Section 122 Penalty Challenges Relegated to Section 107 Appeal; Proper-Officer Objection Not Patent Lack of Jurisdiction; Pre-01.10.2025 SCNs Attract Old Pre-Deposit: Delhi High Court

1. Title of the Case

2. Summary of the Judgment

Facts of the Case: This common judgment disposes of a batch of writ petitions, including that of Rohit Garg, arising mainly out of a DGGI investigation into invoices issued without actual supply of goods and the wrongful availment and passing on of Input Tax Credit (paras 1, 3, 6). The Additional Director, DGGI, Ghaziabad Regional Unit, issued SCN No. 48/2025-26 dated 30.06.2025 under Section 122 for FY 2018-19 to FY 2024-25, and Orders-in-Original dated 26.12.2025 imposed penalties under several clauses of Section 122(1) (paras 11, 15). Rohit Garg assailed the same Order-in-Original on grounds of officer competence, denial of hearing, multiple penalties and pre-deposit (para 20). In the lead matter, the liability of about Rs. 45.55 crore proposed in DRC-01 rose to about Rs. 227.72 crore in DRC-07 (paras 12, 15).

Issues for Determination: The Court considered whether (i) SCNs under Section 122 issued before Circular No. 254/11/2025-GST dated 27.10.2025 were without jurisdiction for want of a proper officer under Section 2(91); (ii) Section 122(1) applies to a person who is not a “taxable person”; (iii) the amended pre-deposit under Section 107(6), effective 01.10.2025, applies to earlier proceedings; and (iv) alleged breaches of natural justice justified bypassing the appellate remedy (paras 28, 31, 34, 37).

Findings and Observations of the Court: Recording the Revenue’s concession, the Court applied Gaurav Jain and held that the substituted proviso to Section 107(6) does not govern appeals arising from SCNs issued before 01.10.2025 (paras 32-33). It left open the applicability of Section 122(1) to non-taxable persons, the issue being pending before the Supreme Court (para 36). Reading Sections 2(91), 3 and 5 with Notification Nos. 02/2017 and 14/2017-Central Tax, it declined to hold that an officer of the requisite rank lacked authority merely because the Circular came later; the Circular was, at the highest, clarificatory (paras 40-46). The objection therefore disclosed no patent lack of jurisdiction (paras 47-48), and the fact-bound record involving 629 entities was best examined in appeal (paras 49-50).

Verdict and Basis of the Judgment: Applying Commercial Steel Limited, the Court held that a mere assertion of a jurisdictional or natural-justice ground does not justify bypassing Section 107 (paras 51-53). The petitions were disposed of with liberty to appeal; all grounds, including those left open, are to be decided on merits; Section 107(6) as it stood when the SCNs were issued shall apply; and exclusion of the writ period from limitation may be sought (paras 54-58).

Analysis of the Judgment: The ruling discourages writ challenges to large, fact-heavy Section 122 adjudications, yet secures the older, lower pre-deposit and a limitation safeguard. By treating the October 2025 Circular as clarificatory, the Court has narrowed, but not closed, the proper-officer objection.

Legal Takeaway: Noticees facing Section 122 penalties under SCNs issued before 01.10.2025 should file appeals under Section 107 promptly, compute the pre-deposit under the unamended provision, seek exclusion of the writ period, and raise the proper-officer, taxable-person and natural-justice objections before the appellate authority.

3. Tabular Summary

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