Quick Answer: On GST adjudication bias, the Rajasthan High Court held that an officer who approved the investigation report for prosecution cannot adjudicate the same matter, given the reasonable apprehension of bias. The Section 122 penalty order and the Order-in-Appeal were quashed and the matter remanded for fresh decision.
In M/s Gajmukhi Bullion v. Additional Commissioner, Central Goods and Service Tax & Anr. (2026:RJ-JP:32194-DB), the Rajasthan High Court addressed GST adjudication bias where the adjudicating officer had approved the prosecution report (paras 11–12). A Division Bench of Dr. Justice Pushpendra Singh Bhati and Justice Praveer Bhatnagar held that a reasonable apprehension of bias could not be ignored (para 13). The Order-in-Original dated 16.01.2025 and the Order-in-Appeal dated 28.01.2026 were quashed and the matter remanded (paras 13–14).
Headnote: GST Adjudication Bias
CGST Act, 2017 – Sections 122(1)(ii), (vii), (xii), (xvi), (xvii) and 132 – Penalty proceedings – Adjudicating officer who approved investigation report for prosecution – Rule against bias – Reasonable apprehension of bias – Natural justice – Article 226
Held: (i) The Additional Commissioner who countersigned and approved the investigation report for prosecution later adjudicated the penalty case (paras 11–12).
(ii) Such an arrangement "undermines the very foundation" on which a quasi-judicial authority must function (para 12).
(iii) The authority's own order did not adequately answer the objection on the approval of the investigation report (para 12).
(iv) Actual bias need not be proved; a reasonable apprehension of bias cannot be ignored in quasi-judicial proceedings (para 13).
(v) Order-in-Original and Order-in-Appeal quashed; matter remanded with a direction that the investigator, approving authority and adjudicator not be the same person (para 13).
(vi) All other issues left open (para 14).
(paras 1–14)
Case Details: Gajmukhi Bullion v. Additional Commissioner (2026:RJ-JP:32194-DB)
Final Outcome: Writ petition allowed; Order-in-Original dated 16.01.2025 and Order-in-Appeal dated 28.01.2026 quashed; matter remanded to the competent authority for fresh decision by a different officer (paras 13–14).
Case: M/s Gajmukhi Bullion, through its Proprietor Shri Dev Madanlal Adania v. Additional Commissioner, Central Goods and Service Tax, Jodhpur & Anr.
Neutral Citation: 2026:RJ-JP:32194-DB
Case No.: D.B. Civil Writ Petition No. 14693/2026
Court: Rajasthan High Court, Jodhpur (Division Bench)
Date of Decision: 17 July 2026
Bench: Dr. Justice Pushpendra Singh Bhati and Justice Praveer Bhatnagar [author not indicated in the order]
Relevant Acts & Sections: CGST Act, 2017 – Sections 122(1)(ii), (vii), (xii), (xvi), (xvii) and 132 (including Section 132(6)); Rajasthan GST Act, 2017; Constitution of India – Article 226
Impugned Order: Order-in-Original dated 16.01.2025 imposing penalties under Section 122(1); Order-in-Appeal dated 28.01.2026 of the Commissioner (Appeals), CGST, Jodhpur, affirming it (para 1)
Counsel: Mr. Prateek Gattani for the petitioner; Mr. Nilesh Choudhary for Mr. Kuldeep Vaishnav, D.G.C., for the respondents.
Source: Rajasthan High Court (official website)
Key Holdings of the Rajasthan High Court
- The investigation report for prosecution was prepared by a Deputy Commissioner and countersigned and approved by the Additional Commissioner (para 11).
- The same Additional Commissioner, acting as quasi-judicial authority, passed the penalty order dated 16.01.2025 (para 12).
- This arrangement undermines the foundation on which a quasi-judicial authority is expected to function (para 12).
- The respondents' precedents had only limited applicability where a person connected with initiation of proceedings adjudicates them (para 12).
- The Court did not decide whether actual bias resulted; a reasonable apprehension of bias was enough to remand (paras 13–14).
- On remand, the roles of investigator, approving authority and quasi-judicial officer must not vest in the same individual (para 13).
Brief Facts of the Case
The petitioner is a proprietorship in bullion, gems and jewellery, registered under the CGST and RGST Acts (para 2). On 13.02.2023, Shri Mahipal Singh, Additional Commissioner, examined and approved an investigation report proposing prosecution under Section 132 (paras 3, 6).
