TaxTMI 
TaxTMI 
2025 (8) TMI 991
X X X X Extracts X X X X
X X X X Extracts X X X X
....in association to "inquiry" or investigation ......................21 b. Framework of single interface and cross-empowerment of powers under Section 6 of the CGST Act ......................30 c. Scope and Ambit of "initiated any proceedings" under Section 6(2)(b) of the CGST Act ......................42 i. Reading of Circular dated 05.10.2018 ......................50 II. Whether "subject matter" within the meaning of Section 6(2)(b) of the CGST Act includes all matters dealt with in summons under the Act? ......................52 III. What is the purport of an "Order" under Section 6(2)(a) of the CGST Act? ......................59 E. CONCLUSION ......................61 1. This matter was notified for admission on 06.03.2025. After hearing the learned Counsel appearing for the petitioner at length, and upon a threadbare examination of the reasoning assigned by the High Court, we decided to dismiss the Special Leave Petition. However, considering the nature of the issue involved, we thought it appropriate to assign reasons, and accordingly reserved the order. 2. This petition arises from the judgment and order passed by the High Court of Delhi dated 07.02.2025....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... investigation in respect of the same issue and the respondent no. 1 does not have the jurisdiction in view of Section 6(2)(b) of the CGST Act. B. IMPUGNED ORDER 8. The High Court dismissed the writ petition preferred by the petitioner and thereby declined to interfere with the summons issued to the petitioner on 16.01.2025 and 23.01.2025 respectively. The Court held that the expression "any proceeding" in Section 6(2)(b) cannot be construed to include a search or investigation. The High Court took the view that a summons or investigation pursuant to a search constitutes only a precursor to the formal proceedings. It distinguished such summons from assessment, noting that summons is primarily intended to elicit information. 9. The High Court noted that the intent of the statute is to prevent parallel proceedings relating to assessment, particularly those initiated under Sections 73 and 74 respectively of the CGST Act or any other analogous provisions. At the stage of issuing summons, the authorities are merely engaged in gathering information from the assessee based on the material collected thus far, as it is not yet possible to determine the specific course of action the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g his submission, Mr. Potaraju underscored the importance of harmony as a foundational principle of cooperative federalism, upon which the GST regime is structured. He submitted that once either the State or Central authority initiates proceedings, the other is expected to act in aid of those proceedings and provide all necessary inputs to ensure their effective culmination. However, the simultaneous exercise of jurisdiction in the form of a parallel investigation on the same subject matter, he argued, runs contrary to the principle of harmony. 15. Mr. Potaraju relied upon D.O. F.No. CBEC/20/43/01/2017-GST (Pt.) dated 05.10.2018, issued by the Central Board of Excise & Customs, Ministry of Finance, to fortify his submission that the mandate of Section 6 of the CGST Act envisages a harmonious exercise of powers by the State and Union authorities. The Circular reads thus; "Dear Colleague, It has been brought to the notice of the Board that there is ambiguity regarding initiation of enforcement action by the Central tax officers in case of taxpayer assigned to the State tax authority and vice versa. 2. In this regard, GST Council in its 9th meeting held o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss all proceedings initiated under the relevant GST enactment. The use of the word "any" in conjunction with "proceedings" reflects the legislative intent to give the provision a broad and inclusive scope. To buttress this submission, he relied on the decision in K.P. Mohammed Salim v. CIT, reported in (2008) 11 SCC 573. Furthermore, Section 6 of the CGST Act, is part of Chapter II of the Act which deals with Administration. As a sequitur, it ought to apply to all the "proceedings" contemplated under the subsequent provisions. 18. Lastly, Mr. Potaraju emphasized that officers under the GST regime are governed by the provisions set out in Chapter II of the CGST Act. He pointed out that the term "proper officer," as defined in Section 2(91) of Chapter I, refers to any officer assigned with any function under the Act. The CGST Act, he argued, does not draw distinctions or impose limitations on the exercise of powers by a proper officer. Rather, the definition operates as an overarching provision, uniformly applicable across the various Chapters of the Act. 19. In such circumstance referred to above, he prayed that there being merit in the present appeal, the same may be allowed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Moreover, the Court interpreted the phrase "same subject matter" in Section 6(2)(b) to refer to the same cause of action concerning the same dispute being adjudicated before a proper officer. In the Court's view, the reference to "subject matter" implies an adjudicatory proceeding founded on an identical cause of action. The relevant observations read as under: "10. The words "subject-matter", "proceedings" and "inquiry" have not been defined either under the State GST Act or the Union Territory GST Act or the CGST Act. Therefore, these words have to be interpreted in the context of the aforesaid Acts. The word "inquiry" in section 70 has a special connotation and a specific purpose to summon any person whose attendance may be considered necessary by the proper officer either to give evidence or to produce a document or any other thing. It cannot be intermixed with some statutory steps which may precede or may ensue upon the making of the inquiry or conclusion of inquiry. The process of inquiry under section 70 is specific and unified by the very purpose for which provisions of Chapter XIV of the Act confers power upon the proper officer to hold inquiry. The word "inquiry....