Who is a ‘Proper Officer’ under GST Law: Clear you Jurisdictional Dilemma

Introduction

The Goods and Service Tax Acts of both the Central and State governments empower them to appoint officers as per their requirements to administer the GST regime. Throughout various provisions, the term ‘proper officer’ is used to designate the authority responsible for dealing with cases. Therefore, it is essential to verify whether any action by the Department has been initiated by the proper officer. Additionally, some provisions may refer to the term ‘deemed proper officer.’ Rule 13 of the ‘Anti-Profiteering Rules, 2017,’ approved by the GST Council in its meeting held on 18.05.2017, stipulates that the Director General of Safeguards, or an officer authorized by him, shall be deemed to be the proper officer to exercise powers such as summoning any person for evidence or document production under section 70. This officer is granted powers similar to those of a civil court under the provisions of the Code of Civil Procedure, 1908, during inquiries.

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 him4.

(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

Every GST taxpayer must know about the powers of GST officers as this will help them approach the proper GST officer at the right time. Also, this will help to save the valuable time that they might lose by approaching the wrong GST officer, including any illegal exploitation by the GST officers. It also protects the GST taxpayer from any misguided inquiry and assessment if taxpayers are fully aware of the powers of officers under GST Act, tax authorities and their powers under GST, GST anti-evasion department powers, and GST inspector power

Proper officer under GST law

The definition of Proper Officer under Section 2(91) originally vests the jurisdiction to the Commissioner and all functions exercised by Proper Officer can duly be exercised by the Commissioner. The second part of the definition requires assignment of function by the Commissioner. No assignment has been undertaken by the Commissioner under UPGST Act, albeit he has delegated his functions of Proper Officer onto various Class of Officers. Thus, it is imperative to examine whether the Commissioner who is originally vested with jurisdiction of Proper Officer has delegated the functions to Class of Officers, it will or will not meet the necessary concomitants of law.

Power of Search and Seizure

Section 79 of the Act gives powers to the GST officer, not below the rank of Joint Commissioner to notice issued inspect, search and seizure. Section 79(1) provides that where the GST officer has reasons to believe that-

a taxable person has suppressed any transaction relating to supply of goods and/or services or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under the Act or has indulged contravention of any of the provisions of this Act evade tax under this Act; or or rules made there there under to evade tax under this Act, or

any person engaged in the business of transporting goods or an owner or operator of a warehouse or a god own or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act,

The GST officer not below the rank of Joint Commissioner has the power to search and seize any goods if he believes that any goods, documents, or information relevant to the proceedings are hidden or not disclosed after seeking such information. It may also authorize the proper GST officer to search and seize such goods, documents, and information at any place. The GST officer has the power to search and seize any goods or any documents or information that will be helpful for the legal proceedings. It shall be noted that search and seizure can only be carried out by any officer who has authorization from the officer not below the rank of Joint Commissioner.

Under which circumstances can a Tax Official initiate for cancellation of GST registration?

• Any Taxpayer other than composition taxpayer has not filed returns for a continuous period of six months
• Supplies any goods and / or services without issue of any invoice, in violation of the provisions of the Act or rules made thereunder, with the intention to evade tax
• Issues any invoice or bill without supply of goods and/or services in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax
• Collects any amount as representing the tax but fails to pay the same to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due
• Fails to pay any amount of tax, interest or penalty to the account of the Central/State Government beyond a period of three months from the date on which such payment becomes due
• Person is no longer liable to deduct tax at source as per the provisions of GST Law
• Person is no longer liable to collect tax at source as per the provisions of GST Law
• Person no longer required to be registered under provisions of GST Law
• GST Practitioner is found guilty of misconduct in connection with any proceeding under the GST Law.
• Discontinuation/Closure of Business
• Change in Constitution leading to change in PAN
• Ceased to be liable to pay tax
• Transfer of business on account of amalgamation, merger/demerger, sale, and lease or otherwise disposed of etc.
• Death of Sole Proprietor
• Composition person has not furnished returns for three consecutive tax periods,
• Registration has been obtained by means of fraud, willful misstatement or suppression of facts. Etc.

Power to Impose a Penalty

Under the CGST Act, 2017, if the proper GST officer believes that the person is liable to a penalty that is not covered by Sections 62, 63, 64, 73, 74, 129, and 130 of the Act, the proper GST officer may issue an order levying penalty on such person after giving him an opportunity of being heard.

Conclusion

The inception of Goods and Service Tax is a strategic move to uphold India’s federal structure, as both the Centre and states collaborated to establish the principle of ‘One Nation, One Tax’. Nevertheless, the existing misalignment between the provisions of central and state laws has become apparent. Failure to promptly rectify these inconsistencies could lead to significant administrative disruptions. The evolving jurisdictional dynamics concerning central and state tax officers add another layer of complexity to the scenario. Until the judiciary offers conclusive guidance on this matter, the uncertainty surrounding the identification of the proper officer under GST law is expected to persist, posing challenges to effective tax governance and enforcement.

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