Supreme Court of India
M/S Armour Security (India) Ltd vs Commissioner, Cgst, Delhi East … on 14 August, 2025
2025 INSC 982 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
SPECIAL LEAVE PETITION (C) No. 6092 of 2025
M/S ARMOUR SECURITY (INDIA) LTD. …PETITIONER
VERSUS
COMMISSIONER, CGST, DELHI
EAST COMMISSIONERATE & ANR. …RESPONDENT(S)
JUDGMENT
Signature Not Verified
Digitally signed by
VISHAL ANAND
Date: 2025.08.14
15:52:38 IST
Reason:
J.B. PARDIWALA, J.
For the convenience of exposition, this judgment is divided into the
following parts:-
INDEX
A. FACTUAL MATRIX ……………………………………………………………… 2
B. IMPUGNED ORDER …………………………………………………………….. 4
C. SUBMISSIONS ON BEHALF OF THE PETITIONER ……………………. 5
D. ANALYSIS …………………………………………………………………………. 9
I. Whether issuance of summons can be regarded as “initiation of
proceedings” within the meaning of Section 6(2)(b) of the CGST Act?
………………………………………………………………………………………….9
a. Contrary Views of different High Courts on the issue ……………………………………… 9
i. Decisions interpreting the contours of “proceedings” in contrast to “inquiry” or
investigation ………………………………………………………………………………………….. 10
ii. Decisions interpreting “proceedings” in association to “inquiry” or investigation 21
b. Framework of single interface and cross-empowerment of powers under Section
6 of the CGST Act ……………………………………………………………………………………………. 30
c. Scope and Ambit of “initiated any proceedings” under Section 6(2)(b) of the CGST
Act ……………………………………………………………………………………………………42
i. Reading of Circular dated 05.10.2018 ……………………………………………………… 50II. Whether “subject matter” within the meaning of Section 6(2)(b) of
the CGST Act includes all matters dealt with in summons under the
Act? ………………………………………………………………………………….52
III. What is the purport of an “Order” under Section 6(2)(a) of the CGST
Act? ………………………………………………………………………………….59
E. CONCLUSION …………………………………………………………………… 61Page 1 of 66
1. This matter was notified for admission on 06.03.2025. After hearing
the learned Counsel appearing for the petitioner at length, and upon
a threadbare examination of the reasoning assigned by the High
Court, we decided to dismiss the Special Leave Petition. However,
considering the nature of the issue involved, we thought it
appropriate to assign reasons, and accordingly reserved the order.
2. This petition arises from the judgment and order passed by the High
Court of Delhi dated 07.02.2025 in W.P.(C) No. 1082 of 2025
(“Impugned Order”), by which the High Court dismissed the writ
petition filed by the petitioner herein, and declined from interdicting
the summons dated 16.01.2025 and 23.01.2025 respectively, issued
to the petitioner under Section 70 of the Central Goods and Services
Tax Act, 2017 (for short, “the CGST Act”) by the Commissioner,
Central Good and Services Tax, Delhi East Commissionerate
(respondent no. 1).
A. FACTUAL MATRIX
3. The petitioner is a public limited company, incorporated under the
Companies Act, 2013 and is registered with the Delhi GST
authorities vide GSTIN: 07AADCA5862E2ZS. The company is
engaged, inter alia, in the business of providing security services.
4. On 18.11.2024, the petitioner received a show cause notice issued
under Section 73 of the CGST Act from the respondent no. 2 for tax
period April 2020-March 2021. The show cause notice raised a
demand of Rs. 1,24,92,162/- (aggregate of CGST, SGST, IGST)
alongwith the applicable interest and penalty under Sections 50 andPage 2 of 66
74 of the CGST Act respectively. The said show cause notice was
served on the ground that – (i) net tax under declared due to non-
reconciliation of turnovers in other returns and e-way bill
information; (ii) excess claim of ITC.
5. On 16.01.2025, a search was conducted at the registered premises
of the petitioner under Section 67(2) of the CGST Act by the officers
of respondent no. 1. A panchnama was drawn seizing electronic
gadgets and documents. Thereafter, summons under Section 70 of
the CGST Act was issued to four directors of the petitioner company
requiring them to produce documents.
6. On 23.01.2025, the petitioner received one another summons under
Section 70 of the CGST Act issued by the officer of respondent no. 1,
directing one of the directors of the petitioner to produce relevant
documents. The petitioner vide letter dated 24.01.2025 submitted a
letter addressed to the respondent no. 1 stating that the petitioner is
being investigated by the respondent no. 2, on similar grounds,
including ITC claimed from cancelled suppliers. The petitioner also
sought release of the seized electronic devices and documents.
7. Aggrieved by the summons dated 16.01.2025 and 23.01.2025
respectively, the petitioner preferred a writ petition before the High
Court of Delhi on the ground that as the respondent no. 2 had
already made the investigation in respect of the same issue and the
respondent no. 1 does not have the jurisdiction in view of Section
6(2)(b) of the CGST Act.
Page 3 of 66
B. IMPUGNED ORDER
8. The High Court dismissed the writ petition preferred by the petitioner
and thereby declined to interfere with the summons issued to the
petitioner on 16.01.2025 and 23.01.2025 respectively. The Court
held that the expression “any proceeding” in Section 6(2)(b) cannot
be construed to include a search or investigation. The High Court
took the view that a summons or investigation pursuant to a search
constitutes only a precursor to the formal proceedings. It
distinguished such summons from assessment, noting that
summons is primarily intended to elicit information.
9. The High Court noted that the intent of the statute is to prevent
parallel proceedings relating to assessment, particularly those
initiated under Sections 73 and 74 respectively of the CGST Act or
any other analogous provisions. At the stage of issuing summons,
the authorities are merely engaged in gathering information from the
assessee based on the material collected thus far, as it is not yet
possible to determine the specific course of action the authority
intends to pursue.
10. Lastly, the High Court considered the decision of the High Court of
Jharkhand in Vivek Narsaria v. State of Jharkhand, reported in
2024 SCC OnLine Jhar 50, which was relied upon by the petitioner
to fortify his submissions. The Court held that the facts of the said
case were distinguishable from those of the present matter. In Vivek
Narsaria (supra), both the State and Central GST authorities were
conducting parallel inquiries, requiring the assessee to reverse the
input tax credit. The Court observed that the search in the present
Page 4 of 66
case could not be construed as related to prior assessments or the
pending proceedings, as it was conducted subsequent to those
events.
C. SUBMISSIONS ON BEHALF OF THE PETITIONER
11. Mr. Sridhar Potaraju, the learned Senior Counsel appearing for the
petitioner, would argue that Section 6(2)(b) of the CGST Act expressly
prohibits parallel proceedings on the same subject matter by both
the State and the Central GST authorities. He submitted that the
summons issued by the respondent no. 1 concerning the subject
matter i.e., availability of input tax credit in respect of cancelled
dealers is barred under Section 6(2)(b), as the respondent no. 2 had
already issued show cause notices on the same subject matter.
12. Mr. Potaraju submitted that the petitioner does not dispute the
jurisdiction and authority of the Central GST authorities in respect
of subject matters not covered by the show cause notices issued by
the State authority. He further contended that the High Court erred
in interpreting Section 6(2)(b) as being limited to proceedings under
Sections 73 and 74 respectively, or other similar provisions.
Consequently, the High Court erroneously held that the statutory
bar under Section 6(2)(b) does not apply to summons issued under
Section 70 of the CGST Act.
13. Mr. Potaraju drew the Court’s attention to Section 146 of the CGST
Act to submit that that the common GST portal reflects complete
records and status of all proceedings initiated by either the State or
Central GST authorities. Accordingly, both the authorities are privy
Page 5 of 66
to any proceedings on any given subject matter. In the present case,
the summons issued by the respondent no. 1 clearly specify the
subject matter, which is evidently identical to that already under
consideration of the respondent no. 2.
14. Further advancing his submission, Mr. Potaraju underscored the
importance of harmony as a foundational principle of cooperative
federalism, upon which the GST regime is structured. He submitted
that once either the State or Central authority initiates proceedings,
the other is expected to act in aid of those proceedings and provide
all necessary inputs to ensure their effective culmination. However,
the simultaneous exercise of jurisdiction in the form of a parallel
investigation on the same subject matter, he argued, runs contrary
to the principle of harmony.
15. Mr. Potaraju relied upon D.O. F.No. CBEC/20/43/01/2017-GST
(Pt.) dated 05.10.2018, issued by the Central Board of Excise &
Customs, Ministry of Finance, to fortify his submission that the
mandate of Section 6 of the CGST Act envisages a harmonious
exercise of powers by the State and Union authorities. The Circular
reads thus;
“Dear Colleague,
It has been brought to the notice of the Board that
there is ambiguity regarding initiation of enforcement
action by the Central tax officers in case of taxpayer
assigned to the State tax authority and vice versa.
2. In this regard, GST Council in its 9th meeting held
on 16.01.2017 had discussed and made
recommendations regarding administrative division
of taxpayers and concomitant issues. The
recommendation in relation to cross-empowerment of
Page 6 of 66
both tax authorities for enforcement of intelligence
based action is recorded at para 28 of Agenda note
no. 3 in the minutes of the meeting which reads as
follows:-
“viii. Both the Central and State tax administrations
shall have the power to take intelligence-based
enforcement action in respect of the entire value
chain”
3. It is accordingly clarified that the officers of both
Central tax and State tax are authorized to initiate
intelligence based enforcement action on the entire
taxpayer’s base irrespective of the administrative
assignment of the taxpayer to any authority. The
authority which initiates such action is empowered to
complete the entire process of investigation, issuance
of SCN, adjudication, recovery, filing of appeal etc.
arising out of such action.
4. In other words, if an officer of the Central tax
authority initiates intelligence based enforcement
action against a taxpayer administratively assigned
to State tax authority, the officers of Central tax
authority would not transfer the said case to its State
tax counterpart and would themselves take the case.
to its logical conclusions.
5. Similar position would remain in case of
intelligence based enforcement action initiated by
officers of State tax authorities against a taxpayer
administratively assigned to the Central tax
authority.
6. It is also informed that GSTN is already making
changes in the IT system in this regard.”
16. By relying on the decision in the Chief Commissioner of Central
Goods and Service Tax v. Safari Retreats Pvt. Ltd., reported in
(2025) 2 SCC 523, Mr. Potaraju further submitted that the CGST
Act is a special statute and constitutes a self-contained code. As
such, its provisions must be interpreted in a literal, plain, and strict
manner. A literal reading of Section 6(2)(b), he argued, clearly
Page 7 of 66
envisages a bar on the initiation of any proceedings by a proper
officer under the CGST Act on the same subject matter where
proceedings have already been initiated by a proper officer under the
SGST Act.
17. Mr. Potaraju submitted that the legislature has consciously
employed the phrase “any proceedings”, which, in his view, is
intended to encompass all proceedings initiated under the relevant
GST enactment. The use of the word “any” in conjunction with
“proceedings” reflects the legislative intent to give the provision a
broad and inclusive scope. To buttress this submission, he relied on
the decision in K.P. Mohammed Salim v. CIT, reported in (2008)
11 SCC 573. Furthermore, Section 6 of the CGST Act, is part of
Chapter II of the Act which deals with Administration. As a sequitur,
it ought to apply to all the “proceedings” contemplated under the
subsequent provisions.
18. Lastly, Mr. Potaraju emphasized that officers under the GST regime
are governed by the provisions set out in Chapter II of the CGST Act.
He pointed out that the term “proper officer,” as defined in Section
2(91) of Chapter I, refers to any officer assigned with any function
under the Act. The CGST Act, he argued, does not draw distinctions
or impose limitations on the exercise of powers by a proper officer.
