Section 122 CGST: Proper Officer, Jurisdiction & Validity of Proceedings

Proper Officer and Jurisdiction under Section 122 of the CGST Act: Legal Framework and Validity of Proceedings.

It is pertinent to note that Section 122(1) of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) prescribes penalties for twenty-one specified offences, including issuance of invoices without actual supply, wrongful availment or utilisation of input tax credit, and failure to remit tax collected to the Government. For such offences, the statute mandates a penalty of ₹10,000 or the amount of tax involved, whichever is higher. This covers listed wrongful acts, like:

• Supplies goods/services without issuing invoice
• Issues fake/false invoice
• Issues invoice without actual supply (bogus billing)
• Collects GST but does not deposit to Govt beyond 3 months
• Wrongly avails or uses ITC
• Fails to deduct/collect TDS/TCS
• Fails to register though liable
• Obstructs GST officer
• Tampers with or destroys evidence
• Transports or stores goods liable for confiscation

Further, Section 122(2) of CGST Act, 2017 separately classifies cases where tax has not been paid or has been short-paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, into non-fraud and fraud categories. In cases not involving fraud, wilful misstatement, or suppression of facts, the penalty shall be ₹10,000 or ten per cent of the tax due, whichever is higher. However, in cases involving fraud, wilful misstatement, or suppression of facts with intent to evade tax, the penalty shall be ₹10,000 or an amount equal to one hundred per cent of the tax due, whichever is higher

Further, Section 122(3) of the Central Goods and Services Tax Act, 2017 extends penal liability to any person, other than the taxable person, who aids or abets the commission of the specified offences (21 offences), deals with goods that are liable to confiscation, or fails to appear before the proper officer when summoned under the Act. In such cases, a penalty of up to ₹25,000 may be imposed.

Absence of Proper Officer Assignment for Proceedings under Section 122

Although Section 122 of the Central Goods and Services Tax Act, 2017 prescribes penalties for specified offences, it does not designate or specify any authority competent to initiate proceedings or issue a show cause notice for imposition of such penalties.

In contrast, almost all other provisions under the GST law that contemplate issuance of a show cause notice expressly empower a “proper officer” to undertake such action. The term “proper officer” has been specifically defined under Section 2(91) of the Act to mean an officer who has been assigned such functions by the Commissioner.

However, Section 122 neither assigns the function of adjudication nor authorizes any proper officer to initiate penalty proceedings. In the absence of a statutory designation or assignment of jurisdiction, assumption of authority to issue a show cause notice or impose penalty under Section 122 is without express sanction of law and is therefore liable to be challenged as lacking jurisdiction.

In fact, for several other provisions of the Act, the Board has issued specific circulars assigning jurisdiction to proper officers. Reference may be made to Circular No. 1/1/2017-GST dated 26.06.2017 assigning officers for matters relating to registration and composition levy. Further, Circular No. 3/3/2017-GST dated 05.07.2017 and Circular No. 31/05/2018-GST dated 09.02.2018 (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) also designate proper officers for discharge of functions under various provisions of the CGST Act and the Integrated Goods and Services Tax Act, 2017.

Therefore, no such circular, notification, or assignment has been issued conferring authority upon any proper officer to initiate or adjudicate penalty proceedings under Section 122. In the absence of any statutory or administrative assignment of jurisdiction, assumption of power to issue a show cause notice or impose penalty under Section 122 lacks legal sanction and renders the proceedings without authority of law.

Subsequent Board Clarification Acknowledging Absence of Proper Officer

It is further pertinent to note that the Central Board of Indirect Taxes and Customs itself has acknowledged the absence of assignment of proper officers under certain provisions of the Central Goods and Services Tax Act, 2017.

Vide Circular No. 254/11/2025-GST dated 27.10.2025, the Board observed that no proper officer had been assigned in respect of Section 74A, Section 75(2), Section 122 and Rule 142(1A). Consequently, the said Circular was issued specifically to assign proper officers for exercise of powers under these provisions.

This subsequent assignment clearly demonstrates that, prior to issuance of the said Circular, there existed no statutory or administrative conferment of jurisdiction upon any officer to initiate or adjudicate proceedings under Section 122. Therefore, any show cause notice or penalty proceedings initiated before such assignment are without authority of law and liable to be declared void ab initio for want of jurisdiction.

Prospective Operation of the Circular

It is further submitted that the aforesaid Circular No. 254/11/2025-GST dated 27.10.2025 issued by the Central Board of Indirect Taxes and Customs, assigning proper officers under Section 122 of the Central Goods and Services Tax Act, 2017, can operate only prospectively and not retrospectively.

The conferment of jurisdiction upon an officer is a substantive requirement of law and cannot be presumed to have retrospective effect in the absence of an express statutory mandate. Therefore, proceedings initiated prior to the issuance of the said Circular cannot be validated by subsequent administrative assignment of authority and remain void ab initio for want of jurisdiction.

Designation of Proper Officers under Section 122 by Subsequent Circular

It is submitted that only thereafter, vide Circular No. 254/11/2025-GST dated 27.10.2025 issued by the Central Board of Indirect Taxes and Customs, the Board, in exercise of the powers conferred under clause (91) of Section 2 read with Section 5 of the Central Goods and Services Tax Act, 2017 and Section 20 of the Integrated Goods and Services Tax Act, 2017, for the first time assigned specific officers as “proper officers” for discharge of functions under Section 122.

By the said Circular, the following officers have been designated as proper officers for the purpose of initiation and adjudication of penalty proceedings under Section 122:

• Additional or Joint Commissioner of Central Tax
• Deputy or Assistant Commissioner of Central Tax
• Superintendent of Central Tax

The very fact that such assignment has been made subsequently establishes that no proper officer had earlier been vested with jurisdiction under Section 122. Consequently, any proceedings initiated prior to the issuance of the said Circular suffer from inherent lack of jurisdiction and are liable to be declared void ab initio.

Prescription of Monetary Limits for Jurisdiction under Section 122

It is further submitted that the Central Board of Indirect Taxes and Customs, vide Circular No. 254/11/2025-GST dated 27.10.2025 issued under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017, has not only assigned specific officers as “proper officers” for the purposes of Section 122, but has also prescribed monetary limits for different levels of officers for optimal distribution of work relating to issuance of show cause notices and adjudication of penalty proceedings.

Monetary limit for issuance of show cause notices and passing of orders under section122 of CGST Act.

Determination of Jurisdiction Where Penalty Involves Both Central Tax and Integrated Tax

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 Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 that where a show cause notice under Section 122 involves demand of penalty in respect of both Central Tax and Integrated Tax, the jurisdiction of the proper officer shall be determined on the basis of the combined amount of penalty.

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 penalty under Central Tax or Integrated Tax, even if either amount separately exceeds the limits specified for those categories.

Example 1: Central Tax penalty of ₹12 lakh and Integrated Tax penalty of ₹15 lakh aggregate to a combined penalty 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.

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