M/S Charanji Distributors vs. The Principal Commissioner Of Central Tax

Held

The Court held that the contention regarding lack of jurisdiction was not tenable. While the petitioner argued that the SCN was issued by the Additional Director, DGGI, and the OIO by the Joint Commissioner, Hyderabad GST, and that the relevant circular designating the Joint Commissioner as the proper officer for cases exceeding Rs. 2 crores was dated 27.10.2025, which was subsequent to the SCN (17.02.2025) and OIO (15.10.2025), the Court found that the Joint Commissioner, who passed the OIO, was indeed the proper officer in terms of the applicable allocation of functions for cases involving more than Rs. 2 crores. The Court noted that the monetary amount involved was over Rs. 2 crores and the OIO was passed by the Joint Commissioner. Therefore, the Joint Commissioner was the competent and proper officer. The Court also invoked Section 160 of the CGST Act, which states that proceedings shall not be invalid merely by reason of any mistake, defect, or omission if they are in substance and effect in conformity with the intents and requirements of the Act. The Court found that the petitioner had an alternative remedy of appeal against the OIO and that the issues raised, other than jurisdiction, could be appropriately raised before the appellate authority. The Court explicitly stated that it had not expressed any opinion on the merits of the case, leaving all such questions open for the appellate authority. The writ petition was dismissed, with the petitioner being at liberty to avail the remedy of appeal and have the period spent in pursuing the writ petition excluded for limitation purposes.

Facts

M/s. Charanji Distributors (Petitioner), a sole proprietorship, filed a writ petition challenging a show cause notice (SCN) dated 17.02.2025 and an Order-in-Original (OIO) dated 15.10.2025. The SCN was issued by the Additional Director General, DGGI, Hyderabad, and the OIO was passed by the Joint Commissioner, Hyderabad GST (Respondents). The DGGI investigated allegations of fraudulent Input Tax Credit (ITC) availment without actual supply of goods. The petitioner's premises were visited on 24.05.2022, and statements were recorded. The SCN invoked Section 122 of the CGST Act, proposing a penalty of Rs. 17,27,04,518/-. The petitioner contended that the SCN and OIO were void ab initio due to lack of jurisdiction, as no proper officer had been assigned functions under Section 122 prior to a subsequent CBIC Circular dated 27.10.2025. The petitioner also argued that notices were not effectively served, violating principles of natural justice.

Key Issues

1. Whether the Show Cause Notice dated 17.02.2025 and Order-in-Original dated 15.10.2025 are void ab initio for want of jurisdiction, as no proper officer had been assigned functions under Section 122 of the CGST Act prior to CBIC Circular No. 254/11/2025-GST dated 27.10.2025? 2. Whether the proceedings were conducted in violation of the principles of natural justice due to non-service of notices? Petitioner's Arguments: The petitioner argued that the officers issuing the SCN and OIO lacked jurisdiction because the assignment of functions under Section 122 of the CGST Act was done only after the issuance of these documents, citing the date of CBIC Circular No. 254/11/2025-GST (27.10.2025) as crucial. They contended that Section 2(91) and Section 5(1) of the CGST Act require proper assignment of functions by the Board. Furthermore, the petitioner claimed that postal returns indicating "addressee left" proved non-service of notices, thus violating principles of natural justice and Article 14 of the Constitution. Respondents' Arguments: The respondents relied on circulars dated 19.06.2017 and 06.07.2022, and Section 160 of the CGST Act, which deals with the validity of proceedings despite defects or omissions. They argued that the Joint Commissioner, who passed the OIO, was the proper officer for cases involving more than Rs. 2 crores, as indicated by the subsequent circular, and that Section 160 would cure any procedural defects.