Supreme Court Prohibits Parallel Proceedings and Clarifies GST Cross-Empowerment Under Section 6(2)(b)

The Hon'ble Supreme Court of India in M/S Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. (2025 INSC 982, dated August 14, 2025) held that the issuance of summons under Section 70 of the CGST Act does not constitute "initiation of proceedings" within the meaning of Section 6(2)(b) of the CGST Act. The Court prohibited parallel proceedings by different tax authorities on the same subject matter and laid down comprehensive guidelines to prevent duplication of proceedings and ensure coordination between Central and State tax authorities.

Facts of the Case

The Petitioner, M/S Armour Security (India) Ltd., is a public limited company incorporated under the Companies Act, 2013, and is registered with Delhi GST authorities. The company is engaged in providing security services.

On November 18, 2024, the Petitioner received a show cause notice issued under Section 73 of the CGST Act from the Respondent No. 2 for the tax period April 2020-March 2021. The show cause notice raised a demand of Rs. 1,24,92,162/- (aggregate of CGST, SGST, IGST) along with applicable interest and penalty under Sections 50 and 74 of the CGST Act respectively. The said show cause notice was served on the ground that net tax under declared due to non-reconciliation of turnovers in other returns and e-way bill information, and excess claim of ITC.

On January 16, 2025, a search was conducted at the registered premises of the Petitioner under Section 67(2) of the CGST Act by 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.

On January 23, 2025, the Petitioner received 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 January 24, 2025 submitted a letter addressed to Respondent No. 1 stating that the Petitioner was being investigated by Respondent No. 2 on similar grounds, including ITC claimed from cancelled suppliers. The Petitioner also sought release of the seized electronic devices and documents.

Aggrieved by the summons dated January 16, 2025 and January 23, 2025 respectively, the Petitioner preferred a writ petition before the High Court of Delhi on the ground that as Respondent No. 2 had already made the investigation in respect of the same issue and Respondent No. 1 does not have the jurisdiction in view of Section 6(2)(b) of the CGST Act. The High Court dismissed the writ petition and declined to interfere with the summons issued to the Petitioner. The Petitioner was aggrieved by the judgment and order passed by the High Court of Delhi dated February 7, 2025 in W.P.(C) No. 1082 of 2025 ("the impugned order").

Issue

Whether issuance of summons under Section 70 of the CGST Act can be regarded as "initiation of proceedings" within the meaning of Section 6(2)(b) of the CGST Act, and whether "subject matter" includes all matters dealt with in summons under the Act?

Held by the Court

The Hon'ble Supreme Court of India in M/S Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. (2025 INSC 982) held that:

• The Court observed that 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 taxpayers that had existed previously in the erstwhile scheme of indirect taxes. The latter pertains to empowering both the Central and State tax administrations to simultaneously undertake enforcement actions against a taxpayer. The Court noted that while at first blush, both these concepts may appear to be in contradiction to one another, however, a closer and more considered examination would reveal that they are complementary to one another and have been consciously adopted within the GST framework to work in tandem for achieving the avowed object of GST.

  
  

• The Court held that Section 6(2)(b) of the CGST Act precludes a proper officer under the CGST Act from initiating any proceedings on a subject matter if a proper officer under the SGST or UTGST Act has initiated any proceedings on the same subject matter. However, 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. The Court emphasized that 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.

  
  

• The Court observed that summons is not the culmination of an investigation, but merely a step in its course. It noted 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. 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.

  
  

• The Court held that 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. The Court emphasized that 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 Court opined that 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. The expression 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. 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. 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 Court established a comprehensive framework for determining "same subject matter" by laying down a twofold test: 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. Where the proceedings concern distinct infractions, each Department is entitled to proceed within its respective statutory remit without infringing the prohibition. The Court held that 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.

Supreme Court Guidelines for Preventing Parallel Proceedings

The Supreme Court issued the following detailed guidelines to be followed in cases where multiple authorities initiate inquiries or investigations on the same subject matter:

1. Initial Compliance Obligation: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. The Court observed that mere issuance of a summons does not enable either the issuing authority or the recipient to ascertain that proceedings have been initiated.

