Case Law Details
Ganapati Ispat Vs Union of India (Andhra Pradesh High Court)
The writ petition before the Andhra Pradesh High Court challenged a show cause notice dated 01.09.2025 issued to the petitioner under Section 122 of the CGST Act/GSGST Act by the third respondent. The notice proposed levy of penalties under Section 122 on the basis of information allegedly gathered by the Central Intelligence Unit, CCO, Visakhapatnam, which indicated instances such as circular trading that could attract penal provisions under the GST law.
Aggrieved by the issuance of the show cause notice, the petitioner approached the High Court contending that Section 122 of the CGST Act does not itself confer power on any authority or officer to initiate or conduct proceedings. It was further argued that proceedings under Section 122 could not be initiated as the provision does not prescribe any mechanism for granting a hearing to the registered person nor does it specify any period of limitation.
On behalf of the respondents, it was contended that the Notification dated 19.06.2017, bearing Notification No. 2/2017–Central Tax, and a subsequent Circular dated 27.10.2025 (Circular No. 254/11/2025-GST) adequately addressed the objections raised by the petitioner. The respondents argued that Notification No. 2/2017, issued under Section 3 read with Section 5 of the CGST Act and Section 3 of the IGST Act, empowered the officers enumerated therein with all powers under the Act and Rules and also defined their territorial jurisdiction. Reliance was also placed on the subsequent circular dated 27.10.2025, which, according to the respondents, expressly empowered the Deputy Commissioner or Assistant Commissioner to exercise powers under Section 122 of the CGST Act. It was further argued that Section 5 of the CGST Act permits superior officers to exercise powers vested in subordinate officers.
The Court noted that the circular dated 27.10.2025 clearly empowered the Assistant Commissioner of Central Tax to exercise powers under Section 122 of the CGST Act. The remaining issue before the Court was whether the initial Notification No. 2/2017 itself conferred such power on all officers mentioned therein. The relevant portion of the notification authorized central tax officers and their subordinates “with all the powers under the said Acts and the rules made thereunder with respect to the jurisdiction specified” in the notification.
The Court examined the scope of this conferment and observed that such language could not be read as granting new or additional powers to all officers under the entire Act. Instead, the Court was of the view that the notification primarily fixed territorial jurisdiction in respect of powers already conferred on officers by the statute itself. On this interpretation, it would not be permissible to conclude that all officers enumerated in the notification were automatically empowered to exercise powers under every provision of the CGST Act, including Section 122.
However, the Court chose not to finally decide the broader question of whether Notification No. 2/2017 conferred jurisdiction on all officers to invoke Section 122. The Court held that the simplest way to resolve the dispute was to set aside the impugned show cause notice dated 01.09.2025 and to leave it open to the third respondent to initiate fresh proceedings, if permissible, by issuing a fresh show cause notice under Section 122 of the CGST Act.
The Court also clarified that it was not examining the wider issues raised by the petitioner regarding enforceability of Section 122, availability of safeguards, absence of hearing provisions, or lack of limitation. These issues were held to be outside the scope of the present writ petition, as the only question under consideration was the jurisdiction of the third respondent to issue the impugned notice.
Accordingly, the writ petition was disposed of by setting aside the show cause notice dated 01.09.2025, while granting liberty to the third respondent to issue a fresh show cause notice under Section 122 of the CGST Act. No order as to costs was made, and all pending miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
Heard Sri V. Sai Mallik, learned counsel appearing for the petitioner and Smt. D. Naga raja Kumari, learned counsel appearing for the respondents.
2. The petitioner was served with a show cause notice on 01.09.22025, by the 3rd respondent, under Section 122 of the GSGST Act, calling upon the petitioner to show cause why certain penalties under Section 122 of the CGST Act should not be levied on the petitioner. This show cause notice is said to have been issued on the ground that the information gathered by the Central Intelligence Unit, CCO, Visakhapatnam had revealed that there were various instances of circular trading etc., which would attract penalties under Section 122 of the GST Act.
3. The petitioner being aggrieved by the said notice, has approached this Court, by way of the present Writ Petition.
4. The contention of the petitioner is that Section 122 of the CGST Act does not confer power on any authority or officer to initiate or conduct proceedings under the Section. Apart from this, it is contended that no proceedings can be initiated under the provisions as there is no provision, for hearing to be given, to the registered person against whom such proceedings are sought to be initiated and that there is no period of limitation set out in the said provision.
5. Smt. D. Naga Raja Kumari, the learned Standing Counsel, on the other hand, would contend that the Notification, dated 19.06.2017, bearing Notification No.2/2017-Central Tax,issued by the Government of India as well as the subsequent notification of the Central Government, dated 27.10.2025, in Circular No.254/11/2025-GST would squarely answer the contention raised by the petitioner. The learned Standing Counsel would contend that Notification No.2 of 2017 issued in exercise of powers under Section 3 read with Section 5 of the GST Act and Section 3 of the IGST Act had empowered various officers, enumerated in the notification, with all the powers under the Act and the rules made thereunder and set out the territorial jurisdiction of each of the said officers. She would further submit that the subsequent circular of 27.10.2025 clearly empowers the concerned Deputy Commissioner or Assistant Commissioner to exercise functions under Section 122 of the CGST Act. Section 5 further states that a superior officer is empowered to exercise any jurisdiction which is vested in a subordinate officer.
6. The circular of 27.10.2025 clearly empowers the Assistant Commissioner of Central tax to exercise powers under Section 122 of the CGST Act. The only issue left before this Court is whether the initial notification 2 of 2017 confers such power on any authority. The said notification reads as follows:
“and the Central Tax Officers subordinate to them as Central Tax Officers and authorized them with all the powers under the said acts and the rules made thereunder with respect to the jurisdiction specified in the tables given below”.
7. To the mind of this Court, this conferment of power can be taken to mean that the notification was not conferring any further power, but was only fixing the territorial jurisdiction of the officers in respect of the powers which are conferred on them by virtue of the act itself. In such circumstances, it may not be permissible to hold that authority had been granted, to all the officers enumerated in the list, in the said notification, with all the powers under the entire act including Section 122 of the CGST Act.
8. This Court does not propose to go into the question, of whether jurisdiction was conferred on all officers under the notification No.2/2017, as the simplest way of resolving this dispute would be to set aside the show cause notice, dated 01.09.2025, and leaving it open to the 3rd respondent to initiate fresh action under Section 122 of the CGST Act by issuing a fresh show cause notice.
9. As far as the question of whether Section 122 of the CGST Act can be enforced and whether necessary safeguards are available is concerned, the same falls outside the scope of the present Writ Petition inasmuch as the question before this Court was only on the jurisdiction of the 3rd respondent in issuing the notice under Section 122 of the CGST Act. These issues are left open.
10. Accordingly, this Writ Petition is disposed of by setting aside the show cause notice, dated 01.09.2025,with liberty to the 3rd respondent to issue a fresh show cause notice under Section 122 of the CGST Act. There shall be no order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand closed.
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