Jurisdictional Validity of Joint Commissioner in Fake Billing Adjudication: High Court Ruling

This ruling (delivered in October 2025) addresses a critical jurisdictional challenge regarding the power of a Joint Commissioner to adjudicate fraud cases under Section 74 and impose penalties under Section 122. The Telangana High Court clarified that administrative circulars issued during the pendency of a case can validate the authority of the “Proper Officer” at the time of the final order.

The Legal Issue

Can an Order-in-Original (OIO) be challenged for lack of jurisdiction if the officer who issued the Show Cause Notice (SCN) was only formally designated as the “Proper Officer” for that specific section shortly before passing the final order?

Facts of the Case

The Allegations: The petitioner was accused of fake billing and fraudulent availment of Input Tax Credit (ITC) without actual receipt of goods for the period May 2018 to June 2019.
The SCN: A notice was issued on May 2, 2025, by the Joint Commissioner, Medchal Commissionerate, proposing penalties under Section 122(1)(ii) (issuing invoices without supply) and Section 122(1)(vii) (taking ITC without receipt of goods).
The Conduct: The petitioner ignored the SCN, missed all personal hearings, and failed to file any response.
The Circular: On October 27, 2025, the CBIC issued Circular No. 254/11/2025-GST, which explicitly designated Joint Commissioners as “Proper Officers” for Section 122 penalty proceedings and prescribed monetary limits for adjudication.
The Order: The Joint Commissioner passed the final order on October 28, 2025, confirming the demand and penalties.

The Decision: Ruling in Favour of Revenue

The High Court dismissed the jurisdictional challenge based on three core pillars:

Jurisdiction at the Time of Order: The Court held that on the date the order was passed (Oct 28), the Joint Commissioner was officially clothed with jurisdiction by the Circular issued just one day prior (Oct 27). The law requires the officer to have jurisdiction when the “power is exercised” (i.e., when the order is passed).
Section 160 Saving Clause: Under Section 160(2) of the CGST Act, if a person has acted upon a notice or communication (by receiving it and allowing the process to continue), they cannot later challenge the “service” or procedural validity of that notice if they failed to raise the objection at the earliest opportunity.
Waiver by Conduct: By not responding to the SCN or questioning the officer’s authority during the hearings, the petitioner was deemed to have accepted the process. A jurisdictional plea raised for the first time in a Writ Petition, after an adverse order, is generally not entertained if the officer had inherent authority over the subject matter.

Key Takeaways for Taxpayers

Raise Jurisdiction Early: If you believe the officer issuing a notice lacks the monetary or statutory authority to do so, you must raise this objection in your very first written reply. Participation (or even silence) can be construed as a waiver of the right to object later under Section 160.
CBIC Circular 254/11/2025: This is now the definitive guide for officer-wise monetary limits for Section 122 (Penalties) and Section 74A (the new unified demand section). For demands above ₹1 Crore (CGST), the Joint/Additional Commissioner is the Proper Officer.
Fake Billing Consequences: Penalties for fake billing under Section 122 are typically 100% of the tax involved. This is in addition to the recovery of the ITC itself under Section 74.

HIGH COURT OF TELANGANA

Alokadci Holdings (P.) Ltd

Commissioner of Central Tax, Central Excise & Service Tax

APARESH KUMAR SINGH, CJ.
and G.M. MOHIUDDIN, J.

Writ Petition No. 4426 of 2026

FEBRUARY 17, 2026

M. Naga Deepak, Learned Counsel for the Petitioner. Dominic Fernandes, Senior Standing Counsel for the Respondent.

ORDER

1. Heard Mr. M.Naga Deepak, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for the respondents.

2. The Order-in-Original dated 28.10.2025, passed by the Joint Commissioner of Central Tax, Medchal GST Commissionerate, imposing upon the petitioner, penalty of Rs.3,49,73,688/- equal to the ITC fraudulently availed, without the actual receipt of goods during the period from May, 2018 to June 2019 under Section 122(1)(vii) read with Section 74 of the of the Central Goods and Services Tax Act, 2017 and Telangana Goods and Services Tax Act, 2017 (CGST/TGST Act) and Section 20 of the Integrated Goods and Services Tax Act, 2017 (IGST Act) and further, penalty of Rs.3,50,19,797/- equal to the ITC fraudulently passed on during the period May, 2018 to June, 2019, by way of issuance of tax invoices without actual supply of goods under Section 122(1)(ii) read with Section 74 of the CGST/TGST Act and Section 20 of the IGST Act, has been assailed in this Writ Petition.

