Background and purpose of the Circular
Circular No. 255/01/2026-GST has been issued by the Central Board of Indirect Taxes and Customs to resolve jurisdictional uncertainty arising where a registered person changes its principal place of business and, consequently, moves from the administrative control of one GST formation to another. The Circular refers to the former authority as the “transferor jurisdictional authority” and the presently competent authority as the “transferee jurisdictional authority.”
The clarification addresses three recurring questions.
First, whether an investigation, audit, show cause notice, adjudication order, review or other statutory action taken before the transfer continues to remain valid.
Secondly, whether the former jurisdictional officer can continue to act after the taxpayer has migrated.
Thirdly, which authority must conduct subsequent proceedings, implement earlier orders, defend litigation and file appeals.
The Board has clarified, after consultation with the Ministry of Law and Justice, that jurisdiction must ordinarily be tested with reference to the date on which the relevant statutory power was exercised. A subsequent transfer of the taxpayer does not retrospectively invalidate an action that was validly undertaken by a competent officer. It does, however, determine which officer may act thereafter.
Summary of the clarification
| Situation | Authority competent to act | Legal effect |
|---|---|---|
| Action validly taken before transfer | Transferor authority at the relevant time | The action remains valid despite subsequent transfer |
| Further proceeding required after transfer | Transferee authority | It must continue from the stage at which the matter stood |
| New issue noticed by former jurisdiction after transfer | Transferee authority | Former authority must communicate the issue and cannot independently initiate proceedings |
| Implementation of an earlier order or direction | Transferee authority | It must give effect to the prior valid action |
| Consequential proceedings arising from an earlier proceeding | Transferee authority | It may act on the earlier record as though it had initiated the proceeding |
| Representation, defense or filing of appeal | Transferee authority | Present jurisdiction controls litigation and appellate action |
| Action initiated by former authority after transfer | Ordinarily impermissible | The former authority has ceased to possess jurisdiction over the taxpayer |
Jurisdiction is determined at the stage when statutory power is exercised
The central principle of the Circular is that each exercise of statutory power constitutes a distinct jurisdictional stage. Investigation, audit, issuance of show cause notice, adjudication, review, appeal and implementation of an order are not treated as one indivisible act. Competence must be examined when the particular power is invoked.
Thus, where an officer validly commenced an audit while the taxpayer was within that officer’s jurisdiction, the commencement of audit does not become invalid merely because the taxpayer subsequently changes its principal place of business. However, if the jurisdiction changes before completion of the audit, the officer presently exercising jurisdiction is required to take over the pending proceeding and conclude it from the stage at which it stood.
The same principle applies to adjudication. A show cause notice issued by a competent officer before the transfer remains legally operative. The transferee officer may adjudicate that notice after transfer, provided that the officer is otherwise assigned the statutory function of adjudication under the Act. The change of officer does not require the show cause notice to be withdrawn and reissued merely because administrative jurisdiction has changed.
Relationship with the concept of “proper officer”
Section 2(91) of the CGST Act defines a “proper officer” in relation to any function to mean the Commissioner or an officer of central tax who is assigned that function by the Commissioner in the Board. Jurisdiction under GST is therefore not founded merely upon the designation of an officer. It depends upon both the assignment of the statutory function and the territorial or administrative control over the taxable person.
Sections 3, 4 and 5 of the CGST Act govern the classes, appointment and powers of central tax officers. Section 5 permits an officer to exercise the powers and discharge the duties conferred or imposed upon him, subject to conditions and limitations imposed by the Board. Circulars assigning functions to particular classes of officers consequently remain relevant while determining whether the transferor or transferee officer is competent to perform the next statutory act. The statutory structure concerning officers, proper officers and assigned functions forms part of the current CGST framework.
The 2026 Circular does not dispense with the requirement that the officer taking over the proceeding must be a proper officer for that particular function. For example, the mere fact that an officer presently controls the taxpayer’s registration does not authorize that officer to exercise a statutory power that has not been assigned to his class or designation. The clarification transfers administrative carriage of the proceeding; it does not enlarge the substantive powers assigned under the Act.
