The Madras High Court has taken up a batch of writ petitions challenging GST penalty proceedings initiated by the Directorate General of GST Intelligence (DGGI), with the principal contention being that the officer who initiated the proceedings lacked statutory authority to impose penalties under Section 122 of the Central Goods and Services Tax (CGST) Act, 2017 before the issuance of Circular No. 254/11/2025-GST.
The bench of Justice Senthilkumar Ramamoorthy, while hearing eight connected writ petitions, directed that the Additional Director, DGGI, Chennai Zonal Unit, be impleaded as the second respondent in all the cases and posted the matters for further hearing on July 20, 2026.
The petitioners questioned the legality of proceedings that began with show cause notices issued by the Additional Director, Directorate General of GST Intelligence (DGGI), Chennai Zonal Unit, and culminated in penalty orders under Section 122 of the CGST Act, 2017.
Their principal argument is that the officer issuing the notices and penalty orders was not a “proper officer” assigned to exercise powers under Section 122 until 27 October 2025, when Circular No. 254/11/2025-GST was issued. Consequently, the petitioners contend that the entire penalty proceedings suffer from lack of jurisdiction.
The batch of petitions has been filed by various business entities and individuals against the Additional Commissioner of GST and Central Excise, Chennai South Commissionerate.
After considering the submissions, the High Court observed that the proceedings under challenge had originated from show cause notices issued by the Additional Director of DGGI. Accordingly, the Court held that the DGGI authority should be made a party to the litigation.
Justice Ramamoorthy, therefore, suo motu impleaded the Additional Director, DGGI, Chennai Zonal Unit, Chennai, as the second respondent in each of the writ petitions. The Registry was directed to carry out the necessary amendments before the next date of hearing, and the petitioners were permitted to serve notice on the standing counsel representing DGGI.
Without expressing any opinion on the merits of the jurisdictional challenge, the Court listed the batch of matters for 20 July 2026 for further consideration after completion of pleadings and service of notice on the newly added respondent.
The petitions raise an important legal question concerning the jurisdiction of DGGI officers to initiate and conclude penalty proceedings under Section 122 of the CGST Act before the issuance of Circular No. 254/11/2025-GST. The High Court’s eventual ruling could have significant implications for similarly placed taxpayers whose penalty proceedings were initiated by DGGI officers during the relevant period.
If the Court accepts the petitioners’ contention that the officers were not duly assigned as “proper officers” for Section 122 proceedings, several penalty orders issued before the assignment may become vulnerable to judicial scrutiny.
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