3. The show cause notice was issued upon the petitioner on 02.05.2025 by respondent No.2-Joint Commissioner of Central Tax, Medchal GST Commissionerate, i.e. , the same Officer, who passed the impugned Order-in-Original. The show cause notice alleged fraudulent availment of Input Tax Credit (ITC) and passing of ITC on fake invoices without actual supply of goods. As per the show cause notice, the ITC available in the electronic credit ledger of the tax period appeared to be ineligible in terms of Section 16(2)(b) of the CGST Act and issuance of tax invoices without underlying supply of goods/services appeared to be in violation of Section 31 of the CGST Act. It also proposed penalty, for offences listed at Clauses (vii) and (ii) of Section 122(1) of the CGST/TGST Act read with Section 20 of the IGST Act, of an amount equivalent to the ITC passed on. The petitioner did not file reply to the summons. He was granted personal hearings on 15.09.2025, 15.10.2025 and 27.10.2025, but no response was received on all such occasions. No further adjournment was granted, taking note of Section 75(5) of the CGST Act, by the proper officer, while proceeding to confirm the demand and imposing the aforesaid penalty.

4. In the present Writ Petition, the jurisdiction of the proper officer to initiate the proceedings and pass the impugned Order-in-Original have been assailed. Reliance is placed on Circular No.254/11/2025-GST dated 27.10.2025, whereunder it is contended that, for the first time, jurisdiction was conferred upon the officers enumerated in Table-I provided thereunder to pass orders under Sections 74A, 75(2) and 122 of the CGST Act and the Rules made thereunder. It is submitted that earlier Notification No.2/2017- Central Tax dated 19.06.2017, only conferred jurisdiction over the areas defined to the proper officer in respect of the provisions of the CGST Act and IGST Act in exercise of the powers under Section 3 read with Section 5 of the CGST Act and Section 3 of the IGST Act. Therefore, the impugned proceedings are without jurisdiction.

5. Learned counsel for the petitioner has also submitted that the administrative/executive orders or Circulars cannot be applied retrospectively as held by the Apex Court in Bharat Sanchar Nigam Ltd. v. Tata Communications Ltd. 2022 LiveLaw (SC) 792. Therefore, the impugned proceedings are bad in law.

6. Learned Senior Standing Counsel for CBIC has drawn the attention of this Court to Sections 74(9) and 75(13) of the CGST Act in support of his submission that the proper officer, who initiated proceedings under Section 74(1) of the CGST Act cannot initiate separate proceedings for levy of penalty in view of Section 75(13) thereof. As such, the proceedings for levy of penalty under Clauses (vii) and (ii) of Section 122(1) of the CGST/TGST Act were initiated together with the proceedings under Section 74(1) of the CGST Act and Section 20 of the IGST Act. The penalty imposed under Section 122(1)(ii) and 122 (1)(vii) read with 74(1) of the CGST/TGST Act are, therefore, not without jurisdiction. It is further pointed out that the same officer i.e. , Joint Commissioner of Central Tax, Medchal GST Commissionerate has initiated proceedings and has also passed the impugned Order-in-Original dated 28.10.2025, after issuance of the Circular dated 27.10.2025. Therefore, the impugned Order-in-Original does not suffer from any want of jurisdiction.

