2025 (8) TMI 67 - HC - GST

Multiple GST SCNs on same issue cause harassment; stay orders must be respected under Kusum Ingots principles

M/s. HM Leisure, Through its authorised representative Mr Amit Ramesh Prasade Versus Assistant Commissioner of CGST, Div. – 1 & 2 Ors.

The HC held that issuance of multiple SCNs on the same subject and period by different authorities leads to multiplicity of proceedings and harassment. ... Issuance of multiple SCN on same subject matter and period - multiplicity of proceedings - requirement of authorities to act upon SCN, notwithstanding the subsisting stay granted by the High Court of Karnataka - HELD THAT:- If multiple show cause notices are issued and conferring jurisdiction on a plurality of officers on the same subject matter, it would result in chaos, harassment, contrary and conflicting decisions. The show cause notice dated 03.08.2024 issued by DGGI for the same period and on same subject matter pending before the High Court of Karnataka (which includes turnover of Goa Branch), no adjudication should have been carried out by respondent no. 1 as it would result in duplication of proceedings or multiplicity of proceedings on same issue for same period. In other words, the subject proceedings should have been transferred to the DGGI for further adjudication as the notice issued by DGGI is on all India basis (including Goa Branch). It was held in Kusum Ingots & Alloys Ltd. [2004 (4) TMI 342 - SUPREME COURT (LB)] that an order passed on writ petition questioning the constitutionality of a Parliamentary Act, whether interim or final, will have effect throughout the territory of India subject to the applicability of the Act. The decision in the case of Kusum Ingots & Alloys Ltd. would cover the issue of the present petitioner as the show cause notice dated 03.08.2024 was challenged before the High Court of Karnataka and the same has been stayed. The fact that the DGGI, Mumbai had issued notice on all India basis, which included the demand for Goa branch also and it was informed to the respondent no. 1 to keep the subject show cause notice proceedings in abeyance but the said request was ignored and the respondent no. 1 proceeded to adjudicate the matter and passed the order dated 30.01.2025 confirming the demand of GST on the very same issue which is set aside in view of the judgment passed by the Hon'ble Supreme Court in Kusum Ingots & Alloys Ltd. it is deemed appropriate to allow the petition. Petition allowed. ISSUES: Whether multiple show cause notices issued by different GST authorities on the same subject matter and period result in duplication and multiplicity of proceedings.Whether the power of cross-empowerment under Section 6(1) of the CGST Act, 2017 is absolute or subject to conditions and limitations.Whether conferring concurrent jurisdiction on multiple officers for the same GST assessment violates principles of natural justice and Article 14 of the Constitution.Whether adjudication by a GST authority is maintainable when a subsisting stay order exists from a High Court on the same issue and period issued by another authority.The territorial and jurisdictional scope of writ petitions under Article 226 of the Constitution in relation to GST adjudication orders. RULINGS / HOLDINGS: Issuance of multiple show cause notices by different officers on the same subject matter and period leads to 'duplication of proceedings or multiplicity of proceedings' and should be avoided to prevent chaos and harassment.The interpretation of Section 6(1) of the CGST Act as conferring 'absolute and not conditional' cross-empowerment is erroneous; the power is subject to conditions and limitations, and ignoring these renders the provision otiose.Conferring jurisdiction on a plurality of officers for the same dealer and subject matter results in 'contrary and conflicting decisions,' causes hardship, and violates Article 14 of the Constitution.Adjudication by a GST authority is impermissible when a subsisting stay order granted by a High Court on the same issue and period by another authority is in place; such proceedings should be transferred or kept in abeyance.As held in Kusum Ingots & Alloys Ltd., a writ petition challenging an order has effect throughout India, and the High Court within whose jurisdiction the order is passed has jurisdiction to entertain the writ petition regardless of the residence of the affected party.The impugned order confirming GST demand without considering the subsisting stay and ignoring the request to transfer proceedings was set aside. RATIONALE: The Court applied the statutory framework under the CGST Act, 2017, specifically Section 6(1), which authorizes officers to act as Proper Officers subject to conditions and limitations.The Court relied on the principle that concurrent jurisdiction leading to multiple proceedings on the same matter causes hardship and violates the principle of equality under Article 14 of the Constitution.The Court followed the precedent set by Kusum Ingots & Alloys Ltd., which clarified the territorial jurisdiction of High Courts under Article 226 of the Constitution and the effect of writ petitions challenging orders passed by authorities.The Court emphasized the importance of avoiding multiplicity of proceedings to prevent harassment and conflicting decisions, holding that the authority should have transferred or stayed proceedings in light of the subsisting High Court stay.No doctrinal shift or dissenting opinion was noted; the judgment adhered to established constitutional and statutory principles governing jurisdiction and procedural fairness in GST adjudication.