CBIC Circular Allowing Superintendents to Issue GST Summons Prima Facie Without Legal Authority: Rajasthan HC Grants Interim Stay [Read Order]

In a recent ruling, the Rajasthan High Court granted an interim stay on the operation of a CBIC circular that allowed Superintendents to issue GST summons, finding that it prima facie lacked legal authority under the GST law.

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Mohit Kirana Store filed a writ petition challenging the circular dated 05.07.2017, arguing that the Central Board of Indirect Taxes and Customs (CBIC) did not have the power to delegate the issuance of GST summons to Superintendents. The petitioner argued that under Section 2(91) of the CGST Act, 2017, only the Commissioner has the authority to delegate such powers, and therefore, the circular was issued without proper legal authority.

The revenue’s counsel argued that the circular was issued by the Commissioner and not by the CBIC, and so the delegation of power to Superintendents to issue summons under GST was valid. The revenue’s counsel argued that the delegation was necessary for effective administration under GST.

The petitioner’s counsel countered, arguing that the circular explicitly stated it was issued by the CBIC and not by the Commissioner, making the delegation invalid in law. The petitioner’s counsel argued that the CBIC had overstepped its authority under the GST framework.

A division bench led by Chief Justice Manindra Mohan Shrivastava and Justice Maneesh Sharma observed that the petitioner had made out a strong prima facie case, indicating that the circular may have been issued without proper legal authority. The court also observed that since a substantial legal question was involved, the matter required detailed examination at the final hearing stage.

The court rejected the revenue’s applications to vacate the earlier stay and made the interim stay absolute. The court directed that the matter be listed for final hearing in the coming weeks to decide the validity of the circular.

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