On 21.05.2024, a show cause notice proposed penalties under Section 122(1) (para 2). According to the respondents, it was issued by another Additional Commissioner (para 9).
The petitioner objected that the officer who approved prosecution could not adjudicate (paras 4, 7). Shri Mahipal Singh rejected the objection and imposed penalties by order dated 16.01.2025 (paras 1, 7, 12). The appeal was dismissed on 28.01.2026, holding that the dual role cast no cloud on the proceedings (paras 1, 5).
Issues Before the High Court
- Whether an officer who approved the investigation report proposing prosecution can adjudicate penalty proceedings on the same facts.
- Whether actual bias must be shown, or whether a reasonable apprehension of bias suffices to set aside a quasi-judicial order.
- What relief should follow where such dual roles are established.
Court's Findings and Reasoning
Petitioner's case (paras 3–8): The same officer approved prosecution under Section 132 and then adjudicated the penalty on the same facts (para 3). The appeal was rejected in a cryptic manner (para 5). Reliance was placed on Ashok Kumar v. State of Haryana and M/s Ramjilal Mohanlal v. Union of India (paras 7–8) [para numbering of the Ashok Kumar extract in the available copy to be verified from certified copy].
Authority's reasoning under challenge (para 7): The penalty order said sanction for prosecution under Section 132(6) lies with the Commissioner, not the Additional Commissioner (para 7, extract of para 25.2). It added that the taxpayer was trying to "hamper the adjudication proceedings" (para 7, extract of para 25.3).
Revenue's case (paras 9–10): The SCN was issued by a different Additional Commissioner, and no objection was taken at the outset (para 9). Approving an investigation report and acting quasi-judicially are distinct roles (para 10). No actual prejudice was shown (para 10).
Dual roles established (paras 11–12): The Court found that the Deputy Commissioner prepared the investigation report and the Additional Commissioner countersigned and approved it (para 11). The same Additional Commissioner passed the penalty order dated 16.01.2025 (para 12).
Undermining quasi-judicial function (para 12): Such an arrangement "undermines the very foundation" of quasi-judicial functioning (para 12). The respondents' precedents had only limited applicability where a person associated with initiation adjudicates (para 12). Para 25.3 of the penalty order did not adequately address the objection (para 12).
Apprehension, not proof, of bias (paras 13–14): The Court declined to decide whether the multiple roles caused actual bias (para 13). But the reasonable apprehension of bias in the petitioner's mind could not be ignored in quasi-judicial matters (para 13). Remand was ordered solely on this ground (para 14).
Final Outcome and Directions
- The Order-in-Original dated 16.01.2025 and the Order-in-Appeal dated 28.01.2026 were quashed (para 13).
- The matter was remanded to the competent authority to decide afresh (para 13).
- The roles of investigator, approving authority and quasi-judicial officer must not be discharged by the same individual (para 13).
- Actual bias or prejudice was not examined; all other issues and contentions were left open (para 14).
- The order is silent on costs and on any timeline for fresh adjudication.
Legal Principle Laid Down
A GST officer who has approved the investigation report proposing prosecution should not adjudicate penalty proceedings arising from the same facts. In quasi-judicial proceedings, a reasonable apprehension of bias is enough; actual bias need not be proved. Orders passed in such circumstances are liable to be quashed and the matter remanded to a different officer (paras 12–14).
Precedents Relied Upon
- Ashok Kumar v. State of Haryana, (1985) 4 SCC 417 – Relied upon by the petitioner – No one can be a judge in his own cause; real likelihood of bias suffices. Extracted after para 7 (numbered "10" in the available copy) [to be verified from certified copy].
- A.K. Kraipak v. Union of India – Referred (within the Ashok Kumar extract) – Rule against bias extends to administrative decision-making. Extracted after para 7.
- M/s Ramjilal Mohanlal v. Union of India & Ors., D.B. CWP No. 7616/2024 (Rajasthan High Court, 29.01.2026) – Relied upon by the petitioner. Discussed at para 8.
- Precedents cited by the respondents are not named in the order; the Court held them of limited applicability (para 12).
Important Paragraphs of the Judgment
Verbatim extracts from the judgment. For the full text, refer to the judgment PDF below.
