TaxTMI 
TaxTMI 
2026 (9) TMI 1201
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....h: Mr. Shashank Sharma, SSC along with Ms. Malika Kumari, Adv. Ms. Avshreya Pratap Singh Rudy, CGSC along with Ms. Usha Jamnal, ⁠Ms. Nyasa Sharma, ⁠Mr. Ankit Khatri, Mr. Siddhant Nagar and Mr. Abhinav Mall, Advs. Mr. Anurag Ojha, SSC along with Mr. Dipak Raj and Mr. Aditya Choudhary, Advs., Mr. Syed Abdul Haseeb, CGSC along with Mr. Muhammad Aamir Khan, Adv., Ms. Anushree Narain, SSC along with Mr. Apurv Yadav and Mr. Naman Choula, Advs., Mr. Shlok Chandra, SSC along with Mr. Parikshit Singh Bhati and Ms. Lolita Crasta, Advs. Mr. Satya Ranjan Swain, CGSC along with Mr. Kautilya Birat GP and Mr. Tushar Hazrati, Mr. Sanskar Gupta and Mr. Prakhar Negi, Advs. Mr. Farman Ali, CGSC along with Ms. Usha Jamnal and Ms. Tanya, Advs. JUDGMENT PER ANIL KSHETARPAL, J.: A. INTRODUCTION: 1. The present batch of 08 Petitions arises out of challenges laid by five (05) exporters and three (03) suppliers, against the Show Cause Notices (SCNs) dated 29.07.2022 and 26.02.2024, as well as the consequential Order-in-Original (OIO) dated 05.02.2025, arising out of proceedings under Central Goods and Services Act, 2017 ['Act of 2017'] and Integrated Goods and Services Act, 2017 ['IG....
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....roceedings lies in intelligence received by the DGGI, Gurugram Zonal Unit, indicating the involvement of various exporter firms across India in a large-scale fraudulent IGST racket. Pursuant thereto, a joint operation was conducted, during which two exporter firms, namely, Petitioner Nos. 2 and 7, were identified and taken up for investigation to ascertain the genuineness of purchases reflected in their returns. 5. Further, the investigation, on tracing the inward supply chain of the said exporter firms, ultimately culminated in the passing of impugned SCN and OIO, whereby the Petitioners have been fastened with liability towards the benefit availed by way of an alleged fraudulent Input Tax Credit (ITC). Modus Operandi of the fraud 6. As per findings recorded by the Adjudicatory Authority, the IGST fraud operated through a three-layer chain of fake invoicing, without any actual movement of goods. At the bottom of the chain, 18 non-existent entities, characterised as L-2 suppliers, issued goods-less invoices to a set of L-1 Suppliers, thereby enabling the L-1 firms to falsely claim ITC on purchases that never actually took place. These L-1 firms, also found to be non-existe....
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....ner, CGST, Delhi by way of the impugned OIO, confirmed the demand of ITC along with interest under Section 74(1) read with Section 50 of the Act of 2017 against the 'End User' firms; confirmed demand, interest and penalty under Sections 74(1) and 122(1) of the Act of 2017 against the 'L-1 Supplier' firms; and further imposed penalty under Sections 74(1), 122(1) and 122(3) of the Act of 2017 upon the individual proprietors/partners/directors/controllers of the said firms, including Mr. Surender Kumar Gupta and Mr. Ajay Singh Gautam. 12. Aggrieved thereby, the Petitioners instead of filing Appeals, have invoked the jurisdiction of this Court seeking our indulgence. 13. As noted at paragraph No. 2 of this judgment, we shall now proceed to examine the issue of jurisdiction agitated by the Petitioners herein. C. CONTENTIONS OF THE PARTIES: 14. Learned counsel representing the Petitioners have made the following submissions: 14.1 Reference has been made to CN 169/2022 and 239/2024, to argue that the amendments made by way of these circulars in the CN 31/2018, in particular under paragraph Nos. 7.1 and 7.2, merely provide for a procedure of adjudication of a common SC....
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.... 14 of the Constitution, with no mention under the Act of 2017. The Impugned Circular provides no guidance on clubbing noticees, allowing the DGGI to determine the adjudicating/appellate authorities, Tribunal Bench, and even the jurisdictional High Court, despite no nexus of an assessee with that State. This criterion is argued to be lacking any intelligible differentia or rational nexus with the object sought to be achieved. Reliance in this regard has been placed on Anirudhsinhji Karansinhji Jadeja v. State of Gujarat (1995) 5 SCC 302 to argue that an exercise of power by an authority not vested with it is void. 14.6 Lastly, it is contended that the Petitioners having their place of business in Haryana are governed by Sections 107, 109 and 112 of the Haryana GST Act, 2017, since no pan-India Commissioner (Appeals) has been notified and Circular No. 250/07/2025-GST dated 24.06.2025 ['CN 250/2025'] itself admits that the CN 239/2024 did not address review, revision or appeals. Reliance in this regard has been placed on Pr. Commissioner of Income Tax-1 v. ABC Papers Ltd. [2022] 289 Taxman 150 (SC) 15. Per contra, learned counsel representing the Respondents have made the....