Rather, the definition operates as an overarching provision,
uniformly applicable across the various Chapters of the Act.
19. In such circumstance referred to above, he prayed that there being
merit in the present appeal, the same may be allowed and the
Page 8 of 66
Impugned Order passed by the High Court may be set aside and the
summons dated 16.01.2025 and 23.01.2025 respectively be
declared as having been issued without jurisdiction.
D. ANALYSIS
20. Having heard the learned Counsel appearing for the petitioner and
having gone through the materials on record, the only question that
falls for our consideration is whether the action of respondent no. 1,
as complained of, amounts to an “initiation of proceedings” in respect
of the “same subject matter” for the purposes of Section 6(2)(b) of the
CGST Act.
I. Whether issuance of summons can be regarded as “initiation
of proceedings” within the meaning of Section 6(2)(b) of the
CGST Act?
21. One of the principal contentions raised by the petitioner herein for
the purpose of assailing the Impugned Order is that the issuance of
summons amounts to “initiation of proceedings” within the meaning
of Section 6(2)(b) of the CGST Act.
a. Contrary Views of different High Courts on the issue
22. Before we proceed to answer the aforesaid contention canvassed on
behalf of the petitioner, it would be appropriate to first refer to the
decisions of various High Courts and the cleavage of opinion that
have been expressed as regards the scope of “initiation of
proceedings” within the meaning of Section 6 of the CGST Act.
Page 9 of 66
i. Decisions interpreting the contours of “proceedings” in
contrast to “inquiry” or investigation
23. The High Court of Allahabad in G.K. Trading v. Union of India &
Ors., reported in 2020 SCC OnLine All 1907, examined the
interplay between Sections 6 and 70 respectively of the CGST Act.
The petitioner had received summons from the State GST authorities
to explain two instances of availed input tax credit. Simultaneously,
the petitioner was also summoned by the Central GST authorities to
tender a statement in connection with the inquiry being undertaken
by the Central GST authorities. Subsequent summons required the
petitioner to produce various documents; however, he failed to
furnish the requisite information.
The High Court held that the term “inquiry” as used in Section
70 of the CGST Act is not synonymous with “proceedings” under
Section 6(2)(b). The Court clarified that proceedings under Section
6(2)(b) include actions relating to assessment, demand, and penalty,
such as those initiated under Sections 73 or 74 respectively of the
Act. Moreover, the Court interpreted the phrase “same subject
matter” in Section 6(2)(b) to refer to the same cause of action
concerning the same dispute being adjudicated before a proper
officer. In the Court’s view, the reference to “subject matter” implies
an adjudicatory proceeding founded on an identical cause of action.
The relevant observations read as under:
“10. The words “subject-matter”, “proceedings” and
“inquiry” have not been defined either under the State
GST Act or the Union Territory GST Act or the CGST
Act. Therefore, these words have to be interpreted in
the context of the aforesaid Acts. The word “inquiry”
in section 70 has a special connotation and a specific
purpose to summon any person whose attendancePage 10 of 66
may be considered necessary by the proper officer
either to give evidence or to produce a document or
any other thing. It cannot be intermixed with some
statutory steps which may precede or may ensue
upon the making of the inquiry or conclusion of
inquiry. The process of inquiry under section 70 is
specific and unified by the very purpose for which
provisions of Chapter XIV of the Act confers power
upon the proper officer to hold inquiry. The word
“inquiry” in section 70 is not synonymous with the
word “proceedings”, in section 6(2)(b) of the UPGST
Act/CGST Act.
xxx
12. Provisions of section 70 has been enacted for
collecting evidence in matters involving tax evasion
which may also lead to confiscation. After inquiry is
completed and materials for tax not paid or short-
paid or erroneously refunded or input-tax credit
wrongly availed or utilized, by reason of fraud or
wilful misstatement or suppression of facts or
otherwise are found, then it may lead to demands
and recovery under section 73 or section 74, as the
case may be. When action for assessment, demand
and penalty, etc., including action under section 73
or 74 is taken, that shall amount to proceedings
referable to section 6(2)(b) of the Act but the inquiry
under section 70 is not a proceeding referable to
section 6(2)(b) of the Act.
xxx
17. Thus, section 6(2)(b) of the CGST Act prohibits
separate initiation of proceedings on the same
subject-matter by the proper officer under the CGST
Act when proceeding on the same subject-matter by
the proper officer under the State Act has been
initiated, whereas section 70 of the UPGST/CGST Act
merely empowers the proper officer to summon any
person in any inquiry. The word “proceedings” used
in section 6(2)(b) is qualified by the words “subject-
matter” which indicates an adjudication
process/proceedings on the same cause of action and
for the same dispute which may be proceedings
relating to assessment, audit, demands and
Page 11 of 66
recovery, and offences and penalties, etc. These
proceedings are subsequent to inquiry under section
70 of the Act. The words “in any inquiry” used in
section 70 of the Act is referable to the provisions of
Chapter XIV, i. e., section 67 (power of inspection,
search and seizure), section 68 (inspection of goods
in movement), section 69 (power to arrest), section 71
(access to business premises) and section 72 (officers
to assist proper officers). Therefore, proper officer
under the UPGST Act or the CGST Act may invoke
power under section 70 in any inquiry. Prohibition of
section 6(2)(b) of the CGST Act shall come into play
only when any proceeding on the same subject-
matter has already been initiated by a proper officer
under the UPGST Act.”
(Emphasis supplied)
24. The High Court of Madras in Kuppan Gounder P.G. Natarajan v.
Directorate General of GST Intelligence, reported in 2021 SCC
OnLine Mad 17053, dealt with a challenge to summons issued by
the respondent on the ground that the appellant’s company fell
within the state jurisdiction under the SGST Act, and the respondent
is an authority with the central jurisdiction. The Court held that the
scope of Sections 6(2)(b) and 70 respectively, are different and
distinct, as the former deals with any proceedings on a same subject
matter, whereas, the latter deals with power to summon in an inquiry
and therefore, the words “proceedings” and “inquiry” cannot
interchangeably be used to say that there is a bar to invoke the power
under Section 70 of the CGST Act. The Court referred to the
proceedings under Section 67, 68, 69, 71 and 72 respectively as
“inquiry”. It was further observed that the prohibition under Section
6(2)(b) shall come into play when any proceedings on the same
subject matter had already been initiated by a proper officer of
another tax authority. The relevant observations read as under:
Page 12 of 66
“31. We need to take note of the word “inquiry”
occurring in Section 70 of the CGST Act and the
proper officer has power to summon any person
whose attendance he considers necessary to give
evidence or to produce a document or any other thing
in any inquiry, in the same manner, as provided in
the case of a Civil Court. The bar contained under
Section 6(2)(b) of the CGST Act is with regard to any
proceedings initiated by a proper officer on a subject
matter, on the same subject-matter, the proper officer
under the Central Act cannot initiate any action
referred.
32. In our considered view, the scope of Section
6(2)(b) and Section 70 is different and distinct, as the
former deals with any “proceedings on a subject
matter/same subject matter” whereas, Section 70
deals with power to summon in an inquiry and
therefore, the words “proceedings” and “inquiry”
cannot be mixed up to read as if there is a bar for the
respondent to invoke the power under Section 70 of
the CGST Act.”
(Emphasis supplied)
25. The High Court of Orissa in Anurag Suri v. Director General of
Goods and Services Tax Intelligence & Ors., reported in 2021
SCC OnLine Ori 2510, dealt with a challenge to show cause notice
and subsequent orders issued by the State GST authority, despite
the Central GST authority already being seized of the matter. During
a search conducted at the petitioner’s business premises by the
Central GST authority, documents were seized and summons were
issued. The petitioner therein participated in the proceedings arising
therefrom. Subsequently, the State GST authority issued a show
cause notice alleging that tax dues had not been paid or had been
short-paid, that refunds had been erroneously released, or that the
input tax credit had been wrongly availed or utilized. The petitioner
was called upon to pay the tax along with interest and penalty. The
Page 13 of 66
petitioner requested that the proceedings initiated by the State GST
authority be kept in abeyance until the conclusion of the proceedings
before the Central GST authority. Nevertheless, the State GST
authority proceeded to pass an order directing the petitioner to pay
the demanded amount.
The High Court noted that the period of enquiry by the Central
GST authority spanned from July 2017 to June 2018, whereas, the
show cause notice issued by the State GST authority pertained to
March 2018. Therefore, there was an overlap in the periods under
scrutiny. In view of this, the High Court quashed the show cause
notice and the subsequent orders issued by the State GST authority.
The relevant observations read as under:-
“14. Counsel for the Opposite Parties does not
dispute that the circular dated 5th October, 2018
precludes the State GST authorities from proceeding
in the matter as long as the Central authorities are
seized of it. The only submission by Mr. Chimanka is
that the Appellant should continue to cooperate with
the Central GST authorities and appear as and when
required by them to do so.
15. Learned counsel for the Appellant states that the
Appellant has already been cooperating and would
continue to do so as far as the proceeding initiated by
the DGGSTI (Opposite Party No. 1) is concerned.
16. It may be noted that the period of enquiry as far
as Central tax authority is concerned is from July,
2017 to June, 2018 whereas Opposite Party No. 3
has issued a show cause notice specific for March,
2018 and, therefore, there is also an overlapping of
the periods.
xxx
18. For the reasons noted above, the Court quashes
the show cause notice dated 23rd July, 2019, the
impugned order dated 5th November, 2019 including
the order dated 4th November, 2019 all passed by
Opposite Party No. 3 and directs that till thePage 14 of 66
conclusion of the proceeding initiated against the
Appellant by the DGGSTI, no coercive action be taken
against the Appellant by the Opposite Party No. 3.”
(Emphasis supplied)
26. In Indo International Tobacco Ltd. v. Vivek Prasad, reported in
2022 SCC OnLine Del 90, the petitioner approached the High Court
of Delhi, aggrieved by multiple search operations and summons. A
search was initially conducted by the Central GST authorities in
Gautam Buddha Nagar, followed by the issuance of a show cause
notice. Thereafter, the bank account of the petitioner was
provisionally attached and summons were issued to produce various
documents. Subsequently, the petitioner’s premises were subjected
to searches by multiple units of the Directorate General of GST
Intelligence (DGGI), Lucknow Zonal Unit, DGGI, Delhi Zonal Unit,
DGGI, Ghaziabad, DGGI, Ahmedabad.
The Court observed that an assessee may fall within the
jurisdiction of a State Tax Officer, a Central Tax Officer, and a
Central Tax Officer having pan-India jurisdiction. In the context of
Section 6, the Court observed that the purport of Section 6 is to
eliminate the assessee from being subjected to multiple jurisdictions.
However, the Court further clarified that neither Section 6 nor the
Circular dated 05.10.2018 would apply to fact-situations where the
inquiry, investigation, or proceedings have implications extending
beyond the territorial jurisdiction of the initiating officer. It
categorically observed that the Circular does not contemplate
situations where actions, by Central or State, or only Central or
State, have a common thread involving multiple taxpayers. In such
cases, requiring an officer to limit the scope of investigation to his
Page 15 of 66
territorial jurisdiction would be impractical and would, in turn,
subject the assessee to multiple overlapping actions. The relevant
observations read as under:
“64. The above circular is intended to give effect to the
mandate of section 6 of the CGST Act and the pari
materia provisions in the State Act(s). It states that
the mandate of section 6 shall apply even to the
“intelligence based enforcement action”. It clarifies
that the Central tax officers as also the State tax
officers are authorized to initiate intelligence based
enforcement action on the entire taxpayer’s base
“irrespective of the administrative assignment of the
taxpayer to any authority” and that the authority
which initiates such action is empowered to complete
the entire process of investigation, issuance of show-
cause notice, adjudication, recover, etcetera. It
further clarifies that even though the taxpayer may
be administratively assigned to the other authority-
State or Centre as the case may be, the officer
initiating “intelligence based enforcement action”
need not transfer the said case to the authority
otherwise having administrative assignment over the
taxpayer.
