DGGI can Transfer Adjudication of SCN in GST Evasion: Gujarat HC [Read Order]
The court ruled that, generally speaking, the court should not interfere with a show cause notice under Article 226 of the Constitution unless it lacks jurisdiction, is prohibited by law, or has an invalid patent
![DGGI can Transfer Adjudication of SCN in GST Evasion: Gujarat HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/01/DGGI-Gujarat-High-Court-Transfer-Adjudication-SCN-in-GST-Evasion-Taxscan-1.jpg "DGGI can Transfer Adjudication of SCN in GST Evasion: Gujarat HC [Read Order]")
The Gujarat High Court in a recent case has held that the Directorate General of Goods and Service Tax (DGGI) Intelligence (DGGI) is empowered to transfer adjudication of Show cause notice (SCN) in GST evasion. “Show cause notice issued by DGGI shall be adjudicated by the competent Central Tax Officer of the Executive Commissionerate in whose jurisdiction the noticee is...
The Gujarat High Court in a recent case has held that the Directorate General of Goods and Service Tax (DGGI) Intelligence (DGGI) is empowered to transfer adjudication of Show cause notice (SCN) in GST evasion.
“Show cause notice issued by DGGI shall be adjudicated by the competent Central Tax Officer of the Executive Commissionerate in whose jurisdiction the noticee is registered. Therefore, it is necessary to refer to the main noticee/s who are situated at Kannauj and who would fall within the jurisdiction of Commissioner, Kanpur as per Entry No.54 of Table II of Notification No.2 of 2017 and Principal Commissioner, Kanpur would have the territorial jurisdiction of District of Kannauj,” he division bench of Justice Bhargav D. Karia and Justice D.N.Ray.
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Three show-cause notices dated 16.03.2022 from the respondent, the Additional Director, Directorate General of Goods and Service Tax Intelligence, Ahmedabad Zonal Unit, threatening to penalize the petitioners under section 122(1)(i)(x)(xvii)(xviii) and (xix) of the Central Goods and Service Tax Act, 2017 were contested by the petitioner company, S. Kushalchand International Pvt. Ltd., and its director.
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In India, the petitioner company operates in the states of Uttar Pradesh and Maharashtra. The three companies, M/s. Flora Naturale, M/s. Odochem Industries, and M/s. Odosynth Inc., have served the petitioners with three show-cause notices in order to impose penalties on them for allegedly evading taxes. The petitioner company has supplied the goods used as raw materials for the production of perfumery compounds, and it has been involved in the covert supply of perfumery compounds to M/s. Trimurti Fragrance Private Limited, Kanpur, and M/s. Trimurti Fragrances and Flavours Private Limited, Kanpur, for the unaccounted production and covert supplies/clearances of pan masala and scented tobacco/jarda.
The petitioner contended that by the show cause notices, Additional/Joint Commissioner, Kanpur is designated as an adjudicating authority. It was submitted that Additional/Joint Commissioner, Kanpur is not a “proper officer” for adjudication of the show cause notices qua the petitioners as Additional/Joint Commissioner, Kanpur does not have jurisdiction to adjudicate the impugned show.
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In order to demonstrate the Notified Officer's jurisdiction under the GST Act, the petitioner cited Notification No.02/2017-Central Tax, dated June 19, 2017, which was issued in the exercise of powers granted under section 3 read with sections 5 and 3 of the GST Act and the IGST Act, 2017.
It was noted that by segmenting the GST Commissionerate into 21 zones, Table I of Notification No. 02/2017 establishes the jurisdiction of the Principal Chief Commissioner/Chief Commissioner of Central Tax in terms of Principal Commissioners/Commissioners of Central Tax, Commissioner of Central Tax (Appeals), Additional Commissioner of Central Tax (Appeals), and Commissioner of Central Tax (Audit). The aforementioned notification referred to Serial No. 12 of Table I to emphasize that the Commissioner of Kanpur will be under the authority of the Principal Chief Commissioner, Lucknow.
The petitioner argued that the GST Act's Section 122(1) could not be used to impose penalties on petitioners because it applies to taxable persons, or suppliers of goods or services, who commit any of the offenses listed therein. These individuals are subject to a penalty of Rs. 10,000 or the amount of tax evaded, whichever is higher.
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The court ruled that, generally speaking, the court should not interfere with a show cause notice under Article 226 of the Constitution unless it lacks jurisdiction, is prohibited by law, or has an invalid patent. There are no requirements in the case's facts to consider this writ petition, and at this point, no intervention in writ jurisdiction is necessary.
To Read the full text of the Order CLICK HERE
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