The Highest Demand May Select the GST Adjudicator But Cannot Create Jurisdiction

Giving an Officer Legal Power Is Different from Assigning a Case

A GST investigation may involve suppliers, purchasers and exporters across several States. Their transactions may be connected, making it useful for a single officer to examine the common allegations. This can avoid repeated examination of the same evidence and conflicting conclusions by different officers. However, the officer must first have the legal authority to adjudicate those proceedings. The Department cannot confer that power on an otherwise unauthorised officer merely because common adjudication would be convenient.

Two separate questions therefore arise. First, which officers are legally empowered to decide the matter? Second, which of those empowered officers should handle the particular case? For example, a notification may authorise specified Additional or Joint Commissioners to adjudicate covered DGGI notices across India. A circular may then prescribe a method for selecting one of them to handle a common notice. The notification supplies the legal power; the circular distributes the work. The circular cannot validly select an officer outside the authorised class.

This distinction was central to Katyani Exports Through Its Proprietor Sh. Ajay Singh Gautam, Vishnu Impex Through Its Partner Sh. Ajay Singh Gautam, Matrix Design Enterprises Through Its Partner Sh. Umesh Chandra Mishra, Divine Creations Through Its Partner Sh. Ajay Singh Gautam, Etemad Cargo Through Its Surviving Partner Sh. Umesh Chandra Mishra, Aura Creations Through Its Partner Sh. Arun Gupta, Lotus Exim Through Its Partner Sh. Ajay Singh Gautam, Mystic Exim Private Limited Versus Union Of India And Ors. - 2026 (9) TMI 1201 - DELHI HIGH COURT, together with seven connected petitions. The Delhi High Court, comprising Hon'ble Mr Justice Anil Kshetarpal and Hon'ble Ms Justice Shail Jain, rejected the jurisdictional challenge because the relevant notifications had already empowered the specified officers. The circular's highest-demand criterion merely helped select the Common Adjudicating Authority from among them. It assigned the case; it did not create the authority to decide it.

Connected Transactions Led to Proceedings Against Several Businesses

The dispute began with an investigation by the Directorate General of GST Intelligence (DGGI) into alleged misuse of input tax credit and IGST refunds on exports. According to the adjudication findings summarised in the judgment, suppliers issued invoices without supplying goods, and other businesses passed the credit through to exporters. The allegation was that the exporters used this credit to discharge tax liability and obtain export refunds. The adjudication order recorded these findings; the High Court did not independently decide whether the alleged transactions were fraudulent.

The eight petitions were filed by five exporters and three suppliers. They challenged show-cause notices dated 29.07.2022 and 26.02.2024, together with the Order-in-Original dated 05.02.2025. The judgment records that the impugned notice covered 146 noticees, including businesses and their proprietors, partners, directors or other persons allegedly involved. The adjudication-imposed demands, interest and penalties on different categories of noticees. The eight petitioners therefore formed part of a much larger set of proceedings arising from the investigation.

Although the petitions challenged both the demands and the proceedings, the final hearing focused on whether the Common Adjudicating Authority had the legal power to decide the matter. The High Court examined the notifications and circulars supporting that authority. It did not undertake a fresh examination of every invoice, movement of goods or allegation against each petitioner. Upholding the officer's jurisdiction did not amount to independently confirming the disputed demands on merits

A Circular Cannot Give an Officer Power That the Law Has Not Granted

The petitioners challenged Circular No.31/05/2018-GST dated 09.02.2018, as amended by Circular No.169/01/2022-GST dated 12.03.2022 and Circular No.239/33/2024-GST dated 04.12.2024. They argued that selecting an adjudicating authority by reference to the highest tax demand effectively gave that officer jurisdiction through a circular. They argued that the required authority had to come from a notification issued under the statutory framework, not an administrative instruction.

The High Court recognised the legal distinction underlying this argument. Section 168 of the CGST Act, 2017 allows the Board to issue instructions for uniform implementation of the law; it does not independently authorise the creation or transfer of jurisdiction. The statutory requirements governing appointment, powers and delegation, including Sections 3, 5(3) and 167 of the CGST Act, 2017, must still be followed. For example, a circular cannot authorise an officer to adjudicate proceedings outside the powers already lawfully assigned to that officer merely because doing so would simplify administration.

