Circular No. 3/3/2017 dated 05.07.2017 was issued by the Board in exercise of the powers conferred under clause (91) of Section 2 of the Central Goods and Services Tax Act, 2017 (12 of 2017), read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), and subject to sub-section (2) of Section 5 of the CGST Act, 2017. The circular clarifies the designation of the “proper officer” for matters other than Registration and Composition, under the provisions of the CGST Act, 2017.
The validity of the said circular was challenged before Hon’ble Delhi High Court in Lovelesh Singhal vs. Central Board of Indirect Taxes & Customs and Others in W.P.(C) 1426/2026, wherein the judgment was delivered on 2nd February, 2026.
The petitioner contended that the circular was issued by the respondent-Board, thereby delegating powers which the Board itself is not authorized to confer. To substantiate this claim, he referred to:
- Sub-section (16) of Section 2 of the CGST Act, defining “Board”;
- Sub-section (91) of Section 2, defining “proper officer”; and
- Sub-section (25) of Section 2, defining “Commissioner in the Board”.
Relying on Section 168, the petitioner argued that even if sub-section (2) of Section 168 contemplates that certain powers are to be exercised with the approval of the Board, the Board, in principle, cannot assign duties to the proper officer. According to him, such authority exclusively vests in the “Commissioner in the Board”.
Consequently, he submitted that the circular is without legal authority, and therefore, the officer concerned is not empowered to issue the show-cause notice or the impugned summons under Section 70 of the CGST Act.
The Hon’ble Delhi High Court held that, the learned counsel for the petitioner relied on sub-section (2) of Section 168 of the CGST Act to argue that it is the Commissioner in the Board who must route proposals for approval by the Board before assigning functions. As regards the circular under challenge, a prima facie reading indicates that the language used states that the Board is assigning the officers listed in column 2 of the table to exercise the functions of proper officers in relation to various provisions of the CGST Act and the rules framed thereunder.
The Hon’ble Delhi High Court observed that it is undisputed that the Commissioner is part of the Board. Since sub-section (2) of Section 168 contemplates that the assignment of functions to Central Tax Officers is made upon a proposal of the Commissioner in the Board, the Court saw no reason to doubt that the assignments in the circular were made under the authority of the Commissioner and approved by the Board as required under the said provision.
In view of the above, the Court saw no reason to infer that, in issuing Circular No. 3/3/2017 dated 5th July, 2017, the proposal was not routed through the Commissioner in the Board, or that it was not approved by the Board, as defined under sub-section (16) and sub-section (25) of Section 2 of the CGST Act.
The Court held that in law, a presumption of validity attaches to the circular, and the onus lies on the petitioner to prove that it was issued without lawful authority or requisite approval. Our view is further fortified by the judgment of the Apex Court in State of Tamil Nadu v. P. Krishnamurthy, (2006) 4 SCC 517. The relevant portion of which reads as under:
“15. There is a presumption in favour of constitutionality or validity of a subordinate legislation and the burden is upon him who attacks it to show that it is invalid. It is also well recognised that a subordinate legislation can be challenged under any of the following grounds:
(a) Lack of legislative competence to make the subordinate legislation.
(b) Violation of fundamental rights guaranteed under the Constitution of India.
(c) Violation of any provision of the Constitution of India.
(d) Failure to conform to the statute under which it is made or exceeding the limits of authority conferred by the enabling Act.
(e) Repugnancy to the laws of the land, that is, any enactment.
(f) Manifest arbitrariness/unreasonableness (to an extent where the court might well say that the legislature never intended to give authority to make such rules).”
Although not directly in the context of the validity of a circular or notification, the Apex Court in G.M. (Operations) S.B.I. & Anr vs. R. Periyasamy, Civil Appeal No. 10942/2014, reiterated the principle of presumption in administrative law, affirming that administrative actions are presumed to be valid unless proven otherwise. The same may be read as under-
“In administrative law, it is a settled principle that the onus of proof rests upon the party alleging the invalidity of an order. In other words, there is a presumption that the decision or executive order is properly and validly made, a presumption expressed in the maxim omnia praesumuntur rite esse acta which means ‘all things are presumed to be done in due form.”
Furthermore, a reference can be made to the decision of the Supreme Court in Ram Krishna Dalmia v. S.R. Tendolkar, 1958 SCC OnLine SC 6, wherein it was held as under:
“18. …….We are not of opinion that they do not. It is not for us to say on this application and we do not in fact say or even suggest that the allegations about the petitioners and their concerns are at all well founded. It is sufficient for our present purpose to say that the facts disclosed on the face of the notification itself and the facts which have been brought to our notice by the affidavits afford sufficient support to the presumption of constitutionality of the notification. There being thus a presumption of validity in favour of the Act and the notification, it is for the petitioners to allege and prove beyond doubt that other persons or companies similarly situate have been left out and the petitioners and their companies have been singled out for discriminatory and hostile treatment. The petitioners have, in our opinion, failed to discharge that onus…….”
Apart from relying on the language in the preamble of Circular No. 3/3/2017 dated 5th July, 2017, wherein the term “Board” is used in relation to the officers listed in column 2 for exercising functions as proper officers, the petitioner has neither clearly pleaded that the proposal was required to be routed through the Commissioner in the Board, nor established through supporting documents that he discharged the burden of proving that the impugned circular was issued without lawful authority.
In our view, the learned counsel for the respondent is justified in asserting that the entire process of issuing the circular was initiated at the behest of the Commissioner in the Board, and that the Board granted its approval for the same. Accordingly, we see no reason to interfere in the matter of testing the validity of the impugned Circular No. 3/3/2017 dated 5th July, 2017, issued by the Government of India.
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