Section 73 or 74 CGST: Proper Officer, Jurisdiction & Validity of Proceedings

Under the Central Goods and Services Tax Act, 2017 (CGST Act/Act), tax is payable on a self-assessment basis. However, where a registered person has failed to pay tax, short-paid tax, wrongly availed or utilized input tax credit, or obtained an erroneous refund, the Proper Officer is empowered to issue a Show Cause Notice and adjudicate the demand under Sections 73 or 74 of the Act. The applicability of the provision depends upon the nature of default. If such non-payment or short payment is not on account of fraud, wilful misstatement, or suppression of facts, proceedings are initiated under Section 73. Conversely, where the default involves fraud, wilful misstatement, or suppression of facts with intent to evade tax, proceedings are required to be initiated under Section 74, which carries extended limitation and higher penalty.

Section 2 (91) of CGST Act defines, “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”.

Any order/decision passed under the Act is called an act of Adjudication. The Adjudication involves activities such as the scrutiny of returns, collection of information to find out taxable persons who might have not may payment short payment, excess availed input tax credit, or sought refund, giving SCN seeking replies to from the tax payers, giving opportunity of being heard before passing of final orders.

It is to be noted that CGST Act does not define the term ‘Adjudication’. But, Section 2(4) of the CGST Act defines ‘Adjudicating authority’ to mean 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.

Authority empowered to issue SCNs and adjudication of demand i.e. Who is proper officer under Section 73 and 74 of the Act.

 It is pertinent to note that in terms of Section 2(91) of the CGST Act, the “Proper Officer” in relation to any function under the Act means the Commissioner or the officer of central tax who is assigned such function by the Commissioner in the Board. Accordingly, the Commissioner may assign the functions of adjudication under Sections 73 and 74 of the Act to any officer of Central Tax, who shall thereupon exercise the powers of the Proper Officer for the said purposes.

It is further pertinent to note that the Board has issued specific circulars assigning jurisdiction to Proper Officers under the statute. Reference may be made to  Circular No. 1/1/2017-GST dated 26^th June, 2017assigning officers for matters relating to registration and composition levy. Further, Circular No. 3/3/2017 – GST dated 5^th July, 2017,;Circular No. 31/05/2018-GST, dated 9th February, 2018 (as amended from time to time, including Circular No. 169/01/2022-GST dated 12.03.2022 and Circular No. 239/33/2024-GST dated 04.12.2024); and Circular No. 254/11/2025-GST dated 27.10.2025, designate Proper Officers for discharge of functions under various provisions of the CGST Act and the Integrated Goods and Services Tax Act, 2017 (IGST Act).

These circulars clearly demonstrate that jurisdiction must be expressly conferred by way of assignment and cannot be assumed or inferred. In consonance with the statutory framework and the said circulars, the respective State authorities are also required to issue corresponding notifications or circulars assigning jurisdiction to Proper Officers under the State GST enactments.

CBIC ,Circular No. 3/3/2017 – GST dated 5^th July, 2017

As per CBIC ,Circular No. 3/3/2017 – GST dated 5^th July, 2017, issued in terms of Section 2(91) of the CGST, specifying the “Proper Officer” for functioning under various provisions of the Act. It is to be noted that the Deputy/Assistant Commissioner of Central Tax was designated as the Proper Officer for issuance of show cause notices and adjudication under Section 74 of the Act. In contrast, the Superintendent of Central Tax was designated as the Proper Officer for issuance of show cause notices and passing of orders under Section 73 of the Act.

Amendment by Circular No. 31/05/2018-GST, dated 9th February, 2018

Subsequently, Circular No. 31/05/2018-GST, dated 9th February, 2018amended the earlier Circular No. 3/3/2017-GST and reassigned the jurisdiction of Proper Officers under the CGST Act. By virtue of the said amendment, the powers under Section 74, which were earlier vested in the Deputy/Assistant Commissioner of Central Tax, were conferred upon the Superintendent of Central Tax. Consequently, the Superintendent of Central Tax was authorised to issue SCN and pass adjudication orders under both Sections 73 and 74 of the Act. Accordingly, the position thereafter stood that the Superintendent of Central Tax became the designated “Proper Officer” for exercising functions under Sections 73 as well as 74, in terms of the revised assignment of jurisdiction.