65. The above circular is one example where section
6 shall have its full play. In terms of section 6(1), the
State or the Central Tax Officer as the case maybe, is
also authorised to act as the “proper officer” for the
purposes of the other Act-CGST or the SGST Act as
the case maybe. Therefore, when such officer
initiates “intelligence based enforcement action”, he
acts and is empowered to so act not only under the
CGST Act but also under the SGST or the UTGST Act.
In terms of section 6(2)(a), he has to pass a
comprehensive order, both under the CGST and the
SGST/UTGST Act. In terms of section 6(2)(b), as he
has initiated “intelligence based enforcement action”,
the other jurisdiction officer must hold his hands and
the officer initiating such “intelligence based
enforcement action” need not transfer the case to thePage 16 of 66
jurisdiction officer to whom otherwise the taxpayer is
administratively assigned.
xxx
67. A bare reading of section 6 of the CGST and the
abovementioned circular, on first blush, supports the
interpretation put forth by the learned senior counsel
for the appellants. However, in our opinion, neither
section 6 of the CGST Act nor the circular dated
October 5, 2018 is intended to nor can be given an
over arching effect to cover all the situations that may
arise in the implementation of the CGST and the
SGST Acts. The circular cannot be extended to cover
all and myriad situations that may arise in the
administration and the functioning of the GST
structure, now being governed by the CGST Act ; the
SGST Act ; the UTGST Act ; and the IGST Act. Section
6 of the CGST Act and the above said circular clearly
has a limited application, which is of ensuring that
there is no overlapping exercise of jurisdiction by the
Central and the State Tax Officers. It is to bring
harmony between the Centre and the State in the
implementation of the GST regime, with the two not
jostling for jurisdiction over a taxpayer. It is, however,
not intended to answer a situation where due to
complexity or vastness of the inquiry or proceedings
or involvement of number of taxpayers or otherwise,
one authority willingly cedes jurisdiction to the other
which also has jurisdiction over such
inquiry/proceedings/taxpayers.
68. Neither section 6 of the CGST Act nor the SGST
Act nor the Circular dated October 5, 2018, therefore,
apply to the fact-situation presented by the two
petitions before us as they do not operate and are not
intended to operate in a situation where the
“intelligence based enforcement action” has
repercussion or involvement of taxpayers beyond the
territorial jurisdictional limit of the officer initiating
such an action. It also does not address a situation
where two or more officers, may be Central or State
or only Central or State, initiate separate “intelligence
based enforcement action” but having a common
thread or involvement of multiple taxpayers, like aPage 17 of 66
case of conspiracy. In the first case, the officer
initiating the “intelligence based enforcement action”
cannot travel beyond his territorial jurisdiction. To
strictly enforce section 6 and the above mentioned
circular would therefore, lead to compelling such
officer to restrict his investigation and findings and
resultant action only to the taxpayer within his
territorial jurisdiction, thereby leading to an
incomplete and inconclusive investigation/action. In
the above mentioned second scenario, as all officers
who have initiated “intelligence based enforcement
action” are otherwise having jurisdiction over the
taxpayer, strictly enforcing the mandate of section 6
and the above mentioned circular, will on the one
hand subject the taxpayer to multiple action(s) (which
is completely contrary to the intent of the Act as noted
hereinabove), while on the other hand lead to multiple
authorities expending their time, energy and
resources investigating the same “intelligence” input,
may be even reaching to conflicting findings. It is
settled principle of interpretation of statute that the
court must adopt construction which will ensure
smooth and harmonious working of the statute and
eschew the other which will lead to absurdity or give
rise to practical inconvenience or friction or confusion
in the working of the system. (Refer : State of Punjab
v. Ajaib Singh AIR 1953 SC 10 ; Collector of Customs,
Baroda v. Digvijaysinhji Spinning & Weaving Mills
Ltd. AIR 1961 SC 1549)”
(Emphasis supplied)
27. The High Court of Kerala in K.T. Saidalavi v. State Tax Officer,
reported in 2024 SCC OnLine Ker 5674, dealt with a case where
the Central GST authority had initiated an enquiry concerning non-
payment of GST, directing the production of certain records, followed
by the issuance of summons under Section 70 of the CGST Act.
During the pendency of this enquiry, the State GST authority
initiated proceedings under Section 74 of the respective State GST
Page 18 of 66
enactment. The Court held that the initiation of an enquiry or
issuance of summons under Section 70 cannot be equated with the
initiation of proceedings for the purposes of Section 6(2)(b) of the
CGST Act. The term “initiation of any proceedings” is in reference to
the issuance of a notice. It further observed that the Circular dated
05.10.2018 did not appear to be in consonance with the mandate of
Section 6(2)(b) of the Act. The relevant observations read as under:
“7. […]Sub-section (2) of Section 6 with which we are
concerned, indicates that, where a proper officer
under the CGST Act has issued an order under the
provisions of the said Act, he shall also issue an order
under the State Goods and Services Tax Act or the
Union Territory Goods and Services Tax Act as the
case may be under the intimation to the jurisdictional
officer of the State Tax or the Union Territory Tax
Authority as the case may be. The Section further
provides that where a proper officer under the State
Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act has initiated any
proceedings on a subject matter, no proceedings shall
be initiated by the proper officer under the CGST Act
on the same subject matter. On a reading of the
provisions, unaided by the authority, I am unable to
conclude that the contention of the learned counsel
for the appellants must be accepted. The term
‘initiation of any proceedings’ is no doubt a reference
to the issuance of a notice under the provisions of the
CGST/SGST Acts and the initiation of an enquiry or
the issuance of summons under Section 70 of the
CGST/SGST Acts cannot be deemed to be initiation of
proceedings for the purpose of Section 6(2)(b) of the
CGST/SGST Acts. I find support for this view from the
judgment of the Allahabad High Court in G.K Trading
Company (Supra) where the court held as
follows;[…]”
(Emphasis supplied)Page 19 of 66
28. The High Court of Rajasthan in Rais Khan v. Add. Commissioner,
Enforcement Wing-II, D.B. Civil Writ Petition No. 3087/2024,
dealt with a challenge to the issuance of summons by the DGGI, on
the ground that the proceedings had already been initiated by the
State GST authority. The Court observed that the terms
“proceedings” under Section 6(2)(b) of the CGST Act and “inquiry”
under Section 70 cannot be conflated to imply a bar on the issuance
of summons. It held that the mere issuance of summons does not
amount to the initiation of proceedings under Section 6(2)(b). The
relevant observations read as under:
“11. In the judgments referred to by counsel for the
respondents, it is held that scope of Section 6(2)(b)
and Section 70 of the CGST Act is different and
distinct, as the former deals with any proceedings on
subject matter, whereas the latter deals with power
to issue summon in an inquiry and therefore, the
words “proceedings” and “inquiry” cannot be mixed
up to read as if there is a bar for the respondents to
invoke the power under Section 70 of the CGST Act.
In “G.K. Trading Company vs. Union of India“, the
Allahabad High Court has held that issuance of
summons is not initiation of proceedings referable to
under Section 6(2)(b) of the CGST Act. Similar is the
view of Madras High Court in “Kuppan Gounder P.G.
Natarajan vs. Directorate General of GST Intelligence,
New Delhi“, wherein, Court has also held that in
issuance of summons for conducting an inquiry and
to obtain a statement from the appellant cannot be
construed to be bar under Section 6(2)(b) of the CGST
Act.
12. In view of the above, we are of the considered
view that issuance of summons under Section 70 of
the CGST Act is not hit by Section 6(2)(b) of the CGST
Act and the present Civil Writ petition being devoid of
merits is accordingly dismissed. Stay application
stands disposed.”
(Emphasis supplied)Page 20 of 66
ii. Decisions interpreting “proceedings” in association to
“inquiry” or investigation
29. The High Court of Calcutta in M/s. R.P. Buildcon Pvt. Ltd. v.
Superintendent, CGST & CX, Circle-II, Group-10, reported in
2022 SCC OnLine Cal 3108, dealt with an appeal wherein the
appellant therein, inter alia, sought quashing of notices issued by
the Central GST authority (Anti-Evasion) in respect of the financial
years 2017-18 to 2019-20, for which an audit under Section 65 of
the CGST Act had already been conducted by another wing of the
Central GST authority. The appellant also sought a declaration that
scrutiny of returns under Section 61 of the CGST Act could not have
been undertaken for the same period once an audit under Section
65 had been completed.
The Court observed that different wings of the same
Department had initiated action for the same period and held that
audit falls within the ambit of “proceedings” under Section 6(2)(b).
Accordingly, it directed that the two wings which had initiated
proceedings subsequently be restrained from proceeding further in
respect of the said financial years. The relevant observations read as
under:
“7. Therefore, we are of the view that since the audit
proceedings under section 65 of the Act has already
commenced, it is but appropriate that the proceedings
should be taken to the logical end. The proceedings
initiated by the Anti Evasion and range office for the
very same period shall not be proceeded with any
further.
xxx
10. It is made clear that the above direction is
confined only for the period covered for the financialPage 21 of 66
years 2017-2018, 2018-2019 and 2019-2020. If
there are any other material required by the second
and third respondents for a Department assessment
period, it will be well open to them to put the
appellants on notice in that regard.”
(Emphasis supplied)
30. The High Court of Madras in Tvl. Metal Trade Incorporation v.
Special Secretary, Head of the GST Council Secretariat, New
Delhi, reported in 2023 SCC OnLine Mad 8234, considered a
challenge to summons issued by both the State and Central GST
authorities. The petitioner therein contended that simultaneous
proceedings by both authorities on the same subject matter were
impermissible. The Court held that it was not permissible for the
State GST authorities to prosecute the petitioner therein again, as
the Central GST authority had already initiated action in respect of
the same matter. However, the Court granted the petitioner an
opportunity to participate in the proceedings initiated by the State
GST authority to ascertain whether both sets of proceedings indeed
pertained to the same subject matter. The relevant observations are
reproduced herein:
“5. Admittedly, no final decision has been taken by
the fifth respondent to initiate action against the
appellant under the TNGST Act, 2017. The appellant
has only been called upon to produce documents
under the impugned Summons dated 18-10-2022
and he has also been called to come for personal
hearing. Admittedly, the appellant has not
participated in the personal hearing and instead he
has chosen to file this Writ Petition, challenging the
impugned Summons. Necessarily, to substantiate his
defence that he cannot be once again prosecuted by
the State Authority under the TNGST Act, 2017, he
has to participate in the enquiry to be conducted by
the fifth respondent and only then it can bePage 22 of 66
ascertained whether the proceedings initiated by the
Central and State Authority are one and the same
involving the same subject matter. Truth will come out
only when the appellant appears before the
respondent pursuant to the Summons received by
him and not otherwise. If it is the same subject
matter, the State Authority cannot prosecute the
appellant once again as the Central Authority has
already initiated action against the appellant in
respect of the very same subject matter. The
appellant has sent a detailed reply on 27-10-2022 to
the impugned Summons dated 18-10-2022 and even
without allowing the same to be considered by the
fifth respondent on merits, the appellant has
approached this Court prematurely by filing this Writ
Petition.
6. As observed earlier, necessarily, the appellant will
have to participate in the personal hearing and state
all his objections with regard to the action launched
by the State Authority under the TNGST Act, 2017.
Unless and until the appellant participates in the
impugned proceedings viz., the impugned Summons
dated 18-10-2022, truth cannot be unearthed with
regard to the appellant’s contentions.”
