Parallel GST proceedings and provisional bank attachment barred where the same tax issue was already under central enforcement action

Section 6(2)(b) of the CGST Act bars a second tax administration from initiating proceedings on the same subject-matter where another administration has already commenced intelligence-based enforcement action. Mere summons, search, or preliminary inquiry does not by itself amount to barred proceedings, but a later overlapping action cannot be used for arbitrary recovery or to deprive the assessee of business operations without authority of law. On the stated facts, the Central tax authority had already acted on the same alleged fraudulent input tax credit for the same period, so the State's provisional bank-account attachment was treated as unlawful and arbitrary; the accounts were permitted to be operated.

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Issues: Whether the State tax authority could provisionally attach the assessee's bank accounts when the Central tax authority had already initiated proceedings on the same subject-matter and period, and whether such attachment was barred by the rule against parallel proceedings.

Analysis: Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 bars initiation of proceedings on the same subject-matter where another tax administration has already commenced intelligence-based enforcement action. The controlling principle is that parallel proceedings should not be initiated for an identical tax liability or contravention, though mere summons, search, or preliminary inquiry does not itself amount to formal adjudicatory proceedings. On the facts, the Central tax authority had already acted in relation to the same alleged fraudulent input tax credit for the same period, and the subsequent State action culminated in provisional attachment of the bank accounts. Such attachment, while investigations against suppliers could continue independently, could not be used to deprive the petitioner of business operations or to effect recovery without authority of law. The action was held to offend the protections against deprivation of property and arbitrary tax recovery.

Conclusion: The provisional attachment was held illegal, unwarranted, and arbitrary, and the bank-account attachment was quashed with permission to operate the accounts.

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