Validity of acts completed before transfer
The Circular protects actions validly completed before the change of jurisdiction. Accordingly, an audit notice, summons, inspection authorisation, show cause notice, adjudication order, review order or appeal filed by an officer who possessed jurisdiction on the date of action does not become invalid merely because the taxpayer later moved to another jurisdiction.
The expression “validly undertaken” is material. The Circular does not validate an action that was without jurisdiction from its inception. If the officer lacked territorial jurisdiction, functional assignment or statutory authority on the date of action, a subsequent transfer cannot cure that defect. The circular preserves a valid act; it does not confer retrospective validity upon an inherently unauthorised act.
For instance, M/s Zenith Components Private Limited had its principal place of business in Division A until 31 August 2026. A show cause notice was issued on 20 August 2026 by the competent proper officer of Division A. The taxpayer shifted to Division B with effect from 1 September 2026. The notice remains valid because jurisdiction existed when it was issued. The adjudication thereafter must ordinarily be conducted by the competent officer of Division B.
Prohibition against further action by the transferor authority
Once the taxpayer has migrated to the transferee jurisdiction, the former officer cannot initiate a fresh proceeding or undertake a new statutory action against the taxpayer. Any issue subsequently discovered by the former formation must be communicated to the transferee formation for appropriate action.
This part of the clarification is significant because it prevents parallel or overlapping proceedings by two formations. It also ensures that the taxpayer has one identifiable jurisdictional authority after migration. The former formation may transfer records, provide factual assistance and communicate intelligence, but it cannot continue to act as the jurisdictional face of the proceeding after its authority over the taxpayer has ceased.
An action initiated after transfer by the former authority may therefore be challenged on the ground that the officer lacked jurisdiction on the date the power was invoked. The department cannot ordinarily answer such a challenge merely by asserting that the matter originated while the taxpayer was earlier under that formation. The relevant inquiry is whether the particular action had already been validly initiated before transfer or was commenced only thereafter.
Continuation of pending proceedings by the transferee authority
Where proceedings are pending on the date of transfer, the transferee officer must take them over from the stage at which they stood. The process is one of statutory continuity and not recommencement. Evidence recorded, statements obtained, documents collected, audit objections issued and replies filed before migration remain part of the proceeding.
The transferee officer may rely upon the earlier record as though the proceeding had been initiated by that officer. Nevertheless, the transferee authority must independently discharge the duties attached to the next statutory stage. Where adjudication is pending, it must consider the taxpayer’s reply, grant a hearing where required and pass a reasoned order. The mere adoption of an earlier internal view of the transferor formation without independent consideration would not satisfy the requirements of adjudication.
Suppose M/s Orion Traders was under investigation in Commissionerate X and statements and documents were collected before its jurisdiction shifted to Commissionerate Y. Commissionerate Y may rely upon that material and continue the investigation. However, if a show cause notice is to be issued after the transfer, it must be issued by the competent proper officer of Commissionerate Y, unless a legally valid special assignment or nationwide jurisdiction exists in favour of another authority.
Implementation and consequential proceedings
The Circular expressly places the responsibility for giving effect to earlier actions upon the transferee authority. This includes implementation of directions contained in an adjudication or appellate order, commencement of consequential recovery, passing of consequential orders and taking action arising from antecedent proceedings.
Accordingly, where an adjudication order was passed before migration but recovery became due afterwards, the present jurisdictional officer would ordinarily undertake recovery. Similarly, where an appellate authority remands a matter after the taxpayer has transferred to another jurisdiction, the remand proceeding should be conducted by the competent officer presently having jurisdiction.
This principle must, however, be applied subject to the statutory provisions governing the particular proceeding. Recovery under sections 78 and 79, adjudication under sections 73, 74 or 74A, review under section 107 and revision under section 108 must each be undertaken by an officer competent under the relevant provision. The Circular identifies the responsible jurisdiction; it does not override the statutory allocation of powers.