However, recognising that principle did not mean that the petitioners' challenge succeeded. The next question was whether the disputed circular actually created a new power or merely allocated work among officers who already possessed that power. The High Court found that the notifications had already conferred the necessary jurisdiction. The circular only prescribed how to assign a particular case. It could organise the exercise of an existing power, but it could not replace the legal instrument needed to confer that power.

The Power to Adjudicate Across India Came from the Notifications

Notification No.02/2017-Central Tax dated 19.06.2017 established the basic jurisdictional framework for Central Tax officers. Notification No.02/2022-Central Tax dated 11.03.2022 amended that framework by inserting paragraph 3A and Table V. It empowered specified Additional or Joint Commissioners to adjudicate the covered DGGI notices across India, rather than being restricted to their ordinary territorial limits. Their authority to hear those cases therefore came from the notifications, not from the circular's highest-demand criterion.

The notification identified the officers who were legally competent, but it did not individually assign every case to a particular officer. For example, a common notice might involve several businesses located in different Commissionerates. More than one designated officer could possess the necessary all-India authority. A method was therefore needed to determine which of them would handle that notice. This was a question of distributing cases among authorised officers, not creating additional legal powers.

The circular supplied that allocation method. Circular No.169/01/2022-GST dated 12.03.2022 expressly recognised that the all-India jurisdiction had already been conferred through Notification No.02/2022-Central Tax. The High Court accordingly rejected the argument that the circular itself created jurisdiction. However, the notification did not give every GST officer unrestricted authority throughout India: the officer and the proceedings still had to fall within its terms.

The Highest Tax Demand Helps Decide Which Authorised Officer Will Hear the Case

Where a covered common show-cause notice involves businesses in different jurisdictions, the allocation process begins by identifying the noticee facing the highest tax demand. The location of that noticee's principal place of business is then checked against the applicable allocation table. The table identifies the designated Commissionerate, where an empowered Additional or Joint Commissioner holding the relevant adjudication charge handles the matter. The highest demand helps select the adjudicating authority; it does not give that authority its legal power.

For example, suppose a common notice proposes tax demands of Rs.60 lakh Rs.35 lakh and Rs.20 lakh against three businesses situated in different jurisdictions. The business facing the Rs.60 lakh demand provides the reference point. Its principal place of business determines which entry in the allocation table applies. The table then identifies the Commissionerate responsible for adjudication. This does not necessarily mean that the business's ordinary local officer will hear the case. The selected officer must belong to the designated Commissionerate and have the required authority under the relevant notification, as set out in CBIC Circular No.239/33/2024-GST.

The mechanism therefore answers a limited practical question: which of the legally empowered officers should handle these proceedings? It does not decide whether the proposed demands are correct or allow an unauthorised officer to act. The High Court upheld the criterion because it distributed work among officers whose jurisdiction already existed. The notification supplies the power, while the allocation rule identifies the officer who will exercise it in the particular case.

An Objective Selection Rule Was Not Arbitrary or an Unlawful Delegation

The petitioners argued that the highest-demand criterion violated Article 14 of the Constitution. They questioned its connection with the adjudication and expressed concern that clubbing noticees could affect the location of the adjudicating and appellate forums. The High Court rejected the challenge. It considered the criterion objective, measurable and uniformly applicable, with a rational connection to a single, consistent decision arising from a common investigation.

The petitioners also relied on Anirudhsinhji Karansinhjijadeja & Another Versus The State of Gujarat - 1995 (8) TMI 308 - Supreme Court, to support their objection to the exercise of power by an unauthorised authority. The High Court distinguished that decision. Here, the issuing officer did not confer adjudicatory power or enjoy an unrestricted choice of forum; the officer applied the Board's prescribed criterion. This conclusion should not, however, be expanded to approve every possible clubbing of unrelated proceedings. It concerned the scheme and connected proceedings before the Court.

Missing Recitals Did Not Establish Missing Authority

Another objection was that the circulars did not expressly state the source of power or record the approval contemplated by Section 168(2) of the CGST Act, 2017. The High Court distinguished a missing recital from a lack of actual authority. The petitioners had produced no material establishing that the circulars were issued without the necessary authority or approval. A drafting omission did not, by itself, prove a jurisdictional defect.