Further, all officers of Central Tax up to the rank of Additional Commissioner or Joint Commissioner stand designated as “proper officers” for the purpose of issuance of SCN and passing of orders under Sections 73 and 74 of the CGST Act. Accordingly, w.e.f. 09.02.2018, the Superintendent of Central Tax, Deputy/Assistant Commissioner of Central Tax, as well as the Additional Commissioner or Joint Commissioner of Central Tax, are competent to act as the “Proper Officer” for exercising powers and discharging functions under the said provisions.

Such assignment of functions is not confined to the CGST Act alone, but extends equally to proceedings under the IGST, by virtue of Section 3 read with Section 20 of the IGST Act, which provides for application of the provisions of the CGST Act to matters under the IGST Act.

 Prescription of Monetary Limits for Jurisdiction by CBIC Circular No. 3/3/2017 – GST dated 5^th July, 2017

Further, it is pertinent to note that for ensuring optimal distribution of work relating to issuance of show cause notices and adjudication orders under Sections 73 and 74 of the CGST Act, and likewise under the IGST Act, specific monetary limits have been prescribed for different ranks of Central Tax officers. Accordingly, the Superintendent of Central Tax, Deputy/Assistant Commissioner of Central Tax, and the Additional/Joint Commissioner of Central Tax are required to exercise jurisdiction subject to such prescribed pecuniary limits, ensuring structured allocation of adjudication work in accordance with administrative instructions.

 Monetary limit for issuance of show cause notices and passing of orders under Section 73 & 74 of CGST Act.

Jurisdiction on the basis of Tax Demand Only vide Circular No. 254/11/2025-GST dated 27.10.2025

It is pertinent to note that prior to issuance of the said circular, there was ambiguity as to whether jurisdiction was to be determined on the basis of the total demand, including tax and penalties, or solely on the tax amount involved. The Circular No. 254/11/2025-GST dated 27.10.2025 has now clarified that jurisdiction for the purpose of assignment of adjudication is to be determined exclusively on the basis of the amount of tax involved, and that penalty components are not to be taken into account for determining pecuniary limits.

 Determination of Jurisdiction where demand involves both Central Tax and Integrated Tax vide Circular No. 254/11/2025-GST dated 27.10.2025

It is further clarified vide Circular No. 254/11/2025-GST dated 27.10.2025 issued by the Central Board of Indirect Taxes and Customs under the CGST Act read with Section 20 of the IGST Act that where a SCN under Section 73 or 74 or 74A involves demand of tax in respect of both Central Tax and Integrated Tax (including cess), the jurisdiction of the proper officer shall be determined on the basis of the combined amount of tax.

In such cases, the competent officer shall be identified with reference to the consolidated monetary limits prescribed in the combined column of the jurisdiction table, irrespective of the individual amounts of tax under Central Tax or Integrated Tax, even if either amount separately exceeds the limits specified for those categories.

 Example 1: Central Tax of ₹12 lakh and Integrated Tax of ₹15 lakh aggregate to a combined of ₹27 lakh. Since the combined amount exceeds ₹20 lakh but does not exceed ₹2 crore, the jurisdiction vests with the Deputy/Assistant Commissioner of Central Tax.= ₹27 lakh. Jurisdiction → Deputy/Assistant Commissioner.

 Determination of Proper Officer in case of subsequent statement vide Circular No. 254/11/2025-GST dated 27.10.2025

 When a SCN under Section 73 or 74 or 74A of the CGST Act is followed by a statement under sub-sections (3) or (4) of respective section, for later tax periods showing additional tax not paid or short paid, the proper officer is determined based on the highest tax amount across all periods, including the original notice and the statement. The officer corresponding to this maximum tax demand, as per the prescribed monetary limits, will have jurisdiction.

