Jurisdiction Of Proper Officer Under Section 73 & 74 Of CGST: Complete Analytical Guide

The Central Goods and Services Tax Act, 2017 is built on the foundation of self-assessment — every registered person is expected to compute and discharge GST liability on their own. However, when tax is not paid, is short-paid, input tax credit is wrongly availed or utilized, or refund is wrongly sanctioned, the law authorizes the Proper Officer to step in and initiate proceedings.

This article provides a structured and updated analysis of:

  • How Section 73 and Section 74 of the CGST Act operate
  • Who qualifies as the Proper Officer for these proceedings
  • How jurisdiction is assigned and limited through CBIC circulars
  • The role of monetary limits and combined tax demands
  • Practical implications for assessees and departmental officers

1. Framework of Sections 73 and 74 of CGST Act

1.1 Nature of proceedings under Section 73

Section 73 deals with situations where:

  • Tax has not been paid or has been short-paid
  • Input tax credit has been wrongly availed or utilized
  • Refund has been wrongly granted

without there being:

  • fraud, or
  • wilful misstatement, or
  • suppression of facts

with intent to evade tax.

In such cases, the proceedings are non-fraud in nature. The limitation period and the penalty structure are comparatively lenient when proceedings are initiated under Section 73.

1.2 Nature of proceedings under Section 74

By contrast, Section 74 is invoked where non-payment or short payment of tax, wrong availment/utilisation of ITC, or erroneous refund arises because of:

  • fraud,
  • wilful misstatement, or
  • suppression of facts

with intent to evade tax.

Proceedings under Section 74:

  • Carry a longer limitation period
  • Attract more stringent penalties

Hence, the classification of a case under Section 73 or Section 74 has direct consequences on the assessee’s exposure to tax, interest, and penalty.

1.3 What is “Adjudication” under GST?

Although the CGST Act does not define the word “Adjudication”, it defines “Adjudicating authority” in Section 2(4) as:

“any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in subsection (2) of section 171.”

In practical terms, adjudication in the GST context covers:

  • Examination and scrutiny of returns
  • Gathering information to detect non-payment, short payment, or wrongful ITC/refund
  • Issuance of Show Cause Notice (SCN)
  • Considering replies, granting personal hearing
  • Passing of a reasoned order determining demand and penalty

All of the above must be done only by a Proper Officer having valid jurisdiction under law and CBIC instructions.

2. Who is a “Proper Officer” under CGST?

2.1 Statutory definition – Section 2(91)

Section 2(91) of the CGST Act defines “Proper Officer” as:

“the Commissioner or the officer of the central tax who is assigned that function by the Commissioner in the Board”.

Key implications:

  • Merely holding a designation (e.g. Superintendent, Deputy Commissioner) is not enough.
  • Jurisdiction to perform a function (like issuing SCN under Section 73 or Section 74) must be specifically assigned.
  • Such assignment is generally done through circulars/notifications issued by the Board.

Once a function is assigned, the relevant officer becomes the “Proper Officer” only for that particular function.

2.2 Adjudicating authority vs Proper Officer

Every “Proper Officer” performing adjudication falls within the meaning of “Adjudicating authority” under Section 2(4), subject to exclusions. However:

  • “Adjudicating authority” is a broader term, signifying the authority that passes orders or decisions.
  • “Proper Officer” highlights the assignment of specific functions under the Act.

Both concepts operate together: a Proper Officer who has been conferred jurisdiction for a particular function acts as the Adjudicating authority for that function.

3. CBIC Circulars Assigning Jurisdiction to Proper Officers

3.1 Initial assignment under Circular No. 1/1/2017-GST and 3/3/2017-GST

The Board, in exercise of its powers, first allocated functions and jurisdiction through various circulars such as:

  • Circular No. 1/1/2017-GST dated 26.06.2017 – mainly concerning registration and composition levy.
  • Circular No. 3/3/2017-GST dated 05.07.2017 – crucial for our analysis, as it designated Proper Officers for different provisions of the CGST Act.

States are required to similarly allocate jurisdiction under their respective State GST laws, maintaining parallel structures to avoid overlap or vacuum in administration.

3.2 Position under original Circular No. 3/3/2017-GST (before amendment)

Under the original structure of **Circular No.