Rajasthan High Court Stays GST Proceedings Over Improper Delegation of Summoning Powers

This landmark interim ruling (July 2025) addresses a fundamental jurisdictional question: Who has the authority to delegate quasi-judicial powers like issuing summons? The Rajasthan High Court has signaled that the current administrative structure of delegating these powers to Superintendents may be legally flawed.

The Legal Issue

Can the Central Board of Indirect Taxes and Customs (CBIC/Board) delegate the power to issue summons to a Superintendent, or is this power of assignment reserved strictly for the Commissioner under the statutory framework of the CGST Act?

Arguments Presented

The Revenue’s Defense:

The Department argued that Circular No. 3/3/2017-CT (dated 05.07.2017), which assigns the functions of a “Proper Officer” to various designations, was essentially issued by the Commissioner (in his capacity within the Board). Therefore, delegating the power to a Superintendent for issuing summons was a valid exercise of administrative authority.

The Petitioner’s Challenge:

The petitioner contended that the Circular explicitly states it was issued by the “Board.” Under Section 2(91) of the CGST Act, a “Proper Officer” is defined as an officer assigned a function by the Commissioner in the Board—not by the Board itself as a collective body. They argued the Board lacks the independent statutory power to delegate such significant quasi-judicial functions.

The Decision: Interim Stay Granted

The Rajasthan High Court, following its previous stance in Mohit Kirana Store v. CBDT & Customs, ruled in favour of the assessee at this interim stage:

Prima Facie Case: The Court found that the distinction between “the Board” and “the Commissioner in the Board” raises a substantial legal question that requires detailed examination.
Protection from Coercive Action: Since the petitioner established a strong prima facie case regarding the lack of jurisdiction of the Superintendent, the Court stayed the operation of the Show Cause Notices (SCNs) dated 23.06.2025 and 24.06.2025.
Interim Order Made Absolute: The Court rejected the Revenue’s application to vacate the stay, ensuring that the tax proceedings remain frozen until the constitutional and statutory validity of the delegation is finalized.

Key Takeaways for Taxpayers

Jurisdictional Objections: If you receive a summons or an SCN issued by an officer (like a Superintendent), always verify if that specific officer has been legally assigned as the “Proper Officer” for that function by the correct authority.
The Power of Section 2(91): This section is the “gatekeeper” of jurisdiction. If the assignment of a function doesn’t follow the specific hierarchy (Commissioner $\rightarrow$ Officer), the entire proceeding (including search, seizure, or summons) could be void.
Administrative vs. Statutory Power: This case highlights that a mere Circular cannot override the specific language of the Act. If the Act says “Commissioner,” the “Board” cannot step in to perform that role.

Summary of the Delegation Hierarchy

The Board (CBIC): A collective body responsible for policy and administration.
The Commissioner in the Board: A specific statutory authority empowered to assign “Proper Officer” functions.
The Proper Officer: The specific individual (e.g., Assistant Commissioner, Superintendent) authorized to perform acts like issuing summons under Section 70.

HIGH COURT OF RAJASTHAN

ACME Cleantech Solution (P.) Ltd.

Union of India

Sanjeev Prakash Sharma and Sanjeet Purohit, JJ.

D.B. Civil Writ Petition No. 11503 of 2025

AUGUST 13, 2025

Sujit Ghosh, Sr. Adv., Ms. Mannat Waraich, Harshal Tholia and Ms. Vidhi Maheshwari for the Petitioner. C.S. Sinha, Sr. Standing Counsel, Dev Yadav and Mayank Kamwar for the Respondent.

ORDER

1. Issue notice.

2. Mr. C.S. Sinha, learned counsel, accepts notice on behalf of the respondents.

3. It is informed by learned Senior Counsel appearing on behalf of the petitioner that in Mohit Kirana Store v. CBDT & Customs [D.B. Civil Writ Petition No.1030 of 2022, dated 1-7-2025], following order has been passed on 01.07.2025:

“Heard on applications (Nos. 1/2022 and 2/2022) for vacating stay order passed by this Court.

Learned counsel for the revenue would vehemently submit that the circular impugned was, in fact, issued by the Commissioner and not by the Central Board of Indirect Taxes and Customs (for short ‘the Board’) and, therefore, the delegation of power in the hands of Superintendent for exercising power of issuance of summons is perfectly in accordance with law.

On the other hand, learned counsel for the petitioner would submit that impugned circular dated 05.07.2017 clearly recites that the power of delegation has been exercised by the Board whereas the Board does not have that power and power of delegation is exercisable only with reference to the provisions contained in Section 2, subsection (91) of the Central Goods and Services Act, 2017 by the Commissioner in the Board as distinguished from the Board itself.

Having considered the submissions of learned counsel for the parties, we find that the petitioner had made out a strong prima facie case which led to passing of interim order in its favour which need not be disturbed.

Applications (Nos. 1/2022 and 2/2022) for vacation of stay order are rejected.

Stay order passed by this Court is made absolute.

However, taking into consideration the importance of the issue, we are inclined to set down the petition for final hearing itself.

List this petition for final hearing in the week after next.”

4. Considering the issue being same, we are inclined to pass interim order in the present matter as has been passed in Mohit Kirana Store (supra).

5. List the present petition along with D.B. Civil Writ Petition No.1030/2022.

6. Operation of the Impugned Show Cause Notice dated 23.06.2025 and Show Cause Notice dated 24.06.2025 shall remain stayed.