Para 11: "After hearing learned counsel for the parties at length, this Court finds that the investigation report for initiation of prosecution was prepared by Shri Abhishek Sinha, Deputy Commissioner, and the same was countersigned and approved by Shri Mahipal Singh, Additional Commissioner."
Para 12: "Such an arrangement undermines the very foundation upon which a quasi-judicial authority is expected to function. This Court is of the view that the precedents cited by the respondents have only limited applicability and do not accord with the settled principles governing the exercise of quasi-judicial powers, particularly in circumstances where a person directly associated with the initiation of proceedings proceeds to adjudicate upon the same matter."
Para 13: "This Court does not deem it necessary to enter into the question as to whether the multiple roles assumed by the same officer, namely, investigator, approving authority, and quasi-judicial authority, actually resulted in bias or partiality in the present case. However, the reasonable apprehension of bias in the mind of the petitioner cannot be ignored, particularly when the matter concerns the exercise of quasi-judicial powers."
Para 14: "This Court further clarifies that it has not examined whether the impugned order is otherwise vitiated by actual bias or prejudice and has remanded the matter solely on the ground that the authority exercising quasi-judicial powers was also involved in the approval of the investigation report leading to the initiation of prosecution proceedings."
Practical Impact of the Ruling
- For taxpayers facing penalty proceedings: Check whether the adjudicating officer approved the investigation or prosecution proposal. If so, object early and in writing (paras 3–4, 13).
- For adjudicating officers: Recuse from cases where you approved the investigation report or prosecution proposal on the same facts (paras 12–13).
- For the department: Assign adjudication to an officer with no role in investigation or approval, to avoid quashing and remand (para 13).
- For practitioners: Actual bias need not be proved; documents showing dual roles, such as countersigned reports, are key (paras 6, 11–13).
- For appellate authorities: A bias objection should not be rejected cryptically; it must be engaged with on the record (paras 5, 12).
FAQs on GST Adjudication Bias
1. What did the Rajasthan High Court hold in Gajmukhi Bullion v. Additional Commissioner, CGST?
It held that the officer who approved the investigation report for prosecution should not adjudicate the related penalty case. A reasonable apprehension of bias sufficed, and both orders were quashed and remanded (paras 12–13).
2. Must actual bias be proved to challenge a GST adjudication order?
No. The Court expressly did not decide whether actual bias resulted. It held that a reasonable apprehension of bias could not be ignored in quasi-judicial proceedings (paras 13–14).
3. Does it matter that sanction for prosecution under Section 132(6) lies with the Commissioner?
The adjudicating authority relied on this point to reject the objection. The High Court nonetheless found that the Additional Commissioner had countersigned and approved the investigation report, and that the objection was not adequately addressed (paras 7, 11–12).
4. Which penalties were involved in Gajmukhi Bullion?
Penalties were imposed under Section 122(1)(ii), (vii), (xii), (xvi) and (xvii) of the CGST Act by order dated 16.01.2025. The Order-in-Appeal dated 28.01.2026 affirmed them (para 1).
5. What directions did the Court give on remand?
The competent authority must decide the matter afresh. The roles of investigator, approving authority and quasi-judicial officer must not be held by the same person, and all other issues stay open (paras 13–14).
Keywords: GST adjudication bias, Gajmukhi Bullion v. Additional Commissioner CGST, 2026:RJ-JP:32194-DB, D.B. Civil Writ Petition No. 14693/2026, Section 122 CGST Act, Section 132 CGST Act, reasonable apprehension of bias, natural justice, quasi-judicial authority, Ashok Kumar v. State of Haryana, GST penalty, Rajasthan High Court, Justice Pushpendra Singh Bhati
Related on LegalTaxGuru
- More High Court judgments on GST and indirect tax
- GST articles and updates
- No ASMT-10 Scrutiny Notice, No Valid GST Demand – Ramhari and Brothers v. Joint Commissioner (State Tax)
Download Judgment PDF – Gajmukhi Bullion v. Additional Commissioner
Judgment PDF: 2026:RJ-JP:32194-DB – M/s Gajmukhi Bullion, through its Proprietor Shri Dev Madanlal Adania v. Additional Commissioner, Central Goods and Service Tax, Jodhpur & Anr. (D.B. Civil Writ Petition No. 14693/2026) – The judgment PDF will be uploaded here shortly.
Source: Rajasthan High Court (official website).
Read more: Rajasthan High Court · GST · Natural Justice · Indirect Tax
