Audit & DGGI Can Issue SCNs but Cannot Adjudicate Without Jurisdictional Allocation

Under the GST framework, Audit Commissionerate and DGGSTI/DGGI (Directorate General of GST Intelligence) have a limited role in adjudication. It is pertinent to note that as Circular No. 3/3/2017-GST dated 05.07.2017, 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.

Subsequently, Circular No. 31/05/2018-GST dated 09.02.2018 amended 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.

Power to issue SCN by Audit Commissionerate

It is pertinent to note that para 6 Circular No. 31/05/2018-GST dated 09.02.2018 (as amended by Circular No. 169/01/2022-GST dated 12.03.2022) clarifies the scope of authority of officers of the Audit Commissionerates. The Circular recognizes that Central tax officers of Audit Commissionerates is proper officers for the purpose of:

• Conducting audit; and
• Issuing SCN under Sections 73 and 74 of the CGST Act.

Thus, issuance of SCN by officers of Audit Commissionerate is legally valid and traceable to statutory authorization read with administrative allocation of functions.

Power of adjudication where SCN is issued by Audit Commissionerate

Under the CGST Act, read with Para 6 of Circular No. 31/05/2018-GST (as amended by Circular No. 169/01/2022-GST dated 12.03.2022), the officers of the Audit Commissionerate is empowered to conduct audit and to issue SCN in respect of discrepancies detected during such proceedings. However, the adjudication of such SCNs is not to be undertaken by the Audit Commissionerate.

The Circular clearly provides that a SCN issued by these formations shall be adjudicated by the competent Central Tax officer of the Executive Commissionerate having jurisdiction over the registered person (noticee) when such cases pertain to jurisdiction of one executive Commissionerate of central tax only.

SCN issued by Audit Commissionerates – with Multiple Commissionerates

It is pertinent to note that Para 7.2 of Circular No. 169/01/2022-GST lays down a distinct mechanism in cases where a SCN is issued by the Central Tax officers of the Audit Commissionerate and the principal places of business of the noticees fall under the jurisdiction of multiple Central Tax Commissionerates.

In such situations, the adjudication cannot automatically be undertaken by any one jurisdictional Commissionerate. Instead, the Circular mandates that a proposal for appointment of a common adjudicating authority must be sent to the Board, namely the Central Board of Indirect Taxes and Customs (CBIC). Upon examination and approval of the proposal, the Board may appoint a common adjudicating authority to adjudicate the SCN. Thus, in multi-jurisdictional Audit cases, the appointment of the adjudicating authority requires specific approval of CBIC, ensuring centralized and uniform adjudication.

Example- (Audit Commissionerate Case– with Multiple Commissionerates)

Suppose ABC Ltd. has GST registrations in three different States under the same PAN:

Now, the Audit Commissionerate issues a common SCN covering all three GST registrations of ABC Ltd.

In this case:

• There is effectively one legal entity (ABC Ltd.),
• But its principal places of business fall under three different Commissionerates,
• Therefore, multiple jurisdictions are involved.

The case will not automatically be decided by Delhi, Gurugram, or Ludhiana Commissionerate. Instead:

• A proposal will be sent to the Board,
• The Board will appoint one common adjudicating authority to decide the entire matter.

In Simple Words: If one taxpayer has registrations in different states and an Audit SCN covers all of them, the Board will choose one officer to handle the entire case so that there is one single decision.

Power to issue SCN(s) by DGGI

It is pertinent to note that Para 6 of Circular No. 31/05/2018-GST dated 09.02.2018 (as amended by Circular No. 169/01/2022-GST dated 12.03.2022) clarifies the scope of authority of officers of the DGGI. The Circular recognizes that Central tax officers of DGGI is proper officers for the purpose of:

• Conducting investigation; and
• Issuing SCN under Sections 73 and 74 of the CGST Act.

Thus, issuance of SCN by officers of DGGI is legally valid and traceable to statutory authorization read with administrative allocation of functions.

