Ganapathi Ispat Vs Union of India (Andhra Pradesh High Court)
The Andhra Pradesh High Court considered a writ petition challenging a show cause notice dated 01.09.2025 issued under Section 122 of the CGST Act, proposing levy of penalties on allegations of circular trading based on information gathered by the Central Intelligence Unit. The petitioner questioned the jurisdiction of the issuing authority, contending that Section 122 itself does not confer power to initiate proceedings, does not prescribe a hearing mechanism, and does not provide any limitation period.
The Revenue relied on Notification No. 2/2017-Central Tax and a subsequent Circular dated 27.10.2025, arguing that these instruments empowered the Deputy/Assistant Commissioner to exercise powers under Section 122, and that superior officers could also exercise powers of subordinate officers under Section 5 of the Act.
The Court examined the scope of Notification No. 2/2017 and observed that it primarily appeared to fix territorial jurisdiction of officers for powers already conferred by the statute, rather than independently granting all officers powers under every provision including Section 122. Without conclusively deciding whether the notification conferred such jurisdiction, the Court opted for a limited resolution.
The High Court set aside the impugned show cause notice on the ground of jurisdiction, while granting liberty to the department to initiate fresh proceedings by issuing a new show cause notice under Section 122 of the CGST Act. The Court expressly left open broader issues relating to enforceability of Section 122 and availability of safeguards, as they were beyond the scope of the present petition. The writ petition was disposed of accordingly, with no order as to costs.
