Case Law

DGGI’s Section 122 Jurisdiction Upheld, Pre-Deposit Transition Rule Reaffirmed — Delhi HC (Rohit Garg)

Published 16 Sept 2026· By Finoscape Editorial Team· 8 min read

Six hundred and twenty-nine businesses, most of them in the iron and steel trade, received the same kind of notice within months of each other: a Show Cause Notice from the Directorate General of GST Intelligence, dated 30 June 2025, alleging fraudulent invoicing without any real supply of goods and proposing personal penalties under Section 122 of the CGST Act. For the lead petitioner, Rohit Garg’s group of companies (M/s Siwon Enterprises Pvt. Ltd. among them), the number on that first notice was ₹45.55 crore. By the time the Order-in-Original was passed on 26 December 2025, cumulative penalties had grown to roughly ₹227.72 crore. A connected notice against an unregistered individual, Krishan Kumar, proposed dual penalties under Section 122(1) and 122(1A) totalling close to ₹163 crore, on Input Tax Credit of ₹68.62 crore allegedly availed and ₹94.84 crore allegedly passed on.

Faced with that scale of exposure, the petitioners didn’t go straight to the merits. They went for the foundation: was the Additional Director who signed the notice even the right officer to sign it?

Sidebar: this argument had real legs going in. Section 2(91) of the CGST Act defines “proper officer,” for any function, as the Commissioner or an officer to whom that specific function has been “assigned” by the Commissioner. A Board Circular dated 27 October 2025 — issued months after these notices — went on to specifically clarify which officers could adjudicate Section 122 penalties. If that Circular was needed to fix a gap, the petitioners argued, then before it, the gap existed — and every notice issued in that gap was void.

The Division Bench of Justices Anil Kshetarpal and Shail Jain didn’t buy it, but the reasoning is worth following closely rather than skimming. The Court didn’t find that no assignment existed before October 2025 — it found that Notification No. 14/2017-Central Tax (which vests DGGI officers with the powers of a central tax officer of the corresponding rank) read together with Notification No. 02/2017-Central Tax (which assigns functions to specified officer classes) already supplied that authority, from 2017 onward. The October 2025 Circular, on this reading, was clarificatory — restating and tidying up an authority that already existed — not the first-ever grant of it. And even taking the petitioners’ argument at its strongest, the Court held that whether these overlapping notifications actually cover Section 122 penalties is a question of statutory construction, not a “patent or self-evident” jurisdictional defect of the kind that justifies bypassing the ordinary appeal route. Citing the Supreme Court’s well-worn line from Assistant Commissioner of State Tax v. Commercial Steel Ltd. [(2022) 16 SCC 447], the Bench held that a bare assertion of a jurisdictional defect doesn’t itself unlock writ jurisdiction — the petitioners would need to make that case before the Appellate Authority under Section 107.

On the second issue — whether the amended 10% pre-deposit requirement for penalty-only appeals (in force from 1 October 2025) applies here — the Court had firmer ground to stand on: its own recent decision in Gaurav Jain & Anr. v. Joint Commissioner (Appeals-II), CGST Delhi Zone, applied by the same Bench a month ago in Arun Kumar Jain (Finoscape covered that ruling on 17 August; see the internal link below). The principle hasn’t moved: appeals arising from Show Cause Notices issued before 1 October 2025 are governed by Section 107(6) as it stood on the date of the SCN — not the amended, 10%-pre-deposit version — regardless of when the eventual adjudication order happens to be passed. Since every SCN in this batch predates the cutoff, none of the 629 petitioners will need to find that pre-deposit before appealing.

One question the Court pointedly did not answer: whether Section 122(1) can penalise someone who isn’t a “taxable person” at all — the position an unregistered individual like Krishan Kumar was arguing. That question is already before the Supreme Court in Mukesh Kumar Garg v. Union of India [SLP(C) No. 18178/2025], and the Delhi High Court left it exactly where it found it, for the Appellate Authority (and eventually the Supreme Court) to resolve.

Why It Matters

This is a jurisdiction case dressed up as a penalty case, and the distinction matters for anyone advising a client on a DGGI-issued Section 122 notice today: a “the officer had no power to issue this” argument, without more, is very unlikely to get a writ petition off the ground before the Delhi High Court — it will get you relegated to Section 107, where you’re welcome to make the same argument to the Appellate Authority instead. Separately and more usefully, this is now the third Delhi High Court ruling in five weeks confirming that the tougher 10% pre-deposit regime doesn’t apply retroactively by reference to when the final order was passed — only by reference to when the SCN was actually issued. For any client with a live pre-October-2025 SCN working its way toward an appeal, that date is now a settled, low-risk point rather than an open argument.

