The Allahabad High Court has held that, under the Uttar Pradesh Goods and Services Tax (UPGST) framework, a Deputy Commissioner of State Tax is competent to issue a show-cause notice under Section 122 of the GST Act, including in cases involving substantial penalty amounts.
The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary declined to entertain a challenge to the jurisdiction of the officer after the taxpayer had participated in the proceedings on merits and directed the petitioner to pursue the statutory appellate remedy available under the GST law.
The petitioner/assessee approached the High Court under Article 226 of the Constitution seeking quashing of the show-cause notice issued under Section 122(1)(ii) of the UPGST Act and the corresponding DRC-01 dated November 19, 2025.
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The taxpayer also challenged the subsequent penalty order dated June 24, 2026, passed under Sections 122(1)(ii) and 122(1)(vii), along with the consequential DRC-07. The central contention was that the officer who issued the original show-cause notice lacked jurisdiction to initiate proceedings against the petitioner.
The dispute therefore principally concerned who was the competent “proper officer” to issue a penalty notice under Section 122 of the UPGST Act.
Appearing for the petitioner, counsel argued that the show-cause notice pertaining to financial year 2022-23 suffered from a patent jurisdictional defect because it had been issued by an officer who allegedly did not possess the authority to initiate proceedings.
The petitioner contended that the expression “proper officer” was not defined under the UPGST Act, 2017, and therefore the officer who issued the notice had no jurisdiction to do so.
Reliance was also placed on CBIC Circular No. 254/11/2025-GST dated October 27, 2025, which clarified the officers competent to issue notices under different provisions of the CGST and IGST Acts, including Sections 74A and 122.
According to the petitioner, similar clarification was required from the State Government in respect of proceedings under the UPGST Act. The argument was that, in the absence of such a State-level clarification, proceedings initiated under Section 122 could be treated as lacking jurisdiction.
The petitioner further relied upon the monetary limits prescribed in the CBIC circular and argued that since the proposed penalty exceeded ₹1 crore, the notice ought to have been issued by an Additional Commissioner or Joint Commissioner of Central Tax. In contrast, the notice in the present case had been issued by a Deputy Commissioner of State Tax.
The State opposed the jurisdictional challenge and relied upon two circulars issued under the UPGST Act, dated December 11, 2018 and May 10, 2022.
The State argued that the December 11, 2018 circular specifically identified the proper officer for issuing notices under Section 122 by reference to Section 127 of the UPGST Act.
According to the State, Section 127 empowers the proper officer to impose penalties in specified circumstances after providing the person concerned a reasonable opportunity of being heard. The circular clarified that Section 127 was applicable to proceedings under Section 122 and that the absence of the expression “proper officer” in Section 122 itself did not prevent the designated officer from exercising jurisdiction.
The State further relied upon the circulars to contend that where the business had a turnover exceeding ₹2.5 crore, the Deputy Commissioner was empowered to exercise the relevant jurisdiction.
After examining the relevant UPGST circulars, the Division Bench rejected the petitioner’s principal jurisdictional objection.
The Court held that, with respect to the UPGST Act, the Deputy Commissioner had been vested with the power to issue a show-cause notice under Section 122.
Importantly, the Bench also recorded that the pecuniary jurisdiction in cases involving an amount exceeding ₹2.5 crore would lie with the Deputy Commissioner. The Court therefore found no substance in the argument that the officer who issued the notice lacked jurisdiction merely because of the amount involved.
The finding is significant because the taxpayer had sought to rely upon the monetary thresholds contained in the later CBIC circular governing Central and Integrated GST proceedings. The High Court instead examined the specific administrative framework governing UPGST proceedings and found that the State’s circulars conferred the necessary authority on the Deputy Commissioner.
The Court also took note of the conduct of the petitioner after receiving the show-cause notice.
The notice had been issued in November 2025, but the petitioner did not challenge the officer’s jurisdiction before the High Court at that stage. Instead, the taxpayer appeared before the concerned officer and made submissions on the merits of the case.
It was only after the adverse order dated June 24, 2026 had been passed that the petitioner approached the High Court questioning the jurisdiction of the officer. The Bench described this as a “volte-face” by the petitioner.
This procedural history became an important consideration in the Court’s decision to decline interference under Article 226.
The High Court acknowledged an important legal principle: a question relating to jurisdiction can ordinarily be raised before a Constitutional Court at any stage.
However, the Bench emphasized that the exercise of writ jurisdiction under Article 226 of the Constitution is discretionary. Such jurisdiction must be exercised judiciously, particularly when an effective statutory remedy is available.
In the present case, the Court identified two reasons for declining to interfere.
First, it was prima facie of the view that the authority issuing the show-cause notice was not lacking in jurisdiction.
Second, the Court held that the petitioner was hit by the doctrine of election and should be relegated to the statutory appellate remedy provided under the GST legislation.
Consequently, the Court did not quash either the show-cause notice or the consequential penalty order.
Instead, the writ petition was disposed of by granting liberty to the petitioner to avail the statutory appellate remedy in accordance with law.
The Court also protected the petitioner to the extent that the period during which the writ petition remained pending would be eligible for the benefit of Section 14 of the Limitation Act, 1963, subject to the petitioner satisfying the statutory requirements of that provision.
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