If the additional tax in the subsequent statement exceeds the limit of the officer who issued the original notice and falls within the limit of a higher-ranked officer, jurisdiction shifts to the higher officer. The original officer must issue a corrigendum, making the earlier proceedings answerable to the higher officer. This ensures consistency, avoids duplication of proceedings, and follows the monetary jurisdiction framework set by the Central Board of Indirect Taxes and Customs.

If the tax in the subsequent statement stays within the original officer’s limit, the same officer continues to have jurisdiction, and the proceedings remain answerable to the same adjudicating authority.

 Situation 1 – Amount remains within same officer’s limit

For example, where the initial show cause notice for FY 2024-25 involves a Central Tax demand of ₹18 lakh, and a subsequent statement for FY 2025-26 adds a further ₹5 lakh, the highest amount across all periods is ₹18 lakh. Since this falls within the prescribed monetary limit of ₹10 lakh to ₹1 crore, jurisdiction continues to vest with the Deputy/Assistant Commissioner, and no change of officer is required.

 Situation 2 – Subsequent Statement exceeds higher monetary limit

Consider a case where the initial show cause notice involves a Central Tax demand of ₹60 lakh, which falls within the monetary limit of the Deputy/Assistant Commissioner. If a subsequent statement raises the demand to ₹1.40 crore, the highest amount across all periods becomes ₹1.40 crore. Since this exceeds the ₹1 crore threshold, jurisdiction shifts to the Additional/Joint Commissioner. In such a scenario, the officer who issued the earlier show cause notice must make the earlier proceedings answerable to the higher officer, and an appropriate corrigendum should be issued to reflect this change.

Situation 3 – Combined Central Tax and IGST Case

 For instance, where the initial show cause notice specifies a Central Tax demand of ₹12 lakh and an IGST demand of ₹15 lakh, the combined demand totals ₹27 lakh. If a subsequent statement increases the Central Tax to ₹30 lakh and IGST to ₹25 lakh, the highest combined demand becomes ₹55 lakh. Since this falls within the prescribed combined monetary limit of ₹20 lakh to ₹2 crore, jurisdiction continues to vest with the Deputy/Assistant Commissioner.

 Rule of Thumb – Determination of Proper Officer

In practice, the proper officer should always be determined by considering the highest tax demand across all show cause notices, subsequent statements, and combined taxes. This maximum amount must then be matched against the prescribed monetary limits for each category of officer. Jurisdiction to initiate or adjudicate proceedings rests solely with the officer corresponding to that highest tax amount.

 Audit Commissionerate Notices – Follow-Up Statements vide Circular No. 254/11/2025-GST dated 27.10.2025

Where a show cause notice is issued by officers of the Audit Commissionerate of Central Tax, any subsequent statement under sub-sections (3) or (4) of Section 73 or 74 or 74A of the CGST Act must be issued by the proper officer of the jurisdictional Central Tax Commissionerate of the noticee. Such statements shall remain answerable to the same adjudicating authority that was specified in the original SCN issued under sub-section (1) of the respective section.

 Example – Audit Commissionerate Notice

Suppose the Audit Commissionerate of Central Tax issues a show cause notice to a taxpayer in Lucknow for FY 2024-25. Later, a statement under sub-sections (3) or (4) is required for subsequent periods. In this case:

• The statement must be issued by the proper officer of the Lucknow jurisdictional Central Tax Commissionerate (where the taxpayer is located).
• The statement will remain answerable to the same adjudicating authority that was mentioned in the original SCN issued by the Audit Commissionerate.

This ensures that even though the original SCN came from the Audit wing, the follow-up statement is handled by the proper local officer while keeping the original adjudicating authority intact.

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.