7. Learned Senior Standing Counsel for CBIC has relied upon a decision of the Delhi High Court in Devender Singh v. Additional Commissioner, Central Goods and Services Tax, Delhi West Devender Singh v. Additional Commissioner, Central GST GST 5/105 GSTL 12 (Delhi), rendered in similar circumstances when jurisdiction of the proper officer was questioned in the light of the Circular dated 27.10.2025. It is submitted that the present case is on a better footing since the impugned Order-in-Original has been passed after issuance of the Circular dated 27.10.2025. It is submitted that therefore, the plea of lack of jurisdiction is not made out to interfere in the matter.

8. We have heard learned counsel for the parties and taken note of the materials placed on record, the relevant provisions of the CGST Act and IGST Act and also perused the decisions cited on their behalf.

9. In the instant case, the proceedings were initiated by Joint Commissioner of Central Tax, Medchal GST Commissionerate, by issuance of show cause notice dated 02.05.2025, invoking the provisions of Section 122(1)(ii) and 122(1)(vii) read with Sections 16, 50, 74 of the CGST Act and Section 20 of the IGST Act. It is not the case of the petitioner that the proper officer was not clothed with the jurisdiction to initiate proceedings under Section 74 of the CGST Act. Under sub-section (9) thereof, the proper officer can levy penalty, upon being satisfied of the evasion of tax of an amount equal to the tax. In the instant case, the same Officer, who had issued the show cause notice dated 02.05.2025, had passed the impugned Order-in-Original dated 28.10.2025, after issuance of Circular dated 27.10.2025. Therefore, on the date of passing of the impugned Order-in-Original dated 28.10.2025, respondent No.2- Joint Commissioner of Central Tax, Medchal GST Commissionerate i.e. , the Proper Officer had the jurisdiction to impose penalty under Section 122(1)(ii) and 122(1)(vii) of the CGST/TGST Act for having passed on fraudulent ITC and issuance of fake invoices without actual supply of goods, which were in teeth of Section 16(2)(b) of the CGST Act.

10. Section 160 of the CGST Act deals with the Assessment Proceedings, etc. , not to be invalid on certain grounds. As per Sub-section (1) thereof, no assessment, reassessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings done, accepted, made, issued, initiated, or purported to have been done, accepted, made, issued, initiated in pursuance of any of the provisions of this Act shall be invalid or deemed to be invalid merely by reason of any mistake, defect or omission therein, if such assessment, re-assessment, adjudication, review, revision, appeal, rectification, notice, summons or other proceedings are in substance and effect in conformity with or according to the intents, purposes and requirements of this Act or any existing law. As per sub-section (2) thereof, the service of any notice, order or communication shall not be called in question, if the notice, order or communication, as the case may be, has already been acted upon by the person to whom it is issued or where such service has not been called in question at or in the earlier proceedings commenced, continued or finalised pursuant to such notice, order or communication.

11. In the instant case, the petitioner did not file a reply or participate in the personal hearings and did not question the issuance of notice on lack of jurisdiction. The show cause notice dated 02.05.2025 was acted upon, leading to passing of the impugned Order-in-Original dated 28.10.2025, when, respondent No.2- Joint Commissioner of Central Tax, Medchal GST Commissionerate, had the jurisdiction to pass the impugned Order-in-Original by virtue of the Circular dated 27.10.2025.

12. In Devender Singh (supra), Delhi High Court had upheld the Order-in-Original dated 28.07.2025, passed by the Additional Commissioner, though it was passed prior to the issuance of Circular dated 27.10.2025, as he was the same officer duly empowered under Section 122 of the CGST Act.

13. In the totality of the facts and circumstances and reasons recorded hereinabove, we are of the considered opinion that the point of jurisdiction raised by the petitioner is not tenable in law and on facts.

14. The instant Writ Petition is, accordingly, dismissed. However, petitioner is granted to liberty to avail the remedy of appeal taking all grounds on facts and in law as are available to it.

15. Needless to say, if the petitioner prefers an appeal with a delay condonation application upon expiry of the period of limitation, the appellate authority would consider it in accordance with law and the period during which the petitioner was pursuing the writ remedy before this Court, shall stand excluded. No costs.

As a sequel, miscellaneous petitions, pending if any, stand closed.