The Allahabad High Court has held that under the Uttar Pradesh Goods and Services Tax Act, 2017, a Deputy Commissioner is vested with the power to issue a show-cause notice under Section 122 and has the requisite pecuniary jurisdiction in cases falling within the limits prescribed by the State Government’s circulars.
The bench of Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary declined to entertain a jurisdictional challenge raised by a taxpayer after it had participated in the proceedings and contested the matter on merits, observing that the petitioner, after suffering an adverse order, had taken a “volte-face” by questioning the jurisdiction of the authority.
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The petitioner/assessee approached the High Court under Article 226 of the Constitution challenging a show-cause notice dated November 19, 2025 issued under Section 122(1)(ii), along with DRC-01.
It also sought quashing of the consequential penalty order dated June 24, 2026 passed under Sections 122(1)(ii) and 122(1)(vii), along with DRC-07.
The principal ground of challenge was an alleged patent lack of jurisdiction on the part of the officer who had initiated the penalty proceedings. The petitioner contended that the officer issuing the show-cause notice was not legally competent to do so and, consequently, the final penalty order was also vitiated.
The petitioner argued that the expression “proper officer” had not been defined under the UPGST Act in the context relied upon by the authorities and, therefore, the officer issuing the impugned notice lacked jurisdiction.
Reliance was placed on Circular No. 254/11/2025-GST dated October 27, 2025, issued by the Central Government. According to the petitioner, the circular clarified the officers competent to issue notices under various provisions of the CGST and IGST Acts, including proceedings under Sections 74A and 122.
The petitioner further argued that similar circulars were required to be issued by the respective State Governments and that, in their absence, notices issued under Section 122 would suffer from a jurisdictional defect.
According to the petitioner, the Central circular prescribed monetary limits and identified the officers competent to issue show-cause notices. Since the proposed penalty in the case exceeded ₹1 crore, it was argued that the notice ought to have been issued by an Additional Commissioner or Joint Commissioner of Central Tax.
Instead, the impugned notice had been issued by a Deputy Commissioner of State Tax, which, according to the petitioner, rendered the proceedings without jurisdiction.
Opposing the writ petition, the State relied upon two circulars issued under the UPGST framework, dated December 11, 2018 and May 10, 2022.
The State submitted that the December 11, 2018 circular specifically provided that the proper officer for issuing a notice under Section 122 of the UPGST Act would be the proper officer contemplated under Section 127.
The circular was described as clarificatory in nature and provided that, for proceedings under Section 122, Section 127 would apply and the proper officer would have the authority to issue the show-cause notice.
Importantly, the circular also clarified that because of Section 127, there was no requirement for Section 122 itself to expressly employ the expression “proper officer”.
The High Court also referred to Section 127, which deals with the power to impose penalties in certain cases.
Under the provision, where the proper officer is of the view that a person is liable to a penalty and the matter is not covered by proceedings under the specified provisions of the GST law, the officer may impose such penalty after providing the person concerned a reasonable opportunity of being heard.
The State further relied upon Circular No. GST/2018-19/1819072/962/Commercial Tax dated December 11, 2018 and Circular No. GST/2022-23/83/State Tax dated May 10, 2022 to establish the jurisdiction of the Deputy Commissioner.
According to the State, the circulars indicated that in cases involving businesses having turnover exceeding ₹2.5 crore, the Deputy Commissioner had the power to exercise the relevant jurisdiction.
After examining the State circulars, the Division Bench found prima facie merit in the State’s position.
The High Court categorically observed that, so far as the UPGST Act was concerned, the Deputy Commissioner had been vested with the power to issue a show-cause notice under Section 122.
The Court further recorded that the pecuniary jurisdiction in cases involving an amount exceeding ₹2.5 crore would lie with the Deputy Commissioner.
The Bench observed: “Upon perusal of the aforesaid circulars, we are of the view that, with regard to the UPGST Act, the Deputy Commissioner has been vested with the power to issue a show-cause notice under Section 122.”
The Court consequently did not accept the contention that the authority issuing the impugned notice was inherently lacking in jurisdiction.
The Court noted that the show-cause notice had been issued in November 2025, but the petitioner did not approach the High Court at that stage by raising an objection regarding the jurisdiction of the authority.
Instead, the petitioner appeared before the officer concerned and advanced submissions on the merits of the dispute.
It was only after the adverse order dated June 24, 2026 was passed that the petitioner approached the High Court and sought to challenge the proceedings on the ground that the officer lacked jurisdiction.
The Bench remarked that the petitioner, after suffering the impugned order, had taken a “volte-face” and challenged the order on jurisdictional grounds.
At the same time, the High Court acknowledged the settled legal principle that an issue concerning jurisdiction can be raised before a Constitutional Court at any stage.
However, the Bench emphasised that the existence of such a legal principle does not automatically entitle a litigant to discretionary relief under Article 226.
The Court observed that the writ jurisdiction exercised by a High Court under Article 226 of the Constitution is discretionary in nature and must be exercised in a judicious manner.
This distinction became crucial because the petitioner had already participated in the adjudication proceedings and contested the case on merits before subsequently seeking to question the jurisdiction of the adjudicating authority.
The High Court ultimately recorded two principal conclusions.
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 therefore pursue the statutory appellate remedy provided under the GST law rather than invoke the High Court’s extraordinary writ jurisdiction against the adjudication order.
The Bench observed: “Firstly, we are prima facie of the view that the authority which issued the show-cause notice was not lacking in jurisdiction. Secondly, we are of the view that the petitioner is hit by the doctrine of election and ought to be relegated to the statutory appellate remedy available under the Act.”
Accordingly, instead of examining the merits of the penalty dispute in writ proceedings, the Court disposed of the petition while granting liberty to the petitioner to avail itself of the statutory appellate remedy in accordance with law.
While relegating the petitioner to the appellate remedy, the High Court provided an important protection concerning limitation.
The Bench clarified that the petitioner would be entitled to seek the benefit of Section 14 of the Limitation Act, 1963 for the period during which the writ petition remained pending before the High Court, subject to satisfying the requirements of that provision.
The writ petition was accordingly disposed of with liberty to pursue the statutory appeal.
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