2017 CBIC Circular On Proper Officers' Powers Under CGST Act Is Valid: Delhi High Court

The Delhi High Court upheld a 2017 Circular issued by the Central Board of Indirect Taxes and Customs (CBIC) assigning functions to officers under the CGST Act, holding that it is legally valid when issued pursuant to a proposal by the Commissioner in the Board and approved by the Board under Section 168(2) of the CGST Act, 2017.

In a judgement dated 2 February 2026, a Bench of Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul dismissed a challenge to the validity of Circular No. 3/3/2017, while granting limited relief only by rescheduling the summons issued to the petitioner.

The Court noted:

"The fact remains that it is not in dispute that the Commissioner is also a part of the Board. Once it is not in dispute that the Commissioner is part of the Board, and sub-section (2) of Section 168 contemplates that the assignment of functions to the Central Tax Officers is upon a proposal of the Commissioner in the Board, we see no reason to disbelieve that the same was not under the authority of the Commissioner, which was approved by the Board as required under sub-section (2) of Section 168 referred above."

The case arose from an inquiry involving a firm, in which the petitioner, an individual, was summoned by a Senior Intelligence Officer of the Central Tax Commissionerate to tender a voluntary statement and produce bank statements, sales invoices, and ledgers for verification. The petitioner challenged both the Circular and the summons.

He argued that the Board lacked authority to assign powers to officers and that only the “Commissioner in the Board” could do so under Section 168(2) of the CGST Act. He also relied on an interim order of the Rajasthan High Court staying summons issued by the Directorate General of GST Intelligence.

Circular No. 3/3/2017, dated 5 July 2017, outlines the officers authorised to carry out functions such as inspection, search, seizure, verification of business premises, detention and release of goods in transit, and initiation of recovery proceedings, except those relating to registration and composition levy. It governs Sections 67, 71, 78, and 129 of the CGST Act and corresponding Rules, and assigns “Proper Officers,” such as Superintendents of Central Tax, to perform functions including verification of records, inspection, search, and seizure.

Opposing the petition, the CBIC contended that, on a plain reading of Section 168, the functions had been duly assigned with the approval of the competent authority.

The High Court noted that the Circular was issued at the behest of the Commissioner in the Board, who is “a part of the Board,” and that the proposal to assign functions had been approved by the Board.

Relying on State of Tamil Nadu v. P. Krishnamurthy, (2006) 4 SCC 517, the Court re-iterated that subordinate legislation and executive circulars carry a presumption of validity unless proved otherwise

In the present case, the Bench noted that the petitioner failed to discharge this burden as no documents or pleadings were placed on record to show that the proposal to assign functions was not routed through the Commissioner or lacked Board approval. The challenge rested solely on an inference drawn from the Circular's preamble, which the Court held was insufficient to invalidate it. The Court observed:

“We see no reason to infer that while issuing the circular dated 5th July, 2017, the proposal was not mooted through the Commissioner in the Board, or that the same was not approved by the Board as defined under sub-section (16) of Section 2 and sub-section (25) of Section 2 of the CGST Act.”

On the limited issue that the summons were received after the scheduled date, the Court granted relief by rescheduling the petitioner's appearance without interfering with the ongoing inquiry.

Accordingly, the Court partly allowed the writ petition to the extent of rescheduling, and directed the petitioner to appear before the competent officer on 23 March 2026.

For Petitioner: Advocates A.K. Babbar, Surendra Kumar, Atul Babbar, Bharat Kumar Tripathi, Rahul Chauhan

For Respondent: Senior Standing Counsel Anushree Narain and Advocates Naman Choula, Yamit Jetley