Supreme Court Stays Allahabad HC Order on GST Section 122 Jurisdiction

Nageen Traders And Molding India Pvt. Ltd. Vs State of U.P & Ors. (Supreme Court of India)

Supreme Court Stays Allahabad High Court Ruling on UP State’s Deputy Commissioner Power to Issue Penalty Notice U/S 122

The Hon’ble Supreme Court in M/s Nageen Traders and Molding India Pvt. Ltd. v. State of U.P. & Ors. [SLP (C) Nos. 30711-30713 of 2026 dated September 07, 2026] issued notice and stayed the operation of the judgment of the Hon’ble Allahabad High Court, Lucknow Bench, in M/s Nageen Traders and Molding India Pvt. Ltd. v. State of U.P. & Ors. [Writ Tax Nos. 989, 991 and 992 of 2026 dated August 10, 2026], wherein the High Court had held that the Deputy Commissioner of State Tax was competent to issue a show cause notice under Section 122 of the Uttar Pradesh Goods and Services Tax Act, 2017 (“the UPGST Act”) and had relegated the assessee to the statutory appellate remedy by applying the doctrine of election.

Read HC Order in this case: Deputy Commissioner Had GST Section 122 Jurisdiction, Allahabad HC Allows Statutory Appeal

Facts:

M/s Nageen Traders and Molding India Pvt. Ltd. (“the Petitioner”) was issued a show cause notice dated November 19, 2025 in Form GST DRC-01 under Section 122(1)(ii) of the UPGST Act for FY 2023-24 by the Deputy Commissioner of State Tax, proposing penalty exceeding Rs. 1 crore. After the Petitioner contested the notice on merits, a penalty order dated June 24, 2026 under Sections 122(1)(ii) and 122(1)(vii) with Form GST DRC-07 (“the Impugned Order”) was passed.