This does not mean that statutory approval requirements can be ignored. If approval is legally necessary, it must exist. The point is narrower: failure to mention approval in the document is not necessarily proof that approval was never obtained. The related argument concerning GST Council ratification under Section 6(1) of the Haryana Goods and Services Tax Act, 2017 also failed because no applicable requirement was established. The Court did not treat that cross-empowerment provision as imposing the suggested condition on these notifications.

The Appellate Forum Followed the Notified Jurisdictional Framework

The petitioners also questioned the appellate arrangement. They argued that businesses situated in Haryana should not be left to pursue proceedings before a Delhi-based hierarchy and relied on PR. COMMISSIONER OF INCOME TAX – I, CHANDIGARH Versus M/s. ABC PAPERS LIMITED - 2022 (8) TMI 863 - Supreme Court. They pointed out that the earlier circular did not address the review, revision, and appeal mechanism.

The High Court found that the appellate forum already existed under Table III of Notification No.02/2017-Central Tax. Circular No.250/07/2025-GST dated 24.06.2025 clarified that appeals against the Common Adjudicating Authority's orders lie before the Commissioner (Appeals) corresponding to the territorial jurisdiction of the Principal Commissioner or Commissioner under whom that authority is posted. It clarified the existing framework rather than creating a new appellate authority. The objection based on the cited income-tax decision therefore did not invalidate the arrangement.

Inconvenience Does Not Prove Lack of Jurisdiction

A common adjudication arrangement may require a taxpayer to contest proceedings outside the place where it carries on business. That can cause inconvenience, but inconvenience and lack of legal authority are different matters. The High Court found no material showing that the Delhi-based Common Adjudicating Authority denied the petitioners a proper hearing, prevented an effective response, or treated them less fairly than a Haryana-based officer would have.

The qualification is important: absence of prejudice cannot cure a genuine jurisdictional defect. An officer without statutory authority does not acquire it merely because the proceedings appeared fair. Here, however, the authority was lawfully constituted. In that setting, the absence of demonstrated prejudice reinforced the rejection of a challenge directed principally at the forum.

Failure of the Jurisdictional Challenge Left the Merits for Appeal

The Department raised the availability of an appeal under Section 107 of the CGST Act, 2017, relying on Ambika Traders Through Proprietor Gaurav Gupta Versus Additional Commissioner, Adjudication DGGSTI, CGST Delhi North. - 2025 (8) TMI 315 - DELHI HIGH COURT. The High Court nevertheless examined the jurisdictional foundation. Referring to The Assistant Commissioner of State Tax and Others Versus M/s Commercial Steel Limited - 2021 (9) TMI 480 - Supreme Court, it recognised that a challenge concerning the very existence of jurisdiction may justify writ examination despite an alternative remedy.

Once that challenge failed, the remaining disputes belonged in the statutory appeal. The Court dismissed the writ petitions, but it did not decide the tax demand and evidentiary issues on their merits. The petitioners were permitted to raise their remaining contentions before the Appellate Authority, which was directed to decide independently and without being influenced by observations in the judgment.

The petitioners could also apply under Section 14 of the Limitation Act, 1963, to exclude the period during which the writ petitions remained pending. That application was to be considered according to law. Permission to seek exclusion was not an automatic exclusion of time or an unconditional extension of the appeal deadline.

Check the Officer's Legal Power and the Assignment of the Case Separately

Before challenging the adjudicating authority, examine two questions. First, does the officer have legal authority to decide the proceedings? This requires checking the relevant provisions of the CGST Act, 2017 and the notifications conferring that authority. Second, was the particular case assigned to the officer in accordance with the applicable instructions? This requires checking the circular, the allocation table, and the notice details, including the highest tax demand and the location of the concerned noticee.

These are distinct inquiries. An officer may possess the necessary legal power, yet the assignment of a particular case may not follow the prescribed allocation method. Conversely, correctly applying an allocation table cannot confer competence on an otherwise unauthorised officer. For example, identifying the appropriate Commissionerate by reference to the highest demand is only part of the exercise. The officer so selected must also have the authority to adjudicate the covered proceedings. Correct allocation cannot cure a lack of legal power, and existing legal power does not make every allocation correct.

The judgment therefore gives circulars a limited role. They cannot override the CGST Act, 2017 or the notifications issued under it, but they may distribute cases among officers already empowered to decide them. The Court upheld the highest-demand criterion because it served that administrative purpose. The amount of the demand helped select the adjudicator; it did not create the power to adjudicate.

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