(Emphasis supplied)
31. The High Court of Jharkhand in Vivek Narsaria (supra), dealt with
a petition wherein the petitioner therein sought a direction that the
proceedings be continued by the State GST authority, and not by the
Preventive Wing of the Central GST authority or the DGGI. An
inspection was initially carried out at the instance of the State GST
authorities, during which the books of account were requisitioned.
Subsequently, the petitioner was served with a notice by the
Preventive Wing of the Central GST authority directing reversal of
input tax credit along with interest and penalty, on the allegation of
purchases from non-existent entities. While both Departments were
seized of the matter, the DGGI conducted a search and effected
Page 23 of 66
seizures. The petitioner therein was also summoned at regular
intervals by both the Preventive Wing of the Central GST authority
and the DGGI.
The High Court observed that the actions taken by any
authority form part of a chain of events occurring under the Act, and
that every enquiry or investigation initiated by any authority is
interrelated. It held that as the State authorities had initiated the
same proceeding for wrong/illegal availment of input tax credit, the
DGGI does not possess any special powers exceeding those conferred
on the officers of the State GST authorities. Accordingly, the Court
directed the Preventive Wing of the Central GST authority and the
DGGI to transfer their investigation in relation to the petitioner
therein to the State GST authorities. The relevant observations read
as under:-
“14. Having heard the arguments advanced by
respective parties and having perused the documents
brought on record and the statements and averments
made in the respective counter-affidavits and
materials available on record, we find that bare
perusal of section 6 of the Act, especially section
6(2)(b), when read with the Clarification dated
October 5, 2018, further read with Clarification dated
June 22, 2020, when read together, it clearly denotes
and implies that it is a chain of a particular event
happening under the Act and every and any
enquiry/investigation carried out at the behest of any
of the Department are interrelated. Even if, we accept
the submission of respondent No. 5 that the
proceedings initiated by respondent No. 5 is on the
basis of an information received from Noida; in that
event also, we are at loss to say that the DGGI is
raising a question about credibility and competence
of the State GST Authorities, in carrying out the
investigation concerning wrong/inadmissible
availment of Input-tax Credit, inasmuch as, thePage 24 of 66
officers of the DGGI does not enjoy any special power
or privilege in comparison with the officers of the
State GST Authorities.
15. We are little hesitant to accept such argument,
inasmuch as, the State Authorities has also initiated
the same very proceeding for wrong/illegal availment
of input-tax credit. Undeniably, the proceedings at the
instance of State Authorities or the Preventive Wing
or the DGGI is at initial stage and the proceedings on
the basis of “Search and Seizure” by the State
Authorities, is prior in point of time. Hence, section
6(2)(b) read with clarification dated October 5, 2018,
adds to the issues raised by the appellant herein and
manifestly crystallizes that since all the proceedings
are interrelated, the State authorities should continue
with the proceedings.”
(Emphasis supplied)
32. The High Court of Punjab & Haryana in Stalwart Alloys India Pvt.
Ltd. v. Union of India & Ors., reported in 2024 SCC OnLine P&H
15153, held that any action taken by any Department amounts to
judicial proceedings but the Departments are within their right to
initiate proceedings and take them to their logical conclusion. In that
case, an enquiry had been initiated both by the State GST authority
and by multiple Zonal Units of the DGGI regarding the wrongful
availment of input tax credit. The petitioner filed a writ petition,
pursuant to which the State GST authority was directed to continue
the enquiry proceedings. In aid of this, the petitioner was directed to
submit records, including ledger accounts, sales and purchase
invoices, and proof of payment, up to 31 January 2021.
Subsequently, fresh search and seizure proceedings were
undertaken by the DGGI. The DGGI granted permission to the
concerned Zonal Unit to conduct a centralized investigation against
the petitioner for the period after 2019. In this context, the State GST
Page 25 of 66
authority transferred the proceedings to the concerned Zonal Unit of
the DGGI.
The High Court observed that the CGST Act does not
contemplate the transfer of proceedings from one proper officer to
another. Accordingly, no authority has the power to transfer a case
from its jurisdiction to another, nor can any authority direct such a
transfer. The Court held that actions taken by a proper officer under
the Act were in the nature of judicial proceedings, which cannot be
transferred through administrative orders. It further held that both
the State and Central GST authorities are vested with equal powers
under the relevant GST enactments, and once proceedings have been
initiated by one authority, the same cannot be transferred to
another. The relevant observations read as under:
“22. We have considered his submission but find
ourselves unable to accept the same in terms of
scheme of the GST Act. As noticed above, the GST Act
of 2017 empowers both the State authority as well as
Central authority with equal powers. Once we have
held that the proceedings are in the nature of judicial
proceedings. The corollary, such judicial proceedings
cannot be transferred by administrative actions.
Merely because the DGGI has information relating to
similar fraudulent availment of ITC by other firms
who may be related to the firm against which the
proceedings have been initiated under section 74 of
the HGST Act by the State authority itself would not
be a sufficient ground to presume that the State GST
authority would not be able to conduct the
proceedings or examine the culpability of the firm
against whom proceedings under section 74 of the
HGST Act have been initiated. Merely because there
may be other firm also against whom proceedings are
initiated, there is no concept of joint proceedings. In
view of the above, we do not subscribe to thePage 26 of 66
contentions raised by learned Assistant Solicitor
General.
xxx
25. The import of the aforesaid Circular dated
October 5, 2018 is to be understood to mean that
when an inquiry is conducted by a proper officer of
the State and investigation is required to be done by
the Central Tax Officer, the Central Tax Officer would
exercise the said power for the purpose of
investigation. However, it would not mean that the
proceedings being conducted by the State Tax Officer
would also be transferred to them. They would only
be in a position as investigating officer as is done in
any criminal case. Their report relating to their
investigation at the level of Pan India will have to be
submitted to the State Tax Officer who has initiated
the proceedings and as a State Tax Officer has the
power to issue summons and warrants of arrest
which would be applicable to Pan India. There is no
reason to believe that the proceedings in any manner
would be hampered or would suffer as against the
company/firm against which proceedings have been
initiated under section 74 of the Act.”
(Emphasis supplied)Further, the High Court interpreted the term “subject matter”
as used in Section 6(2)(b) of the CGST Act to refer to the nature of the
proceedings. In the facts of the case, the Court construed the subject
matter to be the proceedings initiated for the wrongful availment of
input tax credit. On this basis, it held that the DGGI was precluded
from initiating proceedings, even for a different period, where the
State GST authority had already initiated proceedings on the same
subject matter. The relevant observations read as under:
“29. In the opinion of this court, the word “subject-
matter” used in section 6(2)(b) of the Act would mean
“the nature of proceedings”. In the present case, thus,
it would mean the proceedings initiated for wrongful
availment of input-tax credit by fraudulent means.
Page 27 of 66
Thus, if the State has already initiated proceedings
by issuing notice under section 74 of the Act for the
period up to July 22, 2019, for the same subject-
matter, the DGGI cannot be allowed to initiate
proceedings for the availment of input-tax credit by
fraudulent means for the period from July 28, 2019
to January 20, 2022. Such action, if allowed, would
be contrary to the provisions contained in section
6(2)(b) of the Act.”
(Emphasis supplied)
33. The High Court of Himachal Pradesh in Kundlas Loh Udyog v.
State of H.P., reported in 2024 SCC OnLine HP 4810, dealt with a
case where the petitioner was issued summons by the State GST
authorities, directing him to furnish details of all suppliers from
September 2021, for the tax period spanning April 2019 to December
2023. Subsequently, the petitioner therein received summons from
the Central GST authority concerning supplies made by five specific
suppliers. The petitioner informed the Central authorities that
proceedings with respect to the named suppliers had already been
initiated by the State authorities and that the relevant documents
had been submitted to them. Nevertheless, the Central authorities
proceeded to block the input tax credit on account of the
transactions involving the said suppliers.
The Court held that Section 6(1) of the CGST Act empowers the
officers appointed under the State enactment to act as proper officers
for the purposes of the CGST Act as well. It observed that the object
of Section 6(2)(b) of the CGST Act is to prevent the cross-
empowerment in a manner that results in taxpayers being subjected
to parallel proceedings. The Court interpreted the term “subject
matter” to refer to the nature of the proceedings, and clarified that if
any new information is gathered by the latter authority, it ought to
Page 28 of 66
be shared with the authority already seized of the investigation. The
relevant observations read as under:
22. Further in conformity with the scheme of cross
empowering officers under the said enactments,
Clause (a) of Section 6(2) of the Act also empowers a
proper officer to issue orders under the SGST Act and
the said Act. Similarly, officers under the SGST Act
and the UGST Act are also empowered to issue orders
under the Act. The only condition is that the issuance
of such orders is required to be intimated to the
Jurisdictional Officer of the central tax or the state
tax, as the case may be.
23. To ensure that there are no multiple proceedings
in regard of the central and the state officers being
authorized as proper officers, Clause (b) of Section
6(2) of the Act provides that where a proper officer
under the SGST Act and the UGST Act has initiated
proceedings on a subject matter, the proper officer
under the Act would not initiate proceedings “on the
same subject matter”. This provision of CGST is also
mirrored by Clause (b) of Section 6(2) of the SGST Act
and UGST Act as well. Thus, where a proper officer
under the CGST Act had initiated proceedings on a
subject matter, no proceedings would be initiated by
proper officer authorized under the SGST Act or UGST
Act on the same subject matter.
24. It is clear that the object of Section 6(2)(b) of the
Act is to ensure that cross empowerment of officers of
Central Tax and State Tax do not result in the
taxpayers being subjected to parallel proceedings.
25. Noticeably, Section 6 (2) (b) of the Act treats the
empowered officers under the SGTS/UGST Act at the
central level to be at par and does not prescribe for
transfer of investigation of the proceedings from State
authority to the Central authority or vice-versa.
26. The object of Section 6(2)(b) of the Act is to avoid
multiple proceedings by the Sales Tax Officer and
Central Tax Officer on the same subject matter and
the Rules of purposive interpretation requires Section
6(2)(b) of the Act to be read in light of this object.
xxx
Page 29 of 66
32. It would be an entirely different matter that if
there would have been another firm which has also
been found to be availing fraudulent ITC, then the
central government authorities would not be
precluded from taking action against that firm. The
independent action against some other firms would
not impede the proceedings already initiated by the
State Tax Authorities. Any new information which the
respondent No. 2 may have gathered related to
fraudulent availment or passing on can always be
informed to the authorities, who already conducting
the investigation, inquiry and proceedings under
Section 6(2) of the Act.
33. In my considered opinion, the word “subject-
matter” used in Section 6(2)(b) of the Act would mean,
“the nature of proceedings”. In the present case, it
would thus mean the proceedings initiated prior at
any point of time vide Annexure P-1 by respondent
No. 1 and, therefore, for the same subject matter,
respondent No. 2 cannot be allowed to initiate
proceedings. Such action, if allowed, would be
contrary to the provisions contained in Section 6(2)(b)
of the Act.
(Emphasis supplied)
b. Framework of single interface and cross-empowerment of
powers under Section 6 of the CGST Act
34. The unique scheme and framework of the Goods and Services Tax
regime envisages two distinct concepts at its heart, the concept of a
“single interface” as-well as the concept of “cross-empowerment”.
The former relates to doing away of dual administrative control over
the collection as-well as assessment of tax returns by tax payers,
that had existed previously, in the erstwhile scheme of indirect taxes
in the form of value added tax or VAT. Whereas, the latter, pertains
empowering both the Central and State tax administrations to
simultaneously undertake enforcement actions against a tax-payer.
Page 30 of 66
35. While at the first blush, both these concepts may appear to be in
contradiction to one another, however, a closer and more considered
examination of these concepts within the GST framework would
reveal that they are complementary to one another. Both these
concepts have been consciously adopted and incorporated within the
GST framework and have been designed to work in tandem for
achieving the avowed object of GST.
