M/S ARMOUR SECURITY (INDIA) LTD. vs. COMMISSIONER, CGST, DELHI EAST COMMISSIONERATE

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)

J U D G M E N T

Digitally signed by VISHAL ANAND Date: 2025.08.14 15:52:38 IST Reason: Signature Not Verified

Page 1 of 66 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 ............................................................... 50 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? .............................................................................................. 52 III. What is the purport of an “Order” under Section 6(2)(a) of the CGST Act? .............................................................................................. 59 E. CONCLUSION .............................................................................. 61

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Page 3 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.

Page 4 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.

Page 5 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.

Page 6 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.

Page 7 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.”

(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 8 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.

Page 9 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 10 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 attendance

Page 11 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 12 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)

Page 13 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)

Page 14 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 the

Page 15 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)

Page 16 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 the

Page 17 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 a

Page 18 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)

Page 19 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 20 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)

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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 financial

Page 22 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)

Page 23 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)

Page 24 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, the

Page 25 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)

Page 26 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 the

Page 27 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 28 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)

Page 29 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 30 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 31 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.

Page 32 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.

Page 33 of 66

Page 34 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.”

Page 35 of 66 20/10/07/2019-GST dated 22.06.2020 by the Central Board of Indirect Taxes, GST Policy Wing.

(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.

Page 36 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;[…]”

Page 37 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 38 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)”

Page 39 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.

Page 40 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.

Page 41 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)

Page 42 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.”

Page 43 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.

Page 44 of 66 that the issuance of multiple, cyclostyled summons may indicate a roving inquiry.

Page 45 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”.

Page 46 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.

Page 47 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.

Page 48 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.

Page 49 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.”

Page 50 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-based

Page 51 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.”

Page 52 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.”

Page 53 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.

Page 54 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)

Page 55 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.

Page 56 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)

Page 57 of 66 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.”

Page 58 of 66 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.

Page 59 of 66 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;”

Page 60 of 66 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.

Page 61 of 66 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.

Page 62 of 66 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.

Page 63 of 66 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

Page 64 of 66 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,

Page 65 of 66 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.

Page 66 of 66 real-time visibility to both authorities of any action taken pursuant to an intelligence input, thereby advancing the objectives of harmony and cooperative federalism.

…...……………………..J. (J.B. PARDIWALA)

.…………………………..J. (R. MAHADEVAN)

New Delhi; 14th August, 2025.