The Supreme Court has in its Judgement dated 14 August 2025 upheld the Delhi High Court decision which had declined to interdict the summons issued by the Central GST authorities pursuant to a search, in a case where the assessee had relied upon Section 6(2)(b) of the CGST Act, 2017 to submit that since the State GST authorities were in seisin of the proceedings, it would be impermissible for the Central authorities to commence any proceedings. While holding so, the Apex Court observed that,
- All actions initiated for inquiry/gathering of evidence or information do not constitute ‘proceedings’ within the meaning of Section 6(2)(b) of the CGST Act.
- Expression ‘initiation of any proceedings’ occurring in Section 6(2)(b) refers to the formal issuance of SCN, and does not cover issuance of summons, or the conduct of any search, or seizure etc.
- Twofold test for determining whether a subject matter is ‘same’ requires, (i) determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and (ii) if the demand or relief sought is identical.
- 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 Court in Armour Security (India) Ltd. v. Commissioner also observed that,
- 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.
- Intelligence-based enforcement action can be initiated by any one of the Central or the State tax administrations.
- Parallel proceedings should not be initiated by other tax authorities when one of the tax authority has already initiated intelligence-based enforcement action.
It may be noted that the Supreme Court also laid down the following guidelines 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.
- Where assessee becomes aware that the matter being investigated is already the subject of an inquiry/investigation by another authority, the assessee is to inform in writing to the authority that has initiated the subsequent investigation.
- Tax authorities need to verify the claim and are within their rights to conduct an inquiry or investigation until it is ascertained that both authorities are examining the identical liability/contravention.
- When subject matter is found different, the authorities need to intimate the taxpayer along with reasons.
- In case of same subject matter, authorities need to decide inter-se which of them shall continue with the inquiry or investigation. In case of non-decision, the first authority to take the matter for conclusion.