36. At the time of the framing of the Goods and Services Tax Act, it was
consciously decided that taxpayers should not be subjected to the
jurisdiction of both the Central and State tax authorities
simultaneously. To prevent the burden of dual administrative control
and to streamline compliance, the concept of a “single interface” was
introduced. Under this model, only one tax administration would
exercise exclusive control over a taxpayer in relation to all aspects of
GST compliance. This included matters pertaining to Central GST
(CGST), State GST (SGST), and Integrated GST (IGST).
37. The underlying objective of this arrangement was to simplify the
taxpayer’s engagement with the tax system by ensuring that all
notices, audits, assessments, and other proceedings are handled by
a single authority, thereby eliminating the complexity and
duplication that would arise from dual control. It was envisioned that
a taxpayer should not be compelled to respond to two different
authorities for the same issue or transaction.
38. In the 5th GST Council Meeting held on 02.12.2016, the Chairman
of the Council emphasized that for the effective implementation of
Page 31 of 66
the CGST and SGST, cross-empowerment was essential and should
extend across the entire value chain of the taxpayer. The Minister
from Karnataka observed that once the State administration had
conducted the audit of a taxpayer, there was no justification for the
matter to be transferred to the Central administration. The Secretary
suggested that the functions such as issuance of show cause notices
and passing of adjudication orders ought to be carried out by the
same tax administration that had undertaken the audit, scrutiny, or
enforcement, thereby maintaining continuity and administrative
coherence. The Minister from Tamil Nadu expressed the view that,
except in intelligence-based actions where both administrations were
to be empowered, dual control should be avoided in other processes
such as registration, return filing, scrutiny, audit, appeals, demand,
and refund.
39. At the 9th GST Council Meeting held on 16.01.2017, the Chairman
of the Central Board of Excise & Customs stated that the States had
agreed that both the Central and State tax administrations shall
have jurisdiction over the entire taxpayer base. He further
emphasized that neither administration should be completely
excluded from any segment of the value chain, so as to ensure proper
checks and balances. Towards the conclusion of the discussion on
the agenda of cross-empowerment, the Chairman noted that
enforcement functions would remain common to both
administrations. The Council accordingly agreed that both Central
and State tax authorities would be empowered to undertake
intelligence-based enforcement actions across the entire value chain
of a taxpayer.
Page 32 of 66
40. With a view to ensure single interface under the GST regime and to
avoid dual control over taxpayers, the GST Council, in its 9th
Meeting, resolved that a clear division of taxpayers between the
Central and State tax administrations be effected for all
administrative purposes. Simultaneously, the Council recognized
the necessity of empowering both the Central and State tax
administrations to act on intelligence-based enforcement actions
across the entire value chain, regardless of administrative allocation.
This dual empowerment was intended to maintain robust
enforcement capabilities and prevent evasion, while preserving the
administrative clarity of the single interface system.
41. To ensure cross-empowerment across the CGST, SGST, and IGST
Acts, Section 6 was incorporated into the statute. Sub-section (1) of
Section 6 authorizes the officers appointed under the SGST Act or
the Union Territory Goods and Services Tax Act (UTGST) to be
“proper officer” for the purposes of the CGST Act. The State GST and
Union Territory GST Acts also have similar provisions authorizing
officers appointed under the CGST Act to be proper officers for the
purposes of the respective State enactments. The provision reads
thus:
“6. Authorisation of officers of State tax or Union
territory tax as proper officer in certain
circumstances.––(1) Without prejudice to the
provisions of this Act, the officers appointed under the
State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act are authorised
to be the proper officers for the purposes of this Act,
subject to such conditions as the Government shall,Page 33 of 66
on the recommendations of the Council, by
notification, specify.
(2) Subject to the conditions specified in the
notification issued under sub-section (1),––
(a) where any proper officer issues an order
under this Act, he shall also issue an order under
the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as
authorised by the State Goods and Services Tax
Act or the Union Territory Goods and Services Tax
Act, as the case may be, under intimation to the
jurisdictional officer of State tax or Union territory
tax;
(b) where a proper officer under the State
Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act has initiated any
proceedings on a subject matter, no proceedings
shall be initiated by the proper officer under this
Act on the same subject matter.
(3) Any proceedings for rectification, appeal and
revision, wherever applicable, of any order
passed by an officer appointed under this Act
shall not lie before an officer appointed under the
State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act.”
42. Section 6 of the CGST Act and the identical pari-materia provision in
the respective State and Union Territories statutes, is a nuanced
provision that enshrines both the concept as-well as the contours of
“single interface” system and “cross-empowerment”. It delineates
when and how the various officers appointed under different
corresponding legislations shall act as “proper officer” for the
purposes of the said legislation. Section 6 of the CGST Act has to be
read with Circular No. 01/2017 dated 20.09.2017 and Circular
dated 05.10.2018 read with Clarification F. No. CBEC-
Page 34 of 66
20/10/07/2019-GST dated 22.06.2020 by the Central Board of
Indirect Taxes, GST Policy Wing.
43. In conformity with the scheme of cross-empowering officers, clause
(a) of sub-section (2) of Section 6 mandates that where a proper
officer issues an order under the CGST Act, he has to pass an order
under the SGST or UTGST Act respectively, under an intimation to
the jurisdictional officer of the State and Union Territory tax
authorities. Further, clause (b) of sub-section (2) bars a proper officer
under the CGST Act to initiate proceedings on a subject matter where
a proper officer under the SGST Act and UTGST Act has initiated
proceedings on the same subject matter.
44. In furtherance of the Council’s decision regarding the administrative
division of taxpayer base, the Circular No. 01/2017 dated
20.09.2017 was issued, laying down the framework for allocation of
taxpayer between the Centre and the States.
“Subject: Guidelines for division of taxpayer base
between the Centre and States to ensure Single
Interface under GST – regarding
Based on the decisions taken in the 9th Meeting of
the GST Council held on 16 January, 2017 and 21st
Meeting of the GST Council held on 9 September,
2017, the following criteria should be followed for the
division of taxpayer base between the Centre and the
States to ensure single interface:
i. Of the total number of taxpayers below Rs. 1.5
crore turnover, all administrative control over 90%
of the taxpayers shall vest with the state tax
administration and 10% with the Central tax
administration; the state
ii. In respect of the total number of taxpayers
above Rs. 1.5 crore turnover, all administrativePage 35 of 66
control shall be divided equally in the ratio of 50%
each for the Central and the State tax
administration;
iii. The division of taxpayers in each State shall
be done by computer at the State level based on
stratified random sampling and could also take
into account the geographical location and type of
the taxpayers, as may be mutually agreed;[…]”
45. While the latter decision that both the Central and State tax
administrations shall have power to take intelligence-based
enforcement action in respect of the entire value chain is reflected in
the Circular dated 05.10.2018, as reproduced above, and
Clarification F. No. CBEC-20/10/07/2019-GST dated 22.06.2020
by the Central Board of Indirect Taxes, GST Policy Wing, which reads
thus:
“To
The Principal Director General,
Directorate General of GST Intelligence,
2nd Floor. Wing- VI, West Block- VIII R.K. Puram, New
Delhi- 110066
Sir,
Subject: Reference form DGGI on Cross empowerment
under GST. reg.
I am directed to refer to DGGI letter
F.No.574/CE/66/2020/Inv./15308 dated
26.05.2020 on the issues related to cross
empowerment of officers in terms of provisions of
section 6 of the Central Goods and Services Tax Act,
2017 (hereinafter referred to as “the CGST Act”).
2. Issue raised in the reference is whether intelligence
based enforcement actions initiated by the Central
Tax officers against those taxpayers which are
assigned to the State Tax administration gets covered
under section 6(1) of the CGST Act and the
corresponding provisions of the SGST/UTGST Acts or
whether a specific notification is required to be issued
for cross empowerment on the same lines asPage 36 of 66
notification No. 39/2017-CT dated 13.10.2017
authorizing the State Officers for the purpose or
refunds under section 54 and 55 of the CGST Act.
3.1 The issue has been examined in the light of
relevant legal provisions under the CGST Act,
2017. It is observed that Section 6 of the CGST Act
provides for cross empowerment of State Tax officers
and Central Tax officers and reads as:-
“6. (1) Without prejudice to the provisions of this
Act, the officers appointed under the State Goods
and Services Tax Act or the Union Territory
Goods and Services Tax Act are authorised to be
the proper officers for the purposes- of this Act,
Subject to such conditions as the Government
shall, on the recommendations of the Council, by
Notification specify.
3.2. Thus in terms of sub-section (1) of section 6 of
the CGST Act and sub-section (1) of section 6 of the
respective State GST Acts respective State Tax
officers and the Central Tax officers respectively are
authorised to be the proper officers for the purposes
of respective Acts and no separate notification is
required for exercising the said powers in this case
by the Central Tax Officers under the provisions of
the State GST Act. It is noteworthy in this context that
the registered person in GST are registered under
both the CGST Act and the respective SGST/UTGST
Act.
3.3 The confusion seems to be arising from the fact
that, the said sub-section provides for notification by
the Government if such cross empowerment is to be
subjected to conditions. It means that notification
would be required only if any conditions are to be
imposed. For example, Notification No. 39/2017-CT
dated 13.10.2017 restricts powers of the State Tax
officers for the purposes of refund and they have
been specified as the proper officers only under
section 54 and 55 of the CGST Act and not under rule
96 of the CGST Rules, 2017 (IGST Refund on exports).
If no notification is issued to impose any condition, it
means that the officers of State and Centre have been
Page 37 of 66
appointed as proper officer for all the purpose of the
CGST Act and SGST Acts.
4. Further, it may kindly be noted that a notification
under section 6(1) of the CGST Act would be part of
subordinate legislation which instead of empowering
the officer under the Act, can only be used to impose
conditions on the powers given to the officers by the
section. In the absence or any such conditions, the
power of Cross- empowerment under section 6(1) of
the CGST Act is absolute and not conditional.
Yours faithfully,
(Sumit Bhatia)
Deputy Commissioner (GST)”
46. The GST regime operates on the principle of self-assessment, as
enshrined in Section 59 of the CGST Act, hence, all provisions are to
be read in consonance, and not in derogation of Section 59. The
provision reads thus:
“59. Self-assessment.—Every registered person shall
self-assess the taxes payable under this Act and
furnish a return for each tax period as specified under
section 39.”
47. The concept of “cross-empowerment” has been retained within the
GST framework in order to maintain a robust enforcement
mechanism and prevent any scope of evasion of taxes. For this
purpose, both the Central and State tax administrations have been
armed with the power to initiate intelligence-based enforcement
action i.e., an action that is predicated on information of tax evasion
emanating from the value chain or chain of transactions rather than
from any administrative scrutiny by way of audit of accounts or
returns.
Page 38 of 66
48. Such gathering of intelligence is intended to be a non-intrusive
exercise. The Department relies on data analytics, validation with
third-party data, and other methods to collect actionable intelligence
via analytical tools, human intelligence, modus operandi alerts as
well as information through past detections. Taxpayers must be
mindful that intelligence about evasion of tax cannot be procured
from them through issuance summons or other non-descript letters
and correspondence.
49. Any action arising from the audit of accounts or detailed scrutiny of
returns falls within the first category, and proceedings in such cases
are to be initiated by the tax administration to which the taxpayer is
assigned. In contrast, when proceedings are based on intelligence
relating to tax evasion, they can be initiated by either the Central or
the State tax administration.
50. To put simply, Section 6 of the CGST Act provides for the cross-
empowerment of powers between the Central and State tax
administrations. However, for the purpose of administrative
convenience, the GST Council has sought to divide the taxpayer base
between the two administrations through a circular. Nonetheless,
with respect to intelligence-based enforcement actions, both the
Central and the State tax authorities are empowered to act across
the entire value chain.