Power of adjudication where SCN is issued by DGGI

Under the CGST Act, read with Para 6 of Circular No. 31/05/2018-GST (as amended), the officers of the DGGI is empowered to conduct investigation and to issue SCN in respect of discrepancies detected during such proceedings. However, the adjudication of such SCNs is not to be undertaken by the DGGI.

Power of adjudication where SCN is issued by DGGI

The Circular clearly provides that a SCN issued by these formations shall be adjudicated by the competent Central Tax officer of the Executive Commissionerate having jurisdiction over the registered person (noticee) when such cases pertain to jurisdiction of one executive Commissionerate of central tax only.

Power of adjudication in special circumstances where SCN is issued by DGGI

Circular No. 239/33/2024-GST dated 04.12.2024 [which substitutes para 7.1 of the Circular No. 31/05/2018-GST dated 9th February, 2018 (as amended by Circular No. 169/01/2022-GST dated 12th March, 2022)] provides that

Where SCN is issued by DGGI, there may be cases where-

• a SCN is issued to multiple noticees, either having the same or different PANs and the principal place of business of such noticees fall under the jurisdiction of multiple Central Tax Commissionerates; or
• multiple SCNs are issued on the same issue to multiple noticees having the same PAN and the principal place of business of such noticees fall under the jurisdiction of multiple Central Tax Commissionerates;

(i) Single SCN issued to Multiple Noticees falling under Different Commissionerates

Example: M/s Alpha Infrastructure Pvt. Ltd. (PAN AAAAA1111A) is headquartered in Delhi and has branches in Maharashtra and Gujarat. DGGI conducts investigation and issues one common SCN to:

• Alpha Infrastructure Pvt. Ltd. (Delhi – Delhi Commissionerate)
• Its Maharashtra branch (Mumbai Commissionerate)
• Its Gujarat branch (Ahmedabad Commissionerate)
• A related subcontractor M/s Beta Traders (different PAN – Maharashtra Commissionerate)

In this case, the SCN contains multiple noticees. Some noticees have the same PAN (Alpha branches). One noticee has a different PAN (Beta Traders). Their principal places of business fall under different Central Tax Commissionerates

(ii) Multiple SCNs issued on Same Issue to Same PAN across Different Commissionerates

Example: M/s Zenith Electronics Ltd. (PAN ZZZZZ2222Z) has:

• Head office in Karnataka (Bengaluru Commissionerate)
• Branch in Tamil Nadu (Chennai Commissionerate)
• Branch in Telangana (Hyderabad Commissionerate)

DGGI investigates wrongful ITC claim on a common issue (say, fake invoices from a common supplier). Instead of issuing one common SCN, DGGI issues:

• One SCN to Bengaluru registration
• One SCN to Chennai registration
• One SCN to Hyderabad registration

All SCNs relate to the same issue, same PAN, but different GSTINs falling under different Commissionerates.

Who will adjudicate such SCNs?

For the purpose of adjudication of such SCNs, Additional/Joint Commissioners of Central Tax of specified Commissionerates have been empowered with All India jurisdiction through amendment in theNotification No. 02/2027 dated 19th June, 2017 vide Notification No. 02/2022-Central Tax dated 11th March, 2022, as further amended vide Notification No. 27/2024-Central Tax dated 25th November, 2024.

It is respectfully submitted that vide Notification No. 02/2022–Central Tax dated 11.03.2022, para 3A was inserted in Notification No. 2/2017–Central Tax dated 19.06.2017, whereby certain Additional Commissioners and Joint Commissioners of specified Central Tax Commissionerates were conferred All India jurisdiction for adjudicating SCNs issued by officers of the DGGI. Through this amendment, the Additional Commissioner or Joint Commissioner working under the ten specified Principal Commissionerates were given the power to: Pass an order or decision in respect of notices issued by officers of the Directorate General of Goods and Services Tax Intelligence (DGGI) under Sections 67, 73, 74, 76, 122, 125, 127, 129 and 130 of the CGST Act, 2017.

