Central tax notices on CGST credit sustained; limited relief for 2017-19 with Armour Security precedent to be considered

HC declined to quash central tax notices challenging denial of CGST credit for 2017-2018 to 2022-2023. For 2017-2018 and 2018-2019, HC permitted Petitioner to furnish all relevant details, including State Authority orders and information on pending appeals, and directed Central Authorities to consider Petitioner's contentions, including reliance on SC's decision in Armour Security (India) Ltd., on merits and in accordance with law. For the remaining years, HC held that no jurisdictional bar applied and allowed Central Authorities to proceed with the notices on merits. The petition was disposed of without interfering with the impugned notices.

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ISSUES PRESENTED AND CONSIDERED

1. Whether Central Authorities lack jurisdiction to reassess or adjudicate input tax credit for financial years already subject to State Authority proceedings, in light of Section 6(2)(b) of the CGST Act.

2. Whether Central Authorities may proceed with notices covering a period partly overlapping with earlier State Authority proceedings when the impugned notices extend beyond the years covered by the State proceedings.

3. Whether the petitioner must disclose particulars and orders of prior State proceedings to the Central Authorities, and if disclosure is made, how the Central Authorities are to treat such material.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Jurisdictional bar under Section 6(2)(b) of the CGST Act in respect of years already adjudicated or subject to State proceedings

Legal framework: Section 6(2)(b) of the CGST Act allocates jurisdiction between State and Central Authorities for purposes of assessment/adjudication; where State proceedings have been initiated, parallel Central adjudication for the same period may be barred.

Precedent Treatment: The Court treated an earlier decision addressing the same jurisdictional conflict as supportive of the claim that Central Authorities lack jurisdiction for years already litigated before State Authorities; that decision was followed for the years in question.

Interpretation and reasoning: The Court accepted that where State Authorities had already issued notices and an adjudication order exists (with appeal pending), the Central Authorities ordinarily cannot re-adjudicate the same period. The petitioner's reliance on the precedent was held to prima facie support its contention limited to the specific years covered by State proceedings.

Ratio vs. Obiter: The holding that Central Authorities are precluded from re-adjudicating years already subject to State adjudication (subject to verification of relevant facts and documents) is treated as ratio in respect of those years; observations about the general interaction between State and Central jurisdiction are explanatory and may be treated as obiter beyond the facts.

Conclusions: The Court directed that Central Authorities should treat the petitioner's contention of lack of jurisdiction seriously for the years already covered by State proceedings and consider supporting documents; prima facie jurisdictional bar accepted for those specific years subject to verification.

Issue 2 - Validity of Central notices covering a larger period when only part of that period was previously dealt with by State Authorities

Legal framework: Where a taxing authority issues notices that span multiple years, jurisdictional questions must be addressed year-by-year; absence of State proceedings for some years allows Central Authorities to act for those years if no jurisdictional bar exists.

Precedent Treatment: The Court distinguished the effect of the cited precedent to the extent that it applies only to years covered by prior State proceedings and not to years outside that scope.

Interpretation and reasoning: The Court noted that the impugned Central notices cover a larger period, only part of which is said to have been covered earlier by State proceedings. The petitioner candidly accepted that the Central Authorities may continue adjudication for years not covered by State proceedings. Thus, the existence of State adjudication for certain years does not nullify Central jurisdiction for other years within the same notice period.

Ratio vs. Obiter: The conclusion that Central Authorities retain competence to adjudicate years not subject to State proceedings is ratio as applied to the facts; the clarification that a notice covering multiple years must be dissected year-wise is an applied principle of law.

Conclusions: Central Authorities are at liberty to proceed with adjudication for the uncovered years; their power to dispose of notices for those years remains unimpaired, subject to merits and legal requirements.

Issue 3 - Obligation to disclose earlier State proceedings and the manner of consideration by Central Authorities

Legal framework: Administrative fairness and statutory scheme require relevant prior adjudicatory orders and pending appeal particulars to be placed before the authority conducting subsequent proceedings so that questions of jurisdiction and res judicata can be properly addressed.

Precedent Treatment: The Court relied on the precedent that recognition of prior State proceedings should inform Central adjudication, and treated the precedent as supportive of the need for disclosure and consideration of prior orders.

Interpretation and reasoning: The Court observed that the petitioner had not previously disclosed the details of State proceedings to the Central Authorities. It directed that the petitioner furnish full details and copies of State orders and particulars of pending appeals. The Court expressed expectation that the Central Authorities will consider such materials on their merits and in accordance with law. The Court declined to quash the impugned notices at this stage, preferring that the Central Authorities examine the materials and apply the legal principle barring re-adjudication for overlapping periods if warranted.

Ratio vs. Obiter: The direction that the petitioner must disclose prior proceedings and that the Central Authorities must consider them is a dispositive procedural direction (ratio) in this matter; broader remarks about administrative practice are obiter to the extent they are general observations.

Conclusions: The petitioner was granted liberty to file full particulars and copies of State orders and pending appeals; upon receipt, Central Authorities are directed to consider those contentions in accordance with law and on merits. The petition was not entertained to the extent of wholly quashing the Central notices without such consideration.

Cross-References and Integrated Conclusion

Where State proceedings have already been initiated and adjudication has occurred for specific years, Central Authorities prima facie lack jurisdiction to re-adjudicate those specific years (Issue 1); however, where Central notices encompass additional years not previously dealt with by State Authorities, Central Authorities retain jurisdiction to proceed for those uncovered years (Issue 2). The petitioner must disclose full particulars of prior State proceedings and pending appeals; once furnished, the Central Authorities are directed to consider and decide those jurisdictional/contention points in accordance with law and on their merits (Issue 3). The Court disposed of the petition without interfering with the impugned notices while directing the procedural course outlined above.

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