51. We clarify with a view to obviate any confusion that, when we say
intelligence-based enforcement action is any action that does not
arise from audit of accounts or detailed scrutiny of returns, we do
Page 39 of 66
not for a moment say, that there is no scope for tax administration
to undertake scrutiny of returns or audit of accounts. Both the
Central and the State tax administration are well empowered to
undertake such actions, as long as these actions are initiated on the
basis of any intelligence relating to tax evasion.
52. The High Court of Delhi in the decision of Amit Gupta v. Union of
India, reported in 2023 SCC OnLine Del 6664, succinctly
interprets Section 6 of the CGST Act. The relevant observations read
thus:
“24. It is clear from Section 6(1) of the Act that it
contains a non obstante clause and also empowers
officers appointed under the State Goods and
Services Tax Act, 2017 (hereafter “the SGST Act”) or
the Union Territory Goods and Services Tax Act, 2017
(hereafter “the UGST Act”) to be appointed as proper
officers for the purposes of the Act.
25. Clause (a) of sub-section (2) of Section 6 of the Act
expressly provides that if a proper officer issues an
order under Act, he shall also issue an order under
the SGST Act or the UGST Act as authorised by the
said enactments under intimation of the jurisdictional
officer.
26. In conformity with the scheme of statutes in
respect of Goods and Services Tax Act (the Act, the
SGST Act and the UGST Act) officers under any of the
said statutes can be authorised as proper officers for
the purposes of proceeding under the other GST
statutes as well. Section 6(1) of the Act empowers the
officers appointed under the SGST Act and the UGST
Act to act as proper officers for the purposes of the
Act. Section 6 of the SGST Act and the UGST Act
mirrors Section 6 of the Act. Consequently, the
officers under the said enactments are also
authorised as proper officers under the Act.
27. In conformity with the scheme of cross-
empowering officers under the said enactments,
Page 40 of 66
clause (a) of Section 6(2) of the Act also empowers a
proper officer to issue orders under the SGST Act and
the said Act. Similarly, officers under the SGST Act
and the UGST Act are also empowered to issue orders
under the Act. The only condition is that the issuance
of such orders is required to be intimated to the
jurisdictional officer of the central tax or the State tax,
as the case may be.
28. To ensure that there are no multiple proceedings
in regard of the central and the State officers being
authorised as proper officers, clause (b) of Section
6(2) of the Act provides that where a proper officer
under the SGST Act and the UGST Act has initiated
proceedings on a subject-matter, the proper officer
under the Act would not initiate proceedings “on the
same subject-matter”. This provision of CGST is also
mirrored by clause (b) of Section 6(2) of the SGST Act
and UGST Act as well. Thus, where a proper officer
under the CGST Act had initiated proceedings on a
subject-matter, no proceedings would be initiated by
proper officer authorised under the SGST Act or UGST
Act on the same subject-matter.”
(Emphasis supplied)
53. At the cost of repetition, sub-section (1) of Section 6 stipulates the
general power, encompassing both the single-interface mechanism
and cross-empowerment, inasmuch as each “proper officer” may act
as a proper officer under the SGST Act or the UTGST Act, and vice
versa. Clause (a) of sub-section (2) further reinforces this by
mandating that where a proper officer issues an order under the
CGST Act, he must simultaneously pass a corresponding order
under the SGST or UTGST Act, with due intimation to the
jurisdictional officer of the State or Union Territory tax authorities.
Clause (b) of sub-section (2) yet again affirms the principle of cross-
empowerment, albeit operating within the narrower confines of
intelligence-based enforcement action.
Page 41 of 66
c. Scope and Ambit of “initiated any proceedings” under Section
6(2)(b) of the CGST Act
54. Before addressing what constitutes “proceedings” under Section
6(2)(b) of the CGST Act, it is apposite to first consider the petitioner’s
contention that the phrase “any proceedings” is intended to
encompass all proceedings initiated under the relevant GST
enactments. We may reproduce the provision in discussion;
“(2) Subject to the conditions specified in the
notification issued under sub-section (1),––
xxx
(b) where a proper officer under the State Goods
and Services Tax Act or the Union Territory Goods
and Services Tax Act has initiated any
proceedings on a subject matter, no proceedings
shall be initiated by the proper officer under this Act
on the same subject matter.”
55. Section 6(2)(b) of the CGST Act precludes a proper officer under the
CGST Act to initiate any proceedings on a subject matter if a proper
officer under the SGST or the UGST Act has initiated any
proceedings on the same subject matter. The CGST Act does not
define the term “proceedings”. In context with this provision, the
Chairman of the 11th GST Council Meeting, held on 04.03.2017,
while discussing the approval of the Draft Central Goods and
Services Tax Law, opined that that there should be an express or
implied bar to prevent a taxpayer from being subjected to
proceedings before multiple officers for the same dispute.
56. Section 70 of the CGST Act empowers a proper officer to summon
any person whose presence is considered necessary for giving
Page 42 of 66
evidence or producing documents or any other relevant material in
an inquiry. The issuance of summons is one of the instruments
employed by the Department to obtain information, documents, or
statements in cases involving suspected tax evasion. Such summons
may be issued to the person under investigation or to a person
considered a witness in investigation against another person.
57. A summons is not the culmination of an investigation, but merely a
step in its course. It is in this context that the legislature has used
the term “inquiry” in Section 70, as at the stage of issuing a
summons, the Department is primarily engaged in gathering
information regarding a possible contravention of law, which may
subsequently form the basis for proceedings against an assessee.
Since the objective is to collect information, the Department has, in
certain instances, advised resorting to a letter of requisition in place
of a formal summons.
58. At the stage of issuing a summons, the Department is yet to
determine whether proceedings should be initiated against the
assessee. Such evidence-gathering and inquiry do not constitute
“proceedings” within the meaning of Section 6(2)(b) of the CGST Act.
The mere issuance of a summons cannot be equated with
proceedings barred under the Act, as the subject matter cannot be
ascertained solely through summons. That said, summons should
not be issued in routine matters or for documents readily available
on the GST portal. They ought to be issued after much thought and
consideration as to the exact information required. We acknowledge
Page 43 of 66
that the issuance of multiple, cyclostyled summons may indicate a
roving inquiry.
59. We affirm and appreciate the view taken by the High Court of
Allahabad in G.K. Trading (supra) and the High Court of Kerala in
K.T. Saidalavi (supra) respectively. The High Court of Allahabad
rightly held that the issuance of summons cannot be conflated with
a statutory step taken upon conclusion of an inquiry. Similarly, the
High Court of Kerala was correct in holding that initiation of inquiry
or the issuance of summons does not amount to the initiation of “any
proceedings”. The phrase “initiation of any proceedings” refers
specifically to the issuance of a notice under the relevant provisions
of the GST enactment.
60. At this juncture, we wish to refer to the Guidelines on Issuance of
Summons under Section 70 of the CGST Act issued by the Central
Board of Indirect Taxes & Customs (GST – Investigation Wing) dated
17.08.2022. In view of the facts of the present case in hand, we would
like to inject thrust into the Guidelines dated 17.08.2022, and direct
the concerned Departments to adhere to the said Guidelines, in both
letter and spirit.
61. In the present case, the petitioner was served with a show cause
notice dated 18.11.2024 by the respondent no. 2 under Section 73
of the CGST Act, thereby initiating proceedings. The petitioner has
impugned the summons dated 16.01.2025 and 23.01.2025
respectively issued by the respondent no. 1 for production of
documents. At the summons stage, it cannot be predicated with
Page 44 of 66
certainty that the subject matter of the proceedings will be identical;
the mere presence of an overlapping aspect under investigation does
not ipso facto render the subject matter “same”.
62. The High Court correctly held that the term “any proceedings” does
not encompass summons issued pursuant to a search or
investigation, as at the stage of issuance of summons the
Department is merely engaged in gathering information. We are in
agreement with the finding that a case of search is clearly distinct
and separate from proceedings initiated only after issuance of a show
cause notice.
63. We may now proceed to elaborate on our understanding of “initiation
of any proceedings” within the meaning of Section 6(2)(b) of the CGST
Act. P. Ramanatha Aiyar’s, 6th Edition, page 4415-4420, defines
“proceedings” as under:-
“It is not a technical expression with defined meaning
attached to it but the one ambit of whose meaning
will be governed by the statute. The word
“proceedings” can be given a narrow or wide import
depending upon the nature and scope of an
enactment in which it is used and in the particular
context of the language of the enactment in which it
appears.”
(Emphasis supplied)
64. We may quote an extract from the Black’s Law Dictionary, 4th
Edition, page 1368, it stated as under:-
“An act which is done by the authority or direction of
the court, express or implied; an act necessary to be
done in order to attain a given end; a prescribed mode
of action for carrying into effect a legal right.”Page 45 of 66
65. A show cause notice is a document served on a noticee, requiring
them to explain why a particular action should not be initiated
against them. Under the GST regime, issuance of a show cause
notice is a mandatory precondition for raising a demand. It forms the
bedrock for proceedings related to the recovery of tax, interest, and
penalty. The notice ensures adherence to the principles of natural
justice by granting the assessee an opportunity to present their case
before any adverse action is taken. In essence, it serves as both a
procedural safeguard and a legal necessity, marking the
commencement of quasi-judicial adjudication under the Act.
66. A show cause notice sets the law in motion concerning the liability
under the statute, containing charges that a specific person is called
upon to answer. In other words, it sets out the alleged violations of
legal provisions and requires the assessee to explain why the duty
should not be recovered from them. Thus, a show cause notice
cannot be vague, nor can any allegations be made without evidence
being commensurate with the gravity of the charges levelled against
the noticee.
67. It sets forth the framework for the proceedings proposed to be
undertaken and provides the noticee with an opportunity to submit
their explanation before the adjudicating authority. It outlines the
background for the initiation of such proceedings, whether arising
from an audit of accounts by the internal audit wing, scrutiny of
returns, or intelligence gathered by officers of the Audit and
Intelligence Commissionerate. It is further mandated that the
authority issuing the notice must meticulously set out all relevant
Page 46 of 66
legal provisions under which the alleged contraventions are framed.
The materials obtained through summons and relied upon for
issuing the show cause notice must be appended and disclosed to
the assessee. In essence, a show cause notice enumerates the
charges levelled against the notice.
68. An assessee may be held liable to pay tax along with interest
pursuant to an audit, scrutiny, or investigation. This liability can be
discharged either through self-assessment or by way of assessment
conducted by the Department. The Act contemplates the issuance of
a show cause notice under Sections 73, 74, and 76 respectively,
wherein the assessee is afforded one or more opportunities to pay
the demanded tax amount. Upon such payment, all proceedings in
respect of the said notice stand concluded.
69. Once a show cause notice is issued under a specific provision and
the reply submitted in response is duly considered by the
adjudicating authority, the liability is then determined through the
issuance of an order of adjudication, commonly referred to as an
‘Order-in-Original’.
Page 47 of 66
70. The above flowchart, prepared and published by the Comptroller and
Auditor General of India in Report No. 1 of 2021 (Indirect Taxes –
Goods and Services Tax, Central Excise and Service Tax), illustrates
that in cases involving determination of tax not levied, or short
levied, or not paid, or short paid, or erroneously refunded, or input
tax credit wrongly availed or utilized, the assessee can discharge the
liability by voluntarily paying tax alongwith interest and, where
applicable, penalty; failing which, the Department contemplates an
action. At this stage, the Department initiates action aimed towards
ascertaining the tax liability and issuing a show cause notice
accordingly.