Subsequently, through Notification No. 27/2024 – Central Tax dated 25.11.2024, Table V was amended again. By this amendment, the earlier list of 10 specified Commissionerates was expanded to 23 Commissionerates. As a result, Additional Commissioners or Joint Commissioners working under these 23 specified Commissionerates are now empowered to adjudicate DGGI-issued notices under the specified sections of the CGST Act, 2017, across India.

In simple terms, the adjudication authority for DGGI cases has now been widened from 10 Commissionerates to 23 Commissionerates.

No monetary limit for adjudication of such SCN.

Such SCNs may be adjudicated, irrespective of the amount involved in the SCN(s), by one of the Additional/Joint Commissioners of Central Tax empowered with All India jurisdiction vide the above mentioned notifications.

Allocation Mechanism for adjudication

It is pertinent to note that the Additional Commissioners or Joint Commissioners posted in the 23 specified Principal Commissionerates/Commissionerates have been vested with All India jurisdiction for the purpose of adjudicating notices issued by officers of DGGI under Sections 67, 73, 74, 76, 122, 125, 127, 129 and 130 of the CGST Act, 2017. Thus, although these officers are stationed in particular Commissionerates, their adjudicatory jurisdiction extends across India in respect of DGGI cases. However, even though multiple Additional/Joint Commissioners are empowered with such All India jurisdiction, the adjudication of a particular case is not automatic. The matter must be formally allocated.

As clarified through the relevant Circular, the Principal Commissioners/Commissioners of the specified Central Tax Commissionerates are responsible for allocating the charge of adjudication (DGGI cases) to one or more Additional Commissioners or Joint Commissioners posted in their Commissionerates.

Where the principal place of business of the noticee, against whom the highest amount of tax demand (including Integrated Tax and cess, wherever applicable) has been raised in the show cause notice(s), falls within the jurisdiction of a particular Central Tax Zone/Commissionerate mentioned in Column 2 of the notified table, such show cause notice(s) may be adjudicated by one of the Additional Commissioners or Joint Commissioners of Central Tax who are holding the designated charge of “Adjudication (DGGI cases)” in the Central Tax Commissionerate mentioned in Column 3 corresponding to that Zone/Commissionerate.

Table

Accordingly, even though multiple officers may be vested with All India jurisdiction for adjudication of DGGI cases, the competent adjudicating authority is determined based on the location of the principal place of business of the noticee having the highest tax demand, and the mapping provided in the notified table.

In such cases, the SCN(s) are required to be made answerable by the officers of DGGI before the concerned Additional/Joint Commissioner of Central Tax to whom the adjudication charge has been allocated.

Example – Highest Demand in Ahmedabad Zone

DGGI issues a common SCN to:

• M/s Alpha Pvt. Ltd. – Ahmedabad (₹12 crore demand)
• M/s Beta Traders – Jaipur (₹4 crore demand)
• M/s Gamma Enterprises – Delhi (₹6 crore demand)

Highest demand: ₹12 crore (Ahmedabad). As per the Table:

• If highest demand falls in Ahmedabad Zone
• The adjudicating authority will be the Additional/Joint Commissioner of Ahmedabad South Commissionerate

Thus, even though officers across India have All India jurisdiction, this particular SCN will be allocated to the Additional/Joint Commissioner holding charge of Adjudication (DGGI cases) in Ahmedabad South.

Adjudication of subsequent SCNs on the Same Issue

Circular No. 239/33/2024-GST dated 04.12.2024 [which substitutes para 7.1 of the Circular No. 31/05/2018-GST dated 9th February, 2018 (as amended by Circular No. 169/01/2022-GST dated 12th March, 2022)] provides para 7.1.1 for a specific mechanism where multiple SCNs arise on the same issue, but are issued at different points of time.

