‘PROPER OFFICER’ UNDER SECTION 73 AND 74 OF CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND UNDER INTEGRATED GOODS AND SERVICES TAX ACT, 2017

[Mr. M. GOVINDARAJAN]

Recovery of tax

Chapter XV of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides the procedure for demand of tax and recovery of the same by the Department. There are 13 sections in this chapter. Among them Section 73 and 74 play a vital role in the procedure of demand and recovery of tax by the Department.

Section 73 of the Act provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts. Section 74 of the Act provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful-misstatement or suppression of facts.

Both the sections require the proper officer to issue show cause notice as to why the tax payer should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. Both the sections prescribe the time limit within which the show cause notice is to be issued by the proper officer. Both the sections prescribe the procedure for passing the order by the proper officer after giving reasonable opportunity to the tax payer.

section 20(xvi) of the Integrated Goods and Services Tax Act, 2017 provides that the provisions of Central Goods and Services Tax Act relating to demand and recovery are applicable to the Integrated Goods and Services Tax Act, 2017.

Proper Officer

Section 73 and Section 74 provide that the tax is to be determined by the proper officer. The expression ‘proper officer’ is defined under section 2(91) of the Act. The said expression is defined in relation to any function to be performed under this Act, as the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board. Therefore any officer of the Central Tax can be assigned the function of Proper Officer by the Board.

Proper Officer for sections 73 and 74

Vide Circular No. 31/05/2018-GST, dated 09.02.2018, the Board assigned the following officers the functions as the proper officers in relation to issue of show cause notices and orders under sections 73 and 74 of the CGST Act and section 20 of the IGST Act (read with sections 73 and 74 of the CGST Act), up to the monetary limits as mentioned below-

• Superintendent of Central tax- Monetary limit of the amount of central tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act – not exceeding ₹ 10 lakhs;

Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act – not exceeding ₹ 20 lakhs;

Monetary limit of the amount of central tax and integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax and integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to integrated tax vide section 20 of the IGST Act;

• Deputy or Assistant Commissioner of Central Tax - Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act - Above ₹ 10 lakhs and not exceeding ₹ 1 crore;

Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act - Above ₹ 20 lakhs and not exceeding ₹ 2 crores;

Monetary limit of the amount of central tax and integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax and integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to integrated tax vide section 20 of the IGST Act - Above ₹ 20 lakhs and not exceeding ₹ 2 crores;

• Additional or Joint Commissioner of Central Tax - Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act - Above ₹ 1 crore without any limit;

Monetary limit of the amount of integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to matters in relation to integrated tax vide section 20 of the IGST Act - Above ₹ 2 crores without any limit;

Monetary limit of the amount of central tax and integrated tax (including cess) not paid or short paid or erroneously refunded or input tax credit of central tax and integrated tax wrongly availed or utilized for issuance of show cause notices and passing of orders under sections 73 and 74 of CGST Act made applicable to integrated tax vide section 20 of the IGST Act - Above ₹ 2 crores without any limit.

In the said notification powers were given to the central tax officers of Audit Commissionerates and Directorate General of Goods and Services Tax Intelligence (‘DGGSTI’ for short) exercise the powers only to issue show cause notices. The said show cause notices shall be adjudicated by the competent central tax officer of the Executive Commissionerate in whose jurisdiction the noticee is registered. In case there are more than one noticees mentioned in the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by the competent central tax officer in whose jurisdiction, the principal place of business of the noticee from whom the highest demand of central tax and/or integrated tax (including cess) has been made falls. If the amount involved in the show cause notice is more than ₹ 5 crores the same would be adjudicated by the an officer of the rank of Additional Director/Additional Commissioner (as assigned by the Board), who shall not be on the strength of DGGSTI.

Vide Circular No. 169/01/2022-GST, dated 12.03.2022, the Board further amended the notification dated 09.02.2018. According to this amendment the Central Tax officers of Audit Commissionerates and 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.

In respect of show cause notices issued by officers of DGGSTI, there may be cases where the principal place of business of noticees fall under the jurisdiction of multiple Central Tax Commissionerates or where multiple show cause notices are issued on the same issue to different noticees, including the persons having the same PAN but different GSTINs, having principal place of business falling under jurisdiction of multiple Central Tax Commissionerates. Such show cause notices shall be adjudicated by the Additional/Joint Commissioners of Central Tax of specified Commissionerates have been empowered with All India jurisdiction irrespective of the amount involved in the show cause notice (prior the limit is ₹ 5 crores). The Principal Commissioners/Commissioners of the Central Tax Commissionerates specified in the notification No.02/2022-Central Tax, dated 11.03.2022 will allocate charge of Adjudication (DGGSTI cases) to one of the Additional Commissioners/ Joint Commissioners posted in their Commissionerates.

The said notification further provides the list of Central Tax Commissionerate whose Additional Commissioner or Joint Commissioner shall adjudicate show cause notices issued by officers of DGGSTI, to the noticee having highest amount of demand of tax involved falls-

• Ahmedabad South Commissionerate – noticees in Ahmedabad and Vadodara zones;
• Bhopal Commissionerate – noticees in Bhopal and Nagpur zones;
• Chandigarh Commissionerate – noticees in Chandigarh and Panchkula zones;
• Chennai South Commissionerate – noticees in Chennai, Bengaluru and Trivandrum zones;
• Delhi North Commissionerate – noticees in Delhi and Jaipur zones;
• Guwahati Commissionerate – noticees in Guwahati zone;
• Rangareddy Commissionerate – noticees in Hyderabad, Vishakapatnam (Amaravathi) and Bhubaneswar zones;
• Kolkata North Commissionerate – noticees in Kolkata and Ranchi zones;
• Lucknow Commissionerate – noticees in Lucknow and Meerut zones;
• Thane Commissionerate – noticees in Mumbai and Pune zones.

Common Adjudicating Authority

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.