71. We are cognizant of Circular No. 31/05/2018 – GST dated
09.02.2018, issued by Central Board of Excise and Customs,
Department of Revenue, which states that the officers of Audit
Commissionerate and DGGI can issue show cause notices. Ergo, by
virtue of being designated as proper officers, the officers of the DGGI
are also empowered, in their capacity as Central Tax officers, to issue
show cause notices. We may reproduce the relevant extract of the
concerned Circular hereinbelow:
“6. The central tax officers of Audit Commissionerates
and Directorate General of Goods and Services Tax
Intelligence (hereinafter referred to as “DGGSTI”)
shall exercise the powers only to issue show cause
notices. A show cause notice issued by them shall be
adjudicated by the competent central tax officer of the
Executive Commissionerate in whose jurisdiction the
noticee is registered. In case there are more than one
noticees mentioned in the show cause notice having
their principal places of business falling in multiple
Commissionerates, the show cause notice shall be
adjudicated by the competent central tax officer inPage 48 of 66
whose jurisdiction, the principal place of business of
the noticee from whom the highest demand of central
tax and/or integrated tax (including cess) has been
made falls.”
72. The statutory framework of the CGST Act does not admit of any
interpretation of the phrase “initiation of proceedings” under Section
6(2)(b) other than one which ties it to the issuance of a show cause
notice. An action qualifies as ‘proceedings’ only when it is
undertaken with the object of attaining a determinate outcome. In
the present context, the issuance of a show cause notice partakes
the character of proceedings, as it is inherently required to culminate
in a definitive determination; there must exist a point of finality or
conclusion thereto.
73. Proceedings, by their very nature, cannot be said to be initiated in
the absence of certainty, nor can they culminate without adherence
to the principles of natural justice. A show cause notice marks the
commencement of a process that culminates in an order passed by
the adjudicating authority. The legislative intent to prevent the
subjugation of a taxpayer to parallel proceedings and to avoid
contradictory orders can only be realized only when the Department
is clear about the subject matter it seeks to pursue, a certainty that
arises only at the stage of issuance of the show cause notice.
74. In the facts of the present case, the mere issuance of summons does
not imply that the Department has decided to proceed against the
taxpayer for recovery of liability. Therefore, issuance of summons, by
no stretch, can be considered as the initiation of proceedings, since
at that stage, the Department still retains the discretion not toPage 49 of 66
initiate any proceedings. A mere contemplation or possibility of
initiating action cannot be equated with “proceedings”, as doing so
would undermine the framework of cross-empowerment under the
Act. Even when a discovery is made during the search proceedings
under Section 67 of the CGST Act, the Department is required to
bring such proceedings to a definitive conclusion, either by issuing
a show cause notice under Section 74 or by dropping the matter
altogether.
i. Reading of Circular dated 05.10.2018
75. While dealing with the present matter, we came across judgments of
various High Courts wherein various counsel relied on the Circular
dated 05.10.2018 to do both challenge and defend actions taken by
the Department. In the present matter, the learned Counsel for the
petitioner by relying on the same Circular submitted that the
respondent no. 1 could not have initiated proceedings on a subject
matter on which the respondent no. 2 had already initiated
proceedings. The Circular reads thus:
“Dear Colleague,
It has been brought to the notice of the Board that
there is ambiguity regarding initiation of enforcement
action by the Central tax officers in case of taxpayer
assigned to the State tax authority and vice versa.
2. In this regard, GST Council in its 9th meeting held
on 16.01.2017 had discussed and made
recommendations regarding administrative division
of taxpayers and concomitant issues. The
recommendation in relation to cross-empowerment of
both tax authorities for enforcement of intelligence
based action is recorded at para 28 of Agenda note
no. 3 in the minutes of the meeting which reads as
follows:-
“viii. Both the Central and State tax administrations
shall have the power to take intelligence-basedPage 50 of 66
enforcement action in respect of the entire value
chain”
3. It is accordingly clarified that the officers of both
Central tax and State tax are authorized to initiate
intelligence based enforcement action on the entire
taxpayer’s base irrespective of the administrative
assignment of the taxpayer to any authority. The
authority which initiates such action is empowered to
complete the entire process of investigation, issuance
of SCN, adjudication, recovery, filing of appeal etc.
arising out of such action.
4. In other words, if an officer of the Central tax
authority initiates intelligence based enforcement
action against a taxpayer administratively assigned
to State tax authority, the officers of Central tax
authority would not transfer the said case to its State
tax counterpart and would themselves take the case.
to its logical conclusions.
5. Similar position would remain in case of
intelligence based enforcement action initiated by
officers of State tax authorities against a taxpayer
administratively assigned to the Central tax
authority.
6. It is also informed that GSTN is already making
changes in the IT system in this regard.”
76. The said Circular is premised on the administrative division of the
taxpayer base, as explained in Circular No. 01/2017 dated
20.09.2017. We would like to underscore that this division of the
taxpayer base does not operate as a bar to the initiation of
enforcement action by Central Tax officers against a taxpayer
assigned to the State Tax authority, and vice versa.
77. Enforcement action undertaken by any Department is ordinarily
based on intelligence as elucidated by us in paragraph 48 of this
judgment, and the authority initiating such action is empowered toPage 51 of 66
carry the matter to its logical conclusion. The term “logical
conclusion” does not invariably refer to an order of assessment in
every case. Rather, it denotes the decision arrived at by the officers
of the Department, having regard to the peculiar facts and
circumstances of each case.
II. Whether “subject matter” within the meaning of Section
6(2)(b) of the CGST Act includes all matters dealt with in
summons under the Act?
78. In the 11th GST Council Meeting, the Council agreed that in respect
of any dispute involving tax liability under both the CGST Act and
the SGST Act, only a single order shall be passed. Accordingly, where
a Central tax officer passes an order, necessarily encompassing the
demand for tax under the SGST Act, the corresponding State tax
officer shall be precluded from passing a separate order on the same
dispute. It was in furtherance of this understanding that Section 6
of the CGST Act was enacted. We may reproduce the provision in
discussion;
“(2) Subject to the conditions specified in the
notification issued under sub-section (1),––
xxx
(b) where a proper officer under the State Goods
and Services Tax Act or the Union Territory Goods
and Services Tax Act has initiated any proceedings
on a subject matter, no proceedings shall be
initiated by the proper officer under this Act on the
same subject matter.”
79. What emerges from the foregoing discussion is the implicit
understanding that the subject matter in question pertains to the
determination of tax liability, referred to as “dispute”. This reinforces
Page 52 of 66
the legislative intent of ensuring that an order passed under the
statute will be comprehensive in nature, more particularly, covering
the entirety of the dispute so as to avoid multiplicity of proceedings,
conflicting determinations, or jurisdictional overlap.
80. The High Court of Allahabad, in G.K. Trading (supra), interpreted
the phrase “subject matter” to mean ‘cause of action’ in relation to
the same dispute in a proceeding before a proper officer under the
relevant GST enactment. The relevant extracts are reproduced
hereinbelow:
“14. Thus, the phrase “subject-matter”, or the phrase
“on the same subject- matter”, used in section 6(2)(b)
of the UPGST Act/CGST Act with reference to any
proceedings, means same cause of action for the
same dispute involved in a proceeding before proper
officer under the UPGST Act and the CGST Act.
xxx
17. Thus, section 6(2)(b) of the CGST Act prohibits
separate initiation of proceedings on the same
subject-matter by the proper officer under the CGST
Act when proceeding on the same subject-matter by
the proper officer under the State Act has been
initiated, whereas section 70 of the UPGST/CGST Act
merely empowers the proper officer to summon any
person in any inquiry. The word “proceedings” used
in section 6(2)(b) is qualified by the words “subject-
matter” which indicates an adjudication
process/proceedings on the same cause of action and
for the same dispute which may be proceedings
relating to assessment, audit, demands and
recovery, and offences and penalties, etc.[…]”
(Emphasis supplied)
81. In Satyam Castings Pvt. Ltd. v. Deputy Director, DGGI,
Bhubaneshwar, reported in 2024 SCC OnLine Ori 1624, the High
Page 53 of 66
Court of Orissa also equated “subject matter” with ‘cause of action’.
The relevant extracts are reproduced hereinbelow:
“21. The relevant fact to be borne in mind is the
subject-matter of the proceeding. If the subject-matter
of the proceeding is entirely different, there is no bar
to the maintainability of the proceeding. What is
barred is the initiation of the proceeding on the same
subject-matter by the proper officer. The words
“subject-matter” can be equated with words “cause
of action”. The reason behind barring the initiation of
proceeding on the same subject-matter by the proper
officer under the State Goods and Services tax Act or
the Union Territory Goods and Services tax Act seems
to be that the possibility of the final decision in the
two proceedings being different cannot be totally
ruled out which would create confusion. In the case
of Vallabh Das v. Dr. Madan Lal reported in [(1970) 1
SCC 761 : AIR 1970 SC 987.] , it is held that the
expression “subject-matter” is not defined in the Civil
Procedure Code. That expression includes the cause
of action and the relief claimed. Unless the cause of
action and the relief claimed in the second suit are
the same as in the first suit, it cannot be said that the
subject-matter of the second suit is the same as that
in the previous suit.”
(Emphasis supplied)
82. However, we shall now proceed to interpret the term “subject matter”
as employed in Section 6(2)(b) of the Act. It is abundantly clear from
the purport of the said section that “subject matter” needs to be
understood in perspective of initiation of proceedings. In other
words, subject matter of the proceedings. In the preceding
paragraphs of this judgment, we have stated that proceedings stand
initiated when a show cause notice is issued with regard to a subject
matter. We say so because an issuance of a show cause notice is the
first stage whereby the Revenue for the very first time elaborately
Page 54 of 66
pens down various grounds and charges it is alleging against the
assessee, who is invited to show cause as to why adverse action must
not be taken against him on the basis of the apprehensions that the
authority contemplates.
83. We shall now consider the contents of a show cause notice, bearing
in mind the manner in which they facilitate the determination of the
subject matter of the proceedings. In Gorkha Security Services v.
Govt. (NCT of Delhi), reported in (2014) 9 SCC 105, this Court
poignantly explained the cardinal principles behind the issuance of
a show cause notice. It held that the service of a show cause notice
is made in order to inform the noticee about the case that has been
set up against him, which he has to meet. The relevant paragraphs
have been supplied below:
“Contents of the show-cause notice
21. The central issue, however, pertains to the
requirement of stating the action which is proposed to
be taken. The fundamental purpose behind the
serving of show-cause notice is to make the noticee
understand the precise case set up against him
which he has to meet. This would require the
statement of imputations detailing out the alleged
breaches and defaults he has committed, so that he
gets an opportunity to rebut the same. Another
requirement, according to us, is the nature of action
which is proposed to be taken for such a breach. That
should also be stated so that the noticee is able to
point out that proposed action is not warranted in the
given case, even if the defaults/breaches complained
of are not satisfactorily explained. When it comes to
blacklisting, this requirement becomes all the more
imperative, having regard to the fact that it is
harshest possible action.
(Emphasis supplied)
Page 55 of 66
84. Primacy is given to the cogency of a show cause notice. The subject
matter of the proceedings lies in the contents of the notice. Hence, it
ought to be exhaustive, so much so that it is capable of presenting
the case of the Revenue in a nutshell. In The Commissioner of
Central Excise, Bhubaneswar-I v. Champdany Industries
Limited, reported in (2009) 9 SCC 466, while deciding upon the
classification of jute carpets, this Court noted that in the failure of
mentioning the application of certain tests which the Revenue relied
upon in the proceedings before the Court, the Revenue cannot rely
on such tests at a later stage. A show cause notice must lay down
the foundation of the case. Such is the importance of a show cause
as a starting point in proceedings. The relevant extracts have been
supplied below:
“50. Apart from that, the point on Rule 3 which has
been argued by the learned counsel for the Revenue
was not part of its case in the show-cause notice. It
is well settled that unless the foundation of the case
is made out in the show-cause notice, Revenue
cannot in Court argue a case not made out in its
show-cause notice. See: Commissioner of Customs,
Mumbai v. Toyo Engineering India
Limited MANU/SC/3625/2006 : (2006) 7 SCC 592,
para 16.
