2025 (8) TMI 558 - HC - GST

Appeal Dismissed: No Parallel Proceedings Allowed Under Section 6(2)(b) CGST Act for SCN Issuance

The HC dismissed the appeal challenging the issuance of a SCN under Section 73 of the CGST Act. The court held that since the Central GST authorities had ... Challenge to issuance of SCN u/s 73 of CGST Act - prior proceedings were initiated by State GST authorities on the same subject matter - issuance of DRC-01 and SCN without DRC-01A for the period when it was mandatory - Parelel / Simultaneous Proceedings before CGST or SGST Authorities - HELD THAT:- In the instant case, first proceeding has been initiated by the Central GST authorities on 27-8-2021 by conducting inspection under Section 67(1) of the CGST Act and thereafter, on 30-8-2021 memo was issued for payment of dues of CGST to the appellant assessee under Reverse Charge Mechanism (RCM) by the office of Principal Commissioner, CGST, Raipur to the extent of ₹ 1,20,09,15,450/- (total tax). Since the first proceeding has already been initiated by the Central GST, therefore, the State GST authorities were not competent to initiate any proceeding and furthermore, the proceedings in pursuance of DRC-01 and DRC-02 dated 21-9-2021 and 13-10-2021, respectively, were closed in light of other case by the Assistant Commissioner, State GST, Bilaspur and second show cause notice dated 21-2- 2022/16-3-2022 was not proceeded with in view of reply dated 13-4-2022 filed by the appellant without specifying any reason whatsoever and without any adjudication proceeding including assessment proceeding, proceeding for penalties, etc., proceedings for demands and recovery under Sections 73 & 74 of the CGST Act, therefore, the proceeding initiated by the Central GST was not barred by Section 6(2)(b) of the CGST Act. As held earlier, Section 6(2)(b) of the Act prohibits a proper officer of CGST under the Act to initiate any proceeding on a subject- matter where on the same subject-matter proceeding by a proper officer under the Chhattisgarh GST Act has been initiated. It is quite vivid that the Central GST had already initiated proceeding against the appellant SECL way back on 27-8-2021 by carrying out inspection under Section 67(1) of the CGST Act and finally, show cause notice was issued on 6/16-1-2023. The State authorities even though were not having jurisdiction to initiate proceeding on the same cause of action and for the same dispute involving adjudication proceedings which include assessment proceedings, proceedings for penalties, etc., proceedings for demands and recovery under Sections 73 & 74 of the CGST Act. There are no merit in the appeal - appeal dismissed. ISSUES: Whether the issuance of a show cause notice under Section 73 of the CGST Act by Central GST authorities is barred by Section 6(2)(b) of the CGST Act when prior proceedings were initiated by State GST authorities on the same subject matter.Whether the mere issuance of show cause notices or summary notices without adjudication or assessment proceedings constitutes initiation of proceedings under Section 6(2)(b) of the CGST Act.Whether the closure of earlier State GST proceedings without adjudication impacts the bar under Section 6(2)(b) of the CGST Act on initiation of Central GST proceedings. RULINGS / HOLDINGS: The Court held that Section 6(2)(b) of the CGST Act bars initiation of proceedings by a proper officer under the CGST Act only if a proper officer under the State GST Act has initiated 'any proceeding' on the same subject matter involving adjudication proceedings, including assessment, penalties, or demands and recovery under Sections 73 and 74. Mere issuance of show cause notices without adjudication does not constitute initiation of proceedings for the purpose of Section 6(2)(b).The Central GST authorities had validly initiated proceedings by inspection under Section 67(1) and issuance of a show cause notice under Section 73 of the CGST Act before the State GST authorities had conducted any adjudication proceedings. Therefore, the show cause notice dated 6/16-1-2023 was not barred by Section 6(2)(b) of the CGST Act.The closure of earlier State GST proceedings without any adjudication or assessment proceedings means that no 'proceeding' as contemplated under Section 6(2)(b) was initiated by the State authorities; hence, the Central GST proceedings are not barred.The writ petition challenging the show cause notice was rightly dismissed as no case for interference in writ jurisdiction was made out. RATIONALE: The Court applied Section 6(2)(b) of the CGST Act, which prohibits initiation of proceedings under the CGST Act if proceedings on the same subject matter have already been initiated under the State GST Act, subject to conditions specified in the relevant notification.The Court relied on the interpretation from the Allahabad High Court in G.K. Trading Company, which clarified that 'any proceeding' under Section 6(2)(b) means adjudication proceedings including assessment, penalties, demands, and recovery, and not mere inquiries or issuance of show cause notices.The Court referred to the Central Board of Excise & Customs circular dated 5-10-2018, which permits both Central and State Tax authorities to initiate intelligence-based enforcement actions independently and complete the entire process arising from such actions.The Court emphasized that in the absence of adjudication or assessment proceedings by the State GST authorities, the Central GST authorities' initiation of proceedings was valid and not barred by Section 6(2)(b).No dissent or doctrinal shift was indicated; the Court followed established precedent and statutory interpretation.