2. Disclosure of Parallel Proceedings: 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.

3. Inter-Authority Communication: 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. The Court emphasized that 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.

4. Different Subject Matters: If the claim of the taxable person regarding the overlap of inquiries is found untenable, and the investigations of the two authorities 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.

5. Continuation of Investigation: 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.

6. Inter-se Decision Making: 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. The Court observed that 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.

7. Priority Rule: Where the authorities are unable to reach a decision as to which of them shall continue with the inquiry or investigation, 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.

8. Judicial Remedy: 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.

9. Assessee's Cooperation: 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.

Additional Recommendations by the Supreme Court

The Court made important suggestions concerning the common IT infrastructure shared by the Central and State tax authorities. It emphasized that the Departments must 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.

The Court specifically recommended that 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 real-time visibility to both authorities of any action taken pursuant to an intelligence input, thereby advancing the objectives of harmony and cooperative federalism.

Relevant Sections

Section 6(2)(b) of the CGST Act: "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."

Section 70 of the CGST Act: Power to summon persons to give evidence and produce documents.

Section 73 of the CGST Act: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any wilful-misstatement or suppression of facts.

Section 74 of the CGST Act: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any wilful-misstatement or suppression of facts.

Section 75(7) of the CGST Act: "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."

• Pari Materia / Cases Referred

G.K. Trading v. Union of India & Ors. (2020 SCC OnLine All 1907) - The Allahabad 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), and proceedings under Section 6(2)(b) include actions relating to assessment, demand, and penalty.

Kuppan Gounder P.G. Natarajan v. Directorate General of GST Intelligence (2021 SCC OnLine Mad 17053) - The Madras High Court held that the scope of Sections 6(2)(b) and 70 are different and distinct, as the former deals with proceedings on subject matter whereas the latter deals with power to summon in an inquiry.

Vivek Narsaria v. State of Jharkhand (2024 SCC OnLine Jhar 50) - The Jharkhand High Court observed that actions taken by any authority form part of a chain of events occurring under the Act, and every enquiry or investigation initiated by any authority is interrelated.

Chief Commissioner of Central Goods and Service Tax v. Safari Retreats Pvt. Ltd. ((2025) 2 SCC 523) - Referenced for the principle that CGST Act is a special statute and constitutes a self-contained code requiring literal interpretation.

K.P. Mohammed Salim v. CIT ((2008) 11 SCC 573) - Cited for the broad interpretation of the word "any" in conjunction with "proceedings".

Gorkha Security Services v. Govt. (NCT of Delhi) ((2014) 9 SCC 105) - Referenced for cardinal principles behind issuance of show cause notice and requirement of stating precise case against the noticee.

The Commissioner of Central Excise, Bhubaneswar-I v. Champdany Industries Limited ((2009) 9 SCC 466) - Cited for the principle that show cause notice must lay down the foundation of the case and Revenue cannot argue a case not made out in the notice.

Amit Gupta v. Union of India (2023 SCC OnLine Del 6664) - Referenced for interpretation of Section 6 of the CGST Act regarding cross-empowerment of officers.

Vallabh Das v. Dr. Madan Lal ((1970) 1 SCC 761) - Cited for interpretation of "subject-matter" as including cause of action and relief claimed.

Indo International Tobacco Ltd. v. Vivek Prasad (2022 SCC OnLine Del 90) - Referenced regarding multiple jurisdictions and elimination of overlapping actions.

K.T. Saidalavi v. State Tax Officer (2024 SCC OnLine Ker 5674) - The Kerala High Court held that initiation of enquiry or issuance of summons under Section 70 cannot be equated with initiation of proceedings for purposes of Section 6(2)(b).

Stalwart Alloys India Pvt. Ltd. v. Union of India & Ors. (2024 SCC OnLine P&H 15153) - The Punjab & Haryana High Court held that CGST Act does not contemplate transfer of proceedings from one proper officer to another.

Kundlas Loh Udyog v. State of H.P. (2024 SCC OnLine HP 4810) - The Himachal Pradesh High Court interpreted "subject matter" to refer to the nature of proceedings and emphasized prevention of parallel proceedings.

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