2026 (2) TMI 385 - HC - GST

Presumption of constitutionality of CGST circular and assignment of functions under Section 168; validity upheld, summons rescheduled.

A presumption of constitutionality was applied to subordinate CGST directions, holding that Section 168 empowers the Board to issue orders and ... Presumption of constitutionality of subordinate legislation - omnia praesumuntur rite esse acta - power to issue instructions or directions u/s 168 of the CGST Act - assignment of functions to central tax officers - proper officer - Commissioner in the Board - summons u/s 70 - HELD THAT:- A plain reading of the Section 168 contemplates that sub-section (1) empowers the Board, for achieving the purpose and uniformity in the implementation of the Act, to issue such orders, instructions, or directions to the Central Tax Officers as it may deem fit. Thereupon, such officers and all other persons employed in the implementation of the Act are required to observe and follow such orders, instructions, or directions. No doubt, the petitioner has relied upon sub-section (2) of Section 168 of the CGST Act so as to substantiate his contention that it is the Commissioner in the Board, who is required to route the proposal and the same is required to be approved by the Board, as provided under sub-section (2) of Section 168 of the CGST Act, in the matter of assigning functions by the Commissioner in the Board. Once it is not in dispute that the Commissioner is part of the Board, and sub-section (2) of Section 168 contemplates that the assignment of functions to the Central Tax Officers is upon a proposal of the Commissioner in the Board, we see no reason to disbelieve that the same was not under the authority of the Commissioner, which was approved by the Board as required under sub-section (2) of Section 168 referred above. Thus, we see no reason to infer that while issuing the circular dated 5th July, 2017, the proposal was not mooted through the Commissioner in the Board, or that the same was not approved by the Board as defined under sub-section (16) of Section 2 and sub-section (25) of Section 2 of the CGST Act. We see no reason to cause interference in the matter of testing the validity of the impugned circular dated 5th July, 2017 issued by Government of India. As regards the issue dealing with the returnable date of the summons is concerned, in view of the statement made by the learned counsel for the respondent, we deem it appropriate to permit the petitioner to appear in compliance with the summons dated 3rd November, 2025 before the competent officer mentioned therein on 23rd March, 2026. The competent officer shall thereafter deal with the issue in accordance with law. With above observations, we deem it appropriate to partly allow the present writ petition to the extent of rescheduling the date, however, the challenge to the circular fails and to that extent, the petition stands dismissed. Issues: (i) Whether Circular No. 3/3/2017 dated 05.07.2017 was issued without authority and therefore liable to be quashed; (ii) Whether the summon dated 03.11.2025 issued under Section 70 of the CGST Act based on the circular is enforceable and whether the returnable date requires rescheduling.Issue (i): Validity of Circular No. 3/3/2017 dated 05.07.2017 and whether the Board had authority to assign functions to officers as 'proper officers' under the CGST Act.Analysis: The impugned circular on its face assigns functions to officers as proper officers. Section 168(1) empowers the Board to issue instructions for uniform implementation, and Section 168(2) contemplates that certain actions by a Commissioner in the Board are to be exercised with the approval of the Board. The Commissioner is part of the Board and the presumption of regularity and validity of subordinate administrative actions applies. The petitioner bears the burden of proving lack of authority or approval for the circular, which was not discharged on the record.Conclusion: The challenge to Circular No. 3/3/2017 dated 05.07.2017 fails; the circular is not quashed.Issue (ii): Validity and enforceability of the summon dated 03.11.2025 issued under Section 70 of the CGST Act and the appropriateness of the scheduled returnable date.Analysis: The summon derives its force from the operative administrative framework, which the Court has not invalidated. However, procedural fairness in respect of the returnable date is implicated because the summons was served after the date fixed for appearance. The respondent conceded that the date can be rescheduled and offered to permit appearance on an alternative date, and the Court found it appropriate to accommodate a rescheduled date for compliance.Conclusion: The summon remains operative but the returnable date is rescheduled; the petitioner is permitted to appear on 23rd March, 2026 before the competent officer, who shall proceed in accordance with law.Final Conclusion: The petition is partly allowed only to the extent of rescheduling the returnable date of the summon; the substantive challenge to the impugned circular is dismissed, leaving the administrative framework and summons intact for enforcement subject to the rescheduled compliance date.Ratio Decidendi: A subordinate administrative circular is presumed valid and the burden lies on the challenger to prove lack of authority or approval; absent discharge of that burden, courts will not strike down an administrative circular and may grant only procedural relief such as rescheduling of a returnable date.