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....r, Delhi North, Commissioner (Appeals-I), Delhi has jurisdiction. 15.7 Lastly, it is the case of the Respondents that a conjoint reading of the Notifications and the Impugned Circular establishes valid adjudicatory and appellate jurisdiction. D. ANALYSIS AND REASONING: 16. Heard learned counsel representing the parties at length and with their able assistance perused the material on record along with the written submissions and judgments relied upon. The Statutory Scheme 17. Before proceeding to the examination of the validity of Impugned Circular, we first notice the provisions of the Act of 2017 under which a notification, on the one hand, and a circular, on the other, are issued, since it is this interplay of these provisions that lies at the heart of the controversy. The relevant provisions are produced hereunder: 2. Definitions.-In this Act, unless the context otherwise requires,- (4) "Adjuicatory Authority" means any authority, appointed or authorised to pass any order or decision under this Act, but does not include Central Board or Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Aut....
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....or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or in the notification, as the case may be, or both Houses agree that the rule or regulation or the notification should not be made, the rule or regulation or notification, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification, as the case may be. 167. Delegation of powers.-The Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification. 168. Power to issue instructions or directions.-(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit....
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....o the aforestated scheme, insofar as every notification issued under the Act is required to be laid before each House of Parliament, thereby subjecting the exercise of this power to a measure of legislative oversight that a mere administrative instruction does not attract. This distinction is not a matter of form alone; it reflects a deliberate legislative choice as to the mode in which jurisdiction-affecting decisions are to be made and scrutinized. 22. However, Section 168 of Act of 2017 stands on a different footing altogether. Sub-section (1) empowers the Board to issue orders, instructions or directions to Central Tax officers to ensure uniformity in the implementation of the Act, which such officers are required to follow. Sub-section (2) further requires that, in respect of specified functions, including those under Sections 5(3) and 167 of Act of 2017, the powers of the Commissioner be exercised by the Board itself or with its approval. Thus, Section 168 does not independently confer, transfer or assign jurisdiction. Its role is administrative and interpretative, intended to ensure uniformity in the exercise of an existing jurisdiction, and not to create or confer such j....
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....n over the noticee against whom the highest amount of demand has been raised. 27. On a plain reading, the Impugned Circular does not claim to appoint any officer, nor does it extend any officer's jurisdiction beyond what NN 2/2022 already confers, as well as it also does not intend to vest adjudicatory power in any officer not already comprehended within the class identified by Table V. Its operative content is confined to selecting, by an objective and uniformly applied criterion, one officer from among several who are already and equally competent to adjudicate. 28. Thus, the Impugned Circular merely operates as an administrative allocation-of-business direction and not as an instrument conferring jurisdiction. While the NN-2/2017 and NN-2/2022 determine who may adjudicate, the Impugned Circular determines which of the competent officers shall adjudicate a particular composite SCN. Examination of the Petitioners' Contentions 29. Learned counsel during the course of submission, argued that CN 169/2022 and CN 239/2024, neither recite the source of statutory power nor record the approval of the Board under Section 168(2) of Act of 2017. However, we are unable to accept t....
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.... the same Commissionerate. Any hardship caused to an assessee by such arrangement, being incidental to the pan-India scheme for composite notices, cannot by itself invalidate the jurisdiction of the Adjudicating Authority. 34. In this regard, it is also relevant to note that, apart from the challenge to the vires of the Impugned Circular, the Petitioners have not shown any actual prejudice arising from the exercise of jurisdiction by the Delhi-based Common Adjudicating Authority. No plea or material has been placed to show that the Petitioners were denied a proper opportunity of hearing, were unable to effectively respond to the notice, or were treated less fairly than they would have been by an officer in Haryana. The grievance is thus confined to the forum and not to any substantive prejudice. While absence of prejudice cannot cure a genuine jurisdictional defect, it is a relevant circumstance where, as held above, the forum is otherwise lawfully constituted. Article 14 of the Constitution: highest demand criterion 35. Learned counsel representing the Petitioners argued that the 'highest amount of demand' criterion is arbitrary and offends Article 14 of the Constitution.....