Where an earlier SCN has been issued to multiple noticees (having same or different PANs) and such SCN has been assigned to a common adjudicating authority based on the criterion of the highest amount of tax demand (as mentioned in Para 7.1 of Circular i.e. as mentioned above) , and subsequently another SCN is issued on the same issue to different noticee(s) having PAN(s) different from those covered in the earlier SCN, the adjudication of such later SCN shall not automatically go to the earlier common adjudicating authority. Instead, the following principles apply:

• If the later SCN involves only one noticee (single GSTIN), then it shall be adjudicated by the jurisdictional adjudicating authority of that noticee.
• However, if the later SCN involves multiple noticees (multiple GSTINs) whose principal places of business fall under the jurisdiction of different Central Tax Commissionerates, then such later SCN shall be adjudicated by a common adjudicating authority, determined independently in accordance with Para 7.1 of Circular— that is, based on the noticee against whom the highest tax demand has been raised in that later SCN.

Example 1 – Later SCN issued to Single Noticee (Different PAN)

DGGI issues an earlier SCN on wrongful ITC claim to:

• M/s A Ltd. (Delhi – ₹5 crore demand)
• M/s B Ltd. (Mumbai – ₹8 crore demand)

Since multiple noticees are involved and ₹8 crore is the highest demand, the SCN is adjudicated by the common adjudicating authority determined as per Para 7.1 (i.e., based on highest demand). Later, DGGI discovers that another entity:

• M/s C Pvt. Ltd. (Chennai – separate PAN)

was also involved in the same fraudulent ITC chain. A separate SCN is issued to M/s C Pvt. Ltd. alone. In this case:

• The later SCN involves only one noticee (single GSTIN).
• Therefore, it shall be adjudicated by the jurisdictional adjudicating authority of Chennai Commissionerate, and not by the earlier common adjudicating authority.

Example 2 – Later SCN issued to Multiple Noticees (Different PANs)

Assume the same earlier SCN (A Ltd. and B Ltd.) was adjudicated by the common authority based on highest demand. Later, DGGI issues another SCN on the same issue to:

• M/s D Traders (Kolkata – ₹3 crore demand)
• M/s E Enterprises (Hyderabad – ₹6 crore demand)

Now:

• There are multiple noticees in the later SCN.
• Their principal places of business fall under different Commissionerates.
• Highest demand in this later SCN is ₹6 crore (Hyderabad).

Therefore, the later SCN will be adjudicated by a common adjudicating authority determined independently, based on ₹6 crore (Hyderabad), in accordance with Para 7.1. It will not automatically go to the adjudicating authority who handled A Ltd. and B Ltd.

Transitional mechanism for pending DGGI cases

Circular No. 239/33/2024-GST dated 04.12.2024 [which substitutes para 7.3 of the Circular No. 31/05/2018-GST dated 9th February, 2018 (as amended by Circular No. 169/01/2022-GST dated 12th March, 2022)] provides that where:

• A SCN was issued by officers of DGGI prior to 01.12.2024 (i.e., before Notification No. 27/2024 came into effect); and
• The case falls within the situations covered under Para 7.1 read with Para 7.1.1 of Circular No. 239/33/2024-GST dated 04.12.2024 (i.e., multi-noticee or multi-jurisdiction cases requiring common adjudication); and
• No adjudication order has been passed up to 30.11.2024,

Then such pending SCNs are not required to be re-issued. Instead, they may be made answerable to the Additional/Joint Commissioners of Central Tax having All India jurisdiction, as per the allocation criteria laid down in Para 7.1 read with Para 7.1.1. This is to be done by issuing a corrigendum to the original SCN.

For more details regarding Additional/Joint Commissioners of Central Tax having All India jurisdiction, please refer to the article “CGST Act Sections 3–5: Administrative Framework & All-India Adjudication Powers in DGGI Cases dated 21st February, 2026” available at the following link: https://taxguru.in/goods-and-service-tax/cgst-act-sections-3-5-administrative-framework-all-india-adjudication-powers-dggi-cases.html

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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.