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 initiated proceedings first by inspection under Section 67(1) and issued a SCN, the State GST authorities lacked jurisdiction to initiate parallel proceedings on the same subject matter. The State proceedings were closed and no adjudication occurred. Section 6(2)(b) of the CGST Act prohibits simultaneous proceedings by CGST and SGST authorities on the same cause of action. Therefore, the Central GST proceedings were valid and not barred by the State's prior action. The appeal was dismissed for lack of merit.

---

---

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.

---