A significant legal issue is emerging in GST litigation across India, with taxpayers increasingly challenging demand orders on the ground that they were issued by officers who lacked the monetary authority to adjudicate such cases. The controversy centers on whether a GST demand order passed by an officer below the rank prescribed under statutory assignments can survive judicial scrutiny or whether it becomes void from the outset.
The issue has gained prominence following the operationalization of the Goods and Services Tax Appellate Tribunal (GSTAT), as taxpayers are examining whether large tax demands have been adjudicated by officers who exceeded their legally assigned powers. According to the legal analysis contained in the uploaded document, such defects are not merely procedural irregularities but may amount to jurisdictional errors that strike at the very foundation of the proceedings.
Core Legal Question: Who Can Legally Adjudicate GST Demands?
Under the CGST Act, the authority to determine tax liability under Sections 73, 74 and, from FY 2024-25 onwards, Section 74A, can only be exercised by a “proper officer” who has been specifically assigned that function. The law does not permit officers to assume powers beyond the limits assigned to them by statutory notifications and circulars.
The concept of a “proper officer” derives from Section 2(91) of the CGST Act, while Section 5 provides that GST officers can exercise only those powers and duties specifically assigned to them, subject to prescribed conditions and limitations. Consequently, the authority to issue a demand order is not inherent in an officer’s designation alone but depends upon the scope of powers formally conferred upon that officer.
Monetary Limits Define Jurisdiction
The Central Board of Indirect Taxes and Customs (CBIC) has established monetary thresholds for adjudication through Circular No. 31/05/2018-GST and later Circular No. 254/11/2025-GST. These circulars allocate adjudication powers according to the quantum of tax involved.
Under the framework:
- Superintendents can adjudicate smaller demands up to specified limits.
- Deputy Commissioners and Assistant Commissioners are empowered to decide matters involving CGST demands exceeding ₹10 lakh but not exceeding ₹1 crore, or combined CGST and IGST demands up to ₹2 crore.
- Additional Commissioners and Joint Commissioners alone possess authority to adjudicate cases where CGST exceeds ₹1 crore or where combined CGST and IGST exceed ₹2 crore.
The legal significance of these limits is at the heart of the debate. The argument advanced is that these ceilings are not administrative guidelines but statutory conditions that determine whether an officer possesses jurisdiction at all.
Why the Defect Could Be Fatal
The document argues that if a Deputy Commissioner, Assistant Commissioner, or Superintendent adjudicates a tax demand exceeding the monetary limits assigned to that rank, the resulting order may be considered coram non judice—an order passed without legal authority. Such an order, according to the analysis, would be void and unenforceable.
The practical consequence is significant. Rather than contesting the merits of the tax demand, a taxpayer may seek complete annulment of the proceedings on the ground that the officer lacked jurisdiction to issue the order in the first place. If accepted, the challenge could invalidate not only the original demand order but also the appellate order that follows from it.
Rule 109A Strengthens the Jurisdiction Argument
An important pillar of this argument is Rule 109A of the CGST Rules, which prescribes different appellate forums depending on the rank of the adjudicating officer. Orders passed by Additional or Joint Commissioners are appealed before the Commissioner (Appeals), whereas orders passed by lower-ranking officers are heard by Joint Commissioners (Appeals).
According to the analysis, this rank-sensitive appellate structure demonstrates that the law itself treats the rank of the adjudicating authority as a jurisdictional factor rather than a mere administrative arrangement. If the original adjudication is assigned to the wrong rank, the entire appellate process may also become defective.
Judicial Support for the Challenge
The legal position relies heavily on established principles laid down by the Supreme Court. In the landmark case of Kiran Singh v. Chaman Paswan, the Court held that orders passed without jurisdiction are nullities and that defects relating to pecuniary, territorial, or subject-matter jurisdiction cannot be cured by consent or participation in proceedings. The principle was subsequently reaffirmed in Sushil Kumar Mehta v. Gobind Ram Bohra.
The analysis further cites the decision of the Allahabad High Court in M/s Mansoori Enterprises v. Union of India, where the Court reportedly held that adjudication beyond the monetary limits assigned under the GST framework renders the order vulnerable to challenge for lack of jurisdiction. The case is viewed as a GST-specific precedent supporting the proposition that monetary limits are legally binding.
Revenue’s Possible Counter-Argument
Tax authorities are likely to contend that the monetary limits prescribed through CBIC circulars merely distribute work among officers and do not restrict statutory powers conferred by the Act. Revenue may rely on earlier indirect tax jurisprudence suggesting that administrative circulars cannot curtail powers otherwise granted by statute.
However, proponents of the jurisdictional challenge argue that the GST framework is distinct because the assignment itself is expressly capped by monetary limits. They contend that once a function is assigned only up to a specified threshold, an officer cannot legally exercise authority beyond that ceiling. The existence of rank-based appellate mechanisms under Rule 109A is also cited as evidence that rank and monetary jurisdiction are integral parts of the statutory scheme.
Potential Impact on GST Litigation
If GSTAT benches and higher courts increasingly accept this interpretation, numerous demand orders involving large tax amounts could face jurisdictional challenges. Taxpayers may scrutinize demand notices and adjudication orders to determine whether the officer who passed the order possessed the requisite monetary competence.
The issue assumes even greater importance in cases involving demands running into several crores of rupees, where the discrepancy between the officer’s jurisdictional limit and the actual demand amount is substantial. Such cases could become fertile ground for litigation before GST appellate forums.
Strategic Considerations for Taxpayers
Experts suggest that taxpayers should carefully examine the designation of the adjudicating officer and compare it with the tax amount involved. Where a rank-and-quantum mismatch is evident, the jurisdictional objection should be raised as a primary ground of challenge. At the same time, taxpayers are advised not to rely solely on this argument and should continue to contest the merits of the demand in the alternative.
Other procedural aspects—including limitation periods, pre-deposit requirements, and verification of Document Identification Numbers (DINs)—should also be reviewed before initiating appellate proceedings.
Conclusion
The debate over pecuniary jurisdiction in GST adjudication has the potential to reshape tax litigation in India. The emerging argument is straightforward yet powerful: when the law assigns adjudication authority according to monetary thresholds, any order issued beyond those limits may be void from inception. While courts will ultimately determine the extent to which such challenges succeed, the issue has already become a critical consideration for taxpayers facing substantial GST demands and could influence a significant number of pending and future disputes before GSTAT.