Filing and conduct of appeals
The transferee jurisdictional authority is declared competent to represent, defend or otherwise conduct proceedings and to file appeals before the Appellate Authority or the Goods and Services Tax Appellate Tribunal. The clarification avoids a situation where the former jurisdiction claims continued control merely because the original order was passed by its officer.
Thus, where an adjudication order was passed by the transferor authority but the taxpayer migrated before the departmental review or appeal was undertaken, the present jurisdictional authority must conduct the subsequent appellate process. It may rely upon the original records and findings, but the decision to pursue further proceedings must be taken in accordance with the statutory review and authorisation mechanism.
The clarification is particularly relevant to appeals before GSTAT because the authority responsible for filing, defending and conducting the appeal may differ from the authority that passed the original order. The litigation remains connected with the taxpayer’s present jurisdiction rather than permanently attached to the officer who originally handled the matter.
Amendment of principal place of business and administrative transfer
A change in the address of the principal place of business is ordinarily governed by section 28 of the CGST Act read with rule 19 of the CGST Rules. The registered person is required to apply for amendment in FORM GST REG-14 within the prescribed period. Where the change relates to the address of the principal place of business, approval is ordinarily communicated in FORM GST REG-15 after verification.
The Circular principally addresses an administrative transfer arising from such change. It should not be confused with migration of existing taxpayers under section 139 at the inception of GST. Nor should it ordinarily be understood as permitting transfer of the same GST registration from one State to another. Since registration under GST is State-specific, shifting the business to another State generally requires cancellation of the existing registration and obtaining a fresh registration in the other State, subject to the facts of the case.
Effect of the Circular under section 168
The Circular has been issued to secure uniformity in implementation of the CGST Act. Instructions issued by the Board under section 168 are binding upon departmental officers. The field formations are therefore expected to follow the allocation stated in the Circular and transfer pending matters to the jurisdiction presently controlling the taxpayer.
For taxpayers, the Circular is also relevant in determining the authority before whom replies, applications, documents and representations should be filed after a change of jurisdiction. A taxpayer should intimate the change to the officer handling the pending matter and obtain confirmation that the records have been transferred to the new jurisdiction. Continued correspondence only with the former officer may create procedural complications, notwithstanding that the obligation to transfer the proceeding primarily rests upon the department.
Litigation implications and available objections
The Circular materially narrows the grounds on which a taxpayer may challenge proceedings merely because jurisdiction changed during their pendency. A validly initiated proceeding will not fail solely due to subsequent migration. The appropriate remedy is ordinarily to require the transferee authority to take over the matter, rather than to seek annulment of all earlier action.
At the same time, the Circular strengthens a jurisdictional objection where a fresh statutory action is taken by the former officer after transfer. The taxpayer may examine the effective date of amendment of registration, the date of administrative transfer, the date of issuance of the notice or order, the assignment of functions to the officer and whether any special authorisation existed.
The following distinction is therefore decisive:
A valid act performed before transfer survives; a fresh act performed by the former jurisdiction after transfer does not acquire validity merely because earlier proceedings had originated there.
The circular also cannot override principles of natural justice. If the transferee officer takes over adjudication, the taxpayer must be informed of the change, given access to the material relied upon and afforded the hearing contemplated under section 75. Continuity of proceedings does not mean continuity of an undisclosed internal departmental process.
Practical implications for registered persons
A registered person changing its principal place of business should preserve the order approving amendment of registration, the effective date of change, updated registration certificate and correspondence showing the transfer of jurisdiction. In every pending audit, investigation, adjudication or appeal, the taxpayer should notify both formations and request written confirmation identifying the officer who will thereafter conduct the proceeding.
Where a notice is issued by the former jurisdiction after the effective date of transfer, the taxpayer should raise the jurisdictional objection at the earliest opportunity without prejudice to its reply on merits. Conversely, where the notice was validly issued before transfer, an objection seeking complete annulment merely because adjudication is subsequently conducted by the transferee authority is unlikely to succeed, provided the transferee officer is otherwise competent and follows due process.