51. Similar view was expressed by this Court in the
case of Commissioner of Central Excise, Nagpur v.
Ballarpur Industries Ltd. MANU/SC/3595/2007 :
(2007) 8 SCC 89. In paragraph 27 of the said report,
learned Judges made it clear that if there is no
invocation of the concerned rules in the show-cause
notice, it would not be open to the Commissioner to
invoke the said Rule.”
(Emphasis supplied)
85. From the above exposition of law, we can safely conclude that a show
cause notice delineates the scope of the proceedings in the
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expression of subject matter with which the authority would be
dealing. It would be impermissible for an authority to invoke such
rules, claims or grounds at a later stage which do not figure in the
show cause notice. That is to say, any ground, reasoning or claim
which does not figure out in the show cause notice cannot be
permitted to adversely affect the noticee. Such recognition has even
been made statutorily, as per sub-section (7) of Section 75 of the Act,
which reads as thus:
“75. General provisions relating to determination of
tax.—…
xxx
(7) The amount of tax, interest and penalty demanded
in the order shall not be in excess of the amount
specified in the notice and no demand shall be
confirmed on the grounds other than the grounds
specified in the notice.”
86. The expression “subject matter” contemplates proceedings directed
towards determining the taxpayer’s liability or contravention,
encompassing the alleged offence or non-compliance together with
the relief or demand sought by the Revenue, as articulated in the
show cause notice through its charges, grounds, and quantification
of demand. Accordingly, the bar on the “same subject matter” is
attracted only where both proceedings seek to assess or recover an
identical liability, or even where there is the slightest overlap in the
tax liability or obligation.
87. In other words, under Section 6(2)(b), the “subject matter” is
intrinsically tied to the determination of the specific violation under
scrutiny or the liability alleged to be unpaid. The statutory bar is
triggered only when the two proceedings against the same taxpayer
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are, in substance, directed towards the very same or overlapping
deficiency in tax discharge or the identical contravention alleged.
Where the proceedings concern distinct infractions, each
Department is entitled to proceed within its respective statutory
remit without infringing the prohibition. Where the proceedings
concern distinct infractions, each Department is entitled to proceed
within its respective statutory remit without infringing the
prohibition.
88. In order to bolster such embodiments of Section 6(2)(b) at large, we
lay down a twofold test, discernible from our discussion above, to
determine whether a subject matter is “same”: first, the subject
matter will be considered the same if an authority has already
proceeded on an identical liability of tax or alleged offence by the
assessee on the same facts; and secondly, if the demand or relief
sought is identical.
89. In the present case, the learned Counsel for the petitioner contended
that the subject matter of the proceedings pertained to the
availability of input tax credit in respect of cancelled dealers.
However, this contention fails for two reasons: first, the summons,
on its own, cannot reveal the subject matter; and secondly, the
subject matter can be ascertained only from the show cause notice.
The apprehension of the petitioner cannot be countenanced merely
because a facet of the ongoing inquiry overlaps with the subject
matter of the show cause notice already issued.
90. Upon crystallization of the subject matter through a show cause
notice issued pursuant to an intelligence, no other tax authority may
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assume jurisdiction over it, provided it is ascertainable that the
consequences of any further departmental action would be
subsumed within the same subject matter.
III. What is the purport of an “Order” under Section 6(2)(a) of
the CGST Act?
91. Clause (a) of sub-section (2) of Section 6 of the CGST Act stipulates
that where any proper officer issues an order under the CGST Act,
he must issue an order under the SGST Act or the UGST Act in order
to intimate the jurisdictional officer of the State tax or Union territory
tax. The provision reads thus:
“(2) Subject to the conditions specified in the
notification issued under sub-section (1),––
(a) where any proper officer issues an order
under this Act, he shall also issue an order under the
State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as authorised
by the State Goods and Services Tax Act or the Union
Territory Goods and Services Tax Act, as the case
may be, under intimation to the jurisdictional officer
of State tax or Union territory tax;”
92. In construing Section 6(2)(a), it is imperative to have due regard to
the legislative intent permeating the GST enactments. Section 6, in
particular, advances the objective of establishing a unified national
market for goods and services and to prevent taxpayers from the
undue hardship of being subjected to the rigours of multiple
jurisdictions.
93. The provision serves a twofold purpose: first, to insulate taxpayers
from the prospect of being proceeded against by more than one
authority for the same subject matter; and secondly, to vest in the
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officers functioning under the CGST Act, the SGST Act, or the UTGST
Act, to render a comprehensive order, thereby avoiding multiplicity
of proceedings. Such a construction is also in consonance with the
well-recognized principle of comity between jurisdictions, which
mandates that coordinate authorities must act with mutual respect
and due regard for each other’s domain, so as to preclude the
possibility of conflicting determinations on the same issue.
94. To give effect to the above intent, Section 6(2)(a) is couched in terms
that are both enabling and mandatory. It confers upon, and
simultaneously obliges, the proper officer to issue a corresponding
order under the SGST Act or the UTGST Act in cases where an order
is being issued under the CGST Act. The expression ‘order’, qualified
by the terms “under this Act”, occurring in the said provision admits
of a broad construction, so as to include every form of order which a
proper officer is competent to issue by virtue of the authority vested
in them under the statute. Such an interpretation is necessary to
ensure that the statutory mandate achieves its intended purpose of
avoiding multiplicity of proceedings and securing uniformity of
adjudication across the parallel enactments.
95. Inasmuch as the CGST Act vests the proper officer with authority to
issue “orders” under various provisions, it becomes imperative that
such officer duly apprises the jurisdictional counterpart of any
action initiated by the Department in relation to a taxable person
who may otherwise fall within the administrative domain of that
officer. Given that the statutory framework envisages a regime of
cross-empowerment amongst officers, the obligation so cast operates
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as a safeguard against the prejudice which may arise from the
initiation of parallel or overlapping proceedings against the same
taxpayer by different wings of the Department.
E. CONCLUSION
96. We summarize our final conclusion as under: –
i. Clause (b) of sub-section (2) of Section 6 of the CGST Act and
the equivalent State enactments bars the “initiation of any
proceedings” on the “same subject matter”.
ii. Any action arising from the audit of accounts or detailed
scrutiny of returns must be initiated by the tax administration
to which the taxpayer is assigned.
iii. Intelligence based enforcement action can be initiated by any
one of the Central or the State tax administrations despite the
taxpayer having been assigned to the other administration.
iv. Parallel proceedings should not be initiated by other tax
administration when one of the tax administrations has
already initiated intelligence-based enforcement action.
v. All actions that are initiated as a measure for probing an
inquiry or gathering of evidence or information do not
constitute “proceedings” within the meaning of Section 6(2)(b)
of the CGST Act.
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vi. The expression “initiation of any proceedings” occurring in
Section 6(2)(b) refers to the formal commencement of
adjudicatory proceedings by way of issuance of a show cause
notice, and does not encompass the issuance of summons, or
the conduct of any search, or seizure etc.vii. The expression “subject matter” refers to any tax liability,
deficiency, or obligation arising from any particular
contravention which the Department seeks to assess or
recover.
viii. Where any two proceedings initiated by the Department seek
to assess or recover an identical or a partial overlap in the tax
liability, deficiency or obligation arising from any particular
contravention, the bar of Section 6(2)(b) would be immediately
attracted.
ix. Where the proceedings concern distinct infractions, the same
would not constitute a “same subject matter” even if the tax
liability, deficiency, or obligation is same or similar, and the
bar under Section 6(2)(b) would not be attracted.
x. The twofold test for determining whether a subject matter is
“same” entails, first, determining if an authority has already
proceeded on an identical liability of tax or alleged offence by
the assessee on the same facts, and secondly, if the demand or
relief sought is identical.
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97. We issue the following guidelines to be followed in cases where, after
the commencement of an inquiry or investigation by one authority,
another inquiry or investigation on the same subject matter is
initiated by a different authority.
a. Where a summons or a show cause notice is issued by either the
Central or the State tax authority to an assessee, the assessee is,
in the first instance, obliged to comply by appearing and
furnishing the requisite response, as the case may be. We say, so
because, mere issuance of a summons does not enable either the
issuing authority or the recipient to ascertain that proceedings
have been initiated.
b. Where an assessee becomes aware that the matter being inquired
into or investigated is already the subject of an inquiry or
investigation by another authority, the assessee shall forthwith
inform, in writing, the authority that has initiated the subsequent
inquiry or investigation.
c. Upon receipt of such intimation from the assessee, the respective
tax authorities shall communicate with each other to verify the
veracity of the assessee’s claim. We say, so as this course of action
would obviate needless duplication of proceedings and ensure
optimal utilization of the Department’s time, effort, and resources,
bearing in mind that action initiated by one authority enures to
benefit of all.
d. If the claim of the taxable person regarding the overlap of inquiries
is found untenable, and the investigations of the two authorities
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pertain to different “subject matters”, an intimation to this effect,
along with the reasons and a specification of the distinct subject
matters, shall be immediately conveyed in writing to the taxable
person.
e. The taxing authorities are well within their rights to conduct an
inquiry or investigation until it is ascertained that both
authorities are examining the identical liability to be discharged,
the same contravention alleged, or the issuance of a show cause
notice. Any show cause notice issued in respect of a liability
already covered by an existing show cause notice shall be
quashed.
f. However, if the Central or the State tax authority, as the case may
be finds that the matter being inquired into or investigated by it
is already the subject of inquiry or investigation by another
authority, both authorities shall decide inter-se which of them
shall continue with the inquiry or investigation. In such a scenario
the other authority shall duly forward all material and information
relating to its inquiry or investigation into the matter to the
authority designated to carry the inquiry or investigation to its
logical conclusion. We say, so because, the taxable person except
for being afforded the statutory protection from duplication of
proceedings, otherwise has no locus to claim which authority
should proceed with the inquiry or investigation in a particular
matter.
g. However, where the authorities are unable to reach a decision as
to which of them shall continue with the inquiry or investigation,
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then in such circumstances, the authority that first initiated the
inquiry or investigation shall be empowered to carry it to its logical
conclusion, and the courts in such a case would be competent to
pass an order for transferring the inquiry or investigation to that
authority.
h. If it is found that the authorities are not complying with these
aforementioned guidelines, it shall be open to the taxable person
to file a writ petition before the concerned High Court under
Article 226 of the Constitution of India.
i. At the same time, taxable persons shall ensure complete
cooperation with the authorities. It is incumbent upon them to
appear in response to a summons and/or reply to a notice.
98. Before parting with this matter, we deem it appropriate to make
certain suggestions concerning the common IT infrastructure shared
by the Central and State tax authorities. It is imperative that the
Departments act in harmony and maintain heightened vigilance with
respect to intelligence inputs received by them, so as to give full effect
to the legislative intent underlying the GST regime. Such
coordination would also serve to mitigate the unnecessary hardship
caused to taxpayers by overlapping proceedings and lack of inter-
Departmental communication.
99. The DGGI may consider adopting necessary measures to develop a
robust mechanism for seamless data and intelligence sharing
between the Central and State authorities, including provision for
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real-time visibility to both authorities of any action taken pursuant
to an intelligence input, thereby advancing the objectives of harmony
and cooperative federalism.
100. Accordingly, the present petition is disposed of in the above terms.
Pending application(s), if any, shall also stand disposed of.
…………………………..J.
(J.B. PARDIWALA)
.…………………………..J.
(R. MAHADEVAN)
New Delhi;
14th August, 2025.
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