Customs Act, in absence of any sub-delegation made in their favour by a further notification under section 6 of that Act. That analogy and reasoning would arise and apply (in the context of the Act), to officers of the 'Central tax', only. It would not apply to functioning of officers of the 'State tax' who may draw their function-jurisdiction from simple sub-delegation under an administrative order issued by the 'Commissioner' with reference to his powers to sub-delegate granted under section 5 of the Act, without any gazette notification of such order. The petition was therefore, dismissed.

• In YASHO INDUSTRIES LIMITED VERSUS UNION OF INDIA [2021 (6) TMI 918 - GUJARAT HIGH COURT] , court observed that section 167 of the CGST Act, 2017 deals with delegation of power by which the Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under the CGST Act may be exercisable also by another authority or officer as may be specified in such notification.

As per the definition of 'proper officer' in section 2(91), a 'proper officer' in relation to any function to be performed under the CGST Act means the Commissioner or the officer of the Central Tax, who is assigned that function by the Commissioner in the Board. It is pertinent to note that this case, the respondent No.3 is an officer of Directorate General of Goods and Services Tax Intelligence (DGGI) holding the designation of Senior Intelligence Officer, who was appointed as the Central Tax Officer with all the powers under the CGST Act and IGST Act and the Rules made thereunder, as are exercisable by the Central Tax Officers of the corresponding rank of Superintendent as specified in the Notification No.14 of 2017-CT dated 1.7.2017 issued by the Central Board of Excise and Customs. It is further pertinent to note that the respondent No.3 being the officer of the Central Tax and the Superintendent under the CGST Act by virtue of the said Notification dated 1.7.2017, he was also assigned the powers of proper officer by the Board vide Circular dated 5.7.2017 issued in exercise of the powers conferred by Clause (91) of Section 2 of the CGST Act read with Section 20 of the IGST Act. Therefore, the respondent No.3 is a proper officer in relation to the function to be performed under the CGST Act as contemplated under Section 2(91).

The Court, therefore, did not find any substance in the submission that the respondent No.3 was not the ‘proper officer’ as per the definition contained in Section 2(91) of the CGST Act, and therefore, had no powers to issue summons under Section 70 of the CGST Act.

• In M/S BIHARILAL CHHATERPAL THRU PROP. RAMESH KUMAR GUPTA VERSUS STATE OF U.P. THRU PRIN. SECY. TAX AND REGISTRATION AND ORS. [2021 (11) TMI 720 - ALLAHABAD HIGH COURT] it was held that cross empowerment under section 4 of IGST Act, 2017 and section 6 of CGST Act, 2017 merely means that state authorities empowered under State Act can also enforce provisions of CGST Act, 2017 and / or IGST Act, 2017.