Delegation of "proper officer" functions under CGST Act via circulars upheld; audit report communication and show-cause notices validated, petition dismissed

Whether the Board had statutory authority to issue circulars delegating "proper officer" functions under the CGST Act: Held that Sections 3, 4 and 5 empower the Board/Central Government to constitute central tax officers (including Commissioner of Central Tax (Audit) and subordinate officers) and to authorize delegation; reference to Section 2(91) did not negate those powers. Reasoning cites that mis-reference to a provision does not vitiate action if lawful power exists (Ben Hiraben Manilal; Tulsiram Patel). Outcome: impugned circulars valid, the officer who communicated the audit report was a proper officer, and challenge to the show-cause notices fails; petition dismissed and respondents may give effect to the disposal order subject to statutory challenge.

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Issues Involved:
1. Validity of Circulars issued by the Central Board of Indirect Taxes and Customs (CBIC).
2. Jurisdiction of Central Tax Officers to issue audit reports and show cause notices under the CGST Act.
3. Applicability of the Supreme Court's decision in Canon India Pvt. Ltd. v/s. Commissioner of Customs.
4. Prematurity and maintainability of the petition.

Summary:

1. Validity of Circulars:
The petitioner challenged the validity of Circular No. 3/3/2017-GST, Circular No. 31/05/2018-GST, and Circular No. 169/01/2022-GST, arguing that the CBIC had no power to issue these circulars and assign functions of the 'proper officer' to Central Tax Officers for issuing audit reports and show cause notices under Sections 65, 73, and 74 of the CGST Act. The court analyzed Section 2(91) of the CGST Act, which defines a "proper officer" and concluded that the Board had the authority to assign functions to central tax officers through the impugned circulars. The court found that the circulars were intra vires and legally valid.

2. Jurisdiction of Central Tax Officers:
The petitioner contended that the impugned circulars usurped jurisdiction by assigning functions of the proper officer to Central Tax Officers. The court examined the relevant provisions of the CGST Act, including Sections 3, 4, and 5, which empower the government and the Board to appoint and authorize officers for the purposes of the Act. The court held that the impugned circulars validly assigned the functions of the proper officer to the central tax officers, including the issuance of audit reports and show cause notices.

3. Applicability of Canon India Pvt. Ltd. v/s. Commissioner of Customs:
The petitioner relied on the Supreme Court's decision in Canon India Pvt. Ltd., which dealt with the definition of "proper officer" under the Customs Act. The court distinguished this case, noting that the issue in Canon India Pvt. Ltd. was whether officers of the Directorate of Revenue Intelligence (DRI) could be appointed as proper officers without being designated as customs officers. In the present case, there was no dispute that the officers of the Audit Commissionerate were central tax officers. Therefore, the court concluded that the ratio of Canon India Pvt. Ltd. did not apply to the present case.

4. Prematurity and Maintainability of the Petition:
The respondent argued that the petition was premature as it was directed only against the show cause notices, and the petitioner had alternate remedies under the CGST Act. The court noted that the Assistant Commissioner of Central GST had already disposed of the show cause notices by confirming certain demands and dropping others. The court held that it was appropriate to decide the issue of the validity of the impugned circulars and show cause notices, as the outcome could affect the jurisdiction of the officers who issued them.

Conclusion:
The court dismissed the petition, upholding the validity of the impugned circulars and the jurisdiction of the central tax officers to issue audit reports and show cause notices under the CGST Act. The court allowed the respondents to give effect to the order dated 29.12.2023, disposing of the show cause notices, subject to the petitioner's right to challenge the order in accordance with the law. The rule was discharged without any order for costs.

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