Andhra Pradesh HC rules Notification Only Fixes Officers’ Territorial Jurisdiction, Not Power to Invoke S.122 CGST Act [Read Order]

The Andhra Pradesh High Court has ruled that Notification No. 2/2017‑ Central Tax issued by the Central Government does not empower officers to invoke section 122 of the Central Goodsand Services Tax (CGST) Act, but only fixes the territorial jurisdiction of the officers.

The petitioner Ganapati Ispat was served with a show cause notice on by the third respondent, Additional Commissioner Central Tax, under Section 122 of the CGST Act, calling upon the petitioner to show cause why certain penalties under Section 122 of the CGST Act should not be levied on the petitioner.

This show cause notice is said to have been issued on the ground that the information gathered by the Central Intelligence Unit, CCO, Visakhapatnam, had revealed that there were various instances of circular trading, etc., which would attract penalties under Section 122 of the GST Act. The petitioner, being aggrieved by the said notice, has approached this Court by way of the present Writ Petition.

The petitioner contended that Section 122 of the CGST Act does not confer power on any authority or officer to initiate or conduct proceedings under the Section.

The revenue defended the SCN by citing Notification No. 2/2017‑Central Tax dated 19.06.2017 and Circular No. 254/11/2025‑GST dated 27.10.2025. According to the standing counsel, these instruments empowered Assistant Commissioners to exercise functions under Section 122, and superior officers could exercise subordinate jurisdiction under Section 5 of the Act.

The Division Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar made the following observation:

“To the mind of this Court, this conferment of power can be taken to mean that the notification was not conferring any further power, but was only fixing the territorial jurisdiction of the officers in respect of the powers which are conferred on them by virtue of the act itself. In such circumstances, it may not be permissible to hold that authority had been granted, to all the officers enumerated in the list, in the said notification, with all the powers under the entire act including Section 122 of the CGST Act.”

To resolve the dispute, the Court chose not to delve into the larger question of whether Section 122 can be enforced without procedural safeguards. Instead, it set aside the impugned SCN, leaving liberty to the department to issue a fresh notice under Section 122, if permissible under law.

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