Key Takeaways

The Delhi High Court has upheld DGGI officers’ authority to issue and adjudicate Section 122 GST penalty notices, holding that Notifications 14/2017-CT and 02/2017-CT already supply that jurisdiction, without needing the Board’s clarificatory Circular of 27 October 2025.
A bare assertion that the issuing officer lacked jurisdiction is not, by itself, enough to justify bypassing the statutory Section 107 appeal route — the construction of overlapping notifications is a matter for the Appellate Authority, not a “patent” defect for writ jurisdiction.
The amended 10% pre-deposit requirement under Section 107(6) (effective 1 October 2025) does not apply to appeals from Show Cause Notices issued before that date — reaffirming Gaurav Jain and Arun Kumar Jain — regardless of when the adjudication order itself was passed.
Whether Section 122(1) penalties can reach a person who is not a “taxable person” remains an open question, pending before the Supreme Court in Mukesh Kumar Garg v. Union of India.
All 629 writ petitions were dismissed with liberty to pursue statutory appeals under Section 107, with the Appellate Authority directed to examine every ground uninfluenced by the High Court’s observations, and with time spent in this litigation excludable for limitation purposes.

Practical Implications

For a client sitting on a DGGI or CGST Section 122 notice signed before October 2025, a jurisdictional challenge to the issuing officer is now a harder sell as a writ-stage argument in Delhi — it belongs inside the Section 107 appeal, argued on the specific notification chain, not as a threshold reason to avoid the appeal altogether. Where the SCN predates 1 October 2025, however, the pre-deposit position is now comfortably settled: no 10% penalty pre-deposit is required for the appeal, whatever the adjudication order’s own date happens to be. Practitioners advising clients in the ongoing wave of DGGI ITC-fraud investigations should treat Rohit Garg as confirming, not disturbing, that settled pre-deposit position, while noting that the underlying “taxable person” question for non-registered individuals remains genuinely unresolved.

Action Checklist

For any client with a Section 122 notice issued by a DGGI officer, check the SCN date against 1 October 2025 first — it decides the pre-deposit question outright under Gaurav Jain/Arun Kumar Jain/Rohit Garg.
Do not lead a writ petition with a bare “wrong officer” jurisdictional argument on a Section 122 notice — file it as a detailed submission before the Section 107 Appellate Authority instead, backed by the specific notification chain the client believes doesn’t cover the officer’s function.
Where a client is an unregistered individual facing a Section 122(1) penalty, flag the pending Supreme Court reference in Mukesh Kumar Garg as a live, unresolved argument worth preserving at every stage rather than conceding.
Track this case’s progress at the Section 107 Appellate Authority stage — the reasoning on the notification chain (14/2017-CT + 02/2017-CT) will likely recur in other DGGI-notice challenges pending across the country.

Relevant Sections / Rules / Notifications

Section 122(1) and 122(1A) of the CGST Act, 2017 (penalty for certain offences).
Section 2(91) of the CGST Act, 2017 (definition of “proper officer”).
Section 107(6) of the CGST Act, 2017, as amended by the proviso effective 1 October 2025 (pre-deposit for penalty-only appeals).
Notification No. 14/2017-Central Tax (DGGI officers vested with powers of corresponding-rank central tax officers).
Notification No. 02/2017-Central Tax (assignment of functions to specified officer classes).
CBIC Circular No. 254/11/2025-GST, dated 27 October 2025 (clarificatory, per the Court’s finding).

FAQs

Q: Does this ruling mean every DGGI Section 122 notice is now immune from a jurisdiction challenge?
A: No — it means a bare, threshold jurisdictional objection isn’t enough to get a writ petition heard on that ground alone in Delhi. The underlying argument about which notifications actually assign Section 122 authority remains open to be argued in detail before the Section 107 Appellate Authority.

Q: Is the pre-deposit question now fully settled for every pending appeal?
A: For SCNs issued before 1 October 2025, yes — this is now the third Delhi High Court ruling on the point in five weeks. For SCNs issued on or after that date, the amended 10% pre-deposit requirement applies as written.

Internal Links

Section 107(6) 10% Pre-Deposit Not Applicable to Pre-Oct-2025 SCN Appeals — Delhi HC (Arun Kumar Jain) · GSTAT Backlog Appeal Deadline Missed? Section 112(6) Condonation Window Explained

Finoscape’s 17 August 2026 coverage of Arun Kumar Jain (the same pre-deposit principle, personal-penalty context); future coverage of Mukesh Kumar Garg v. Union of India once the Supreme Court rules on the “taxable person” question.

Prepared by Finoscape Editorial Team — hello@finoscape.com. This article is for general informational purposes and is based on reporting from TaxGuru, Verdictum and A2Z Taxcorp of the Delhi High Court’s ruling in Rohit Garg v. Union of India & Ors. [2026:DHC:7502-DB]. The order’s date is reported inconsistently across outlets (7, 8 and 16 September 2026); this is disclosed rather than resolved, since the order itself was not independently retrieved from the Delhi High Court’s e-portal in this cycle. It does not constitute legal or tax advice. Readers relying on this development for a specific client matter should verify the complete order before acting. Professional advice should be sought for any specific situation.