Section 6(2)(b) Bars Multiple GST Proceedings on Same Matter; No Further Audit Allowed Under Section 65

The HC allowed the writ petition challenging audit observations under the WBGST/CGST Act, 2017, holding that Section 6(2)(b) prohibits initiation of proceedings on the same subject matter if already initiated by proper officers under State or Union territory GST Acts. Multiple proceedings under Section 73 for tax periods 2018-2019 to 2020-2021 concerning exempted supply claims and alleged suppression of facts were found to be overlapping. The court noted that the petitioner had not annexed relevant audit observations and that further audit under Section 65 was impermissible since notices under Section 73 had been issued. The impugned order based on audit observations of suppression and turnover mismatch was set aside, concluding no scope for additional audit proceedings.

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ISSUES:

Whether the initiation of audit proceedings by central authorities violates Section 6(2)(b) of the WBGST/CGST Act, 2017 when state authorities have already adjudicated the same subject matter.Whether the audit observations and subsequent proceedings under Section 65 and Section 73 of the said Act are valid and lawful in light of prior orders passed by state authorities.Whether a fresh audit can be initiated for tax periods already covered by previous audits and adjudications.The scope and applicability of Section 6(2)(b) of the said Act in preventing multiple proceedings on the same subject matter by different authorities.

RULINGS / HOLDINGS:

The Court held that Section 6(2)(b) of the said Act "provides that where the proper officer under the State... have initiated any proceedings on the subject matter, no proceedings shall be initiated by the proper officer under the said Act on the same subject matter."The audit observations and proceedings initiated by the central authorities for the tax periods 2018-2019 to 2021-2022 are in conflict with Section 6(2)(b) since the state authorities had already adjudicated the identical issue for these periods.The initiation of fresh audit proceedings under Section 65 for tax periods already covered by prior audits and adjudications is impermissible; therefore, the audit should be restricted to the tax periods 2017-2018 and 2022-2023 only.The Court allowed the writ petition to the extent of restricting audit proceedings to periods not previously adjudicated and held that the respondents are free to consider any representation made by the petitioner.

RATIONALE:

The Court applied the statutory framework of the WBGST/CGST Act, 2017, particularly Section 6(2)(b), which bars initiation of duplicate proceedings on the same subject matter by different tax authorities.Precedent and statutory interpretation confirm that once state authorities have adjudicated an issue under Section 73, central authorities cannot initiate proceedings on the same matter.The Court noted that audit proceedings under Section 65 must comply with the limitation imposed by prior adjudications and that reopening audits for periods already covered would contravene the statutory bar.No dissent or doctrinal shift was indicated; the Court adhered to a strict reading of the statutory provisions to prevent multiplicity of proceedings and protect the taxpayer's rights under Article 20 of the Constitution of India.

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