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Intelligence, reported in 2021 SCC OnLine Mad 17053, dealt with a challenge to summons issued by the respondent on the ground that the appellant's company fell within the state jurisdiction under the SGST Act, and the respondent is an authority with the central jurisdiction. The Court held that the scope of Sections 6(2)(b) and 70 respectively, are different and distinct, as the former deals with any proceedings on a same subject matter, whereas, the latter deals with power to summon in an inquiry and therefore, the words "proceedings" and "inquiry" cannot interchangeably be used to say that there is a bar to invoke the power under Section 70 of the CGST Act. The Court referred to the proceedings under Section 67, 68, 69, 71 and 72 respectively as "inquiry". It was further observed that the prohibition under Section 6(2)(b) shall come into play when any proceedings on the same subject matter had already been initiated by a proper officer of another tax authority. The relevant observations read as under: "31. We need to take note of the word "inquiry" occurring in Section 70 of the CGST Act and the proper officer has power to summon any person whose attendance he considers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he relevant observations read as under:- "14. Counsel for the Opposite Parties does not dispute that the circular dated 5th October, 2018 precludes the State GST authorities from proceeding in the matter as long as the Central authorities are seized of it. The only submission by Mr. Chimanka is that the Appellant should continue to cooperate with the Central GST authorities and appear as and when required by them to do so. 15. Learned counsel for the Appellant states that the Appellant has already been cooperating and would continue to do so as far as the proceeding initiated by the DGGSTI (Opposite Party No. 1) is concerned. 16. It may be noted that the period of enquiry as far as Central tax authority is concerned is from July, 2017 to June, 2018 whereas Opposite Party No. 3 has issued a show cause notice specific for March, 2018 and, therefore, there is also an overlapping of the periods. xxx 18. For the reasons noted above, the Court quashes the show cause notice dated 23rd July, 2019, the impugned order dated 5th November, 2019 including the order dated 4th November, 2019 all passed by Opposite Party No. 3 and directs that till the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hority" and that the authority which initiates such action is empowered to complete the entire process of investigation, issuance of show- cause notice, adjudication, recover, etcetera. It further clarifies that even though the taxpayer may be administratively assigned to the other authority- State or Centre as the case may be, the officer initiating "intelligence based enforcement action" need not transfer the said case to the authority otherwise having administrative assignment over the taxpayer. 65. The above circular is one example where section 6 shall have its full play. In terms of section 6(1), the State or the Central Tax Officer as the case maybe, is also authorised to act as the "proper officer" for the purposes of the other Act-CGST or the SGST Act as the case maybe. Therefore, when such officer initiates "intelligence based enforcement action", he acts and is empowered to so act not only under the CGST Act but also under the SGST or the UTGST Act. In terms of section 6(2)(a), he has to pass a comprehensive order, both under the CGST and the SGST/UTGST Act. In terms of section 6(2)(b), as he has initiated "intelligence based enforcement action", the other juris....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. To strictly enforce section 6 and the above mentioned circular would therefore, lead to compelling such officer to restrict his investigation and findings and resultant action only to the taxpayer within his territorial jurisdiction, thereby leading to an incomplete and inconclusive investigation/action. In the above mentioned second scenario, as all officers who have initiated "intelligence based enforcement action" are otherwise having jurisdiction over the taxpayer, strictly enforcing the mandate of section 6 and the above mentioned circular, will on the one hand subject the taxpayer to multiple action(s) (which is completely contrary to the intent of the Act as noted hereinabove), while on the other hand lead to multiple authorities expending their time, energy and resources investigating the same "intelligence" input, may be even reaching to conflicting findings. It is settled principle of interpretation of statute that the court must adopt construction which will ensure smooth and harmonious working of the statute and eschew the other which will lead to absurdity or give rise to practical inconvenience or friction or confusion in the working of the system. (Refer : State o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... judgment of the Allahabad High Court in G.K Trading Company (Supra) where the court held as follows;[...]" (Emphasis supplied) 28. The High Court of Rajasthan in Rais Khan v. Add. Commissioner, Enforcement Wing-II, D.B. Civil Writ Petition No. 3087/2024, dealt with a challenge to the issuance of summons by the DGGI, on the ground that the proceedings had already been initiated by the State GST authority. The Court observed that the terms "proceedings" under Section 6(2)(b) of the CGST Act and "inquiry" under Section 70 cannot be conflated to imply a bar on the issuance of summons. It held that the mere issuance of summons does not amount to the initiation of proceedings under Section 6(2)(b). The relevant observations read as under: "11. In the judgments referred to by counsel for the respondents, it is held that scope of Section 6(2)(b) and Section 70 of the CGST Act is different and distinct, as the former deals with any proceedings on subject matter, whereas the latter deals with power to issue summon in an inquiry and therefore, the words "proceedings" and "inquiry" cannot be mixed up to read as if there is a bar for the respondents to invoke the power und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de clear that the above direction is confined only for the period covered for the financial years 2017-2018, 2018-2019 and 2019-2020. If there are any other material required by the second and third respondents for a Department assessment period, it will be well open to them to put the appellants on notice in that regard." (Emphasis supplied) 30. The High Court of Madras in Tvl. Metal Trade Incorporation v. Special Secretary, Head of the GST Council Secretariat, New Delhi, reported in 2023 SCC OnLine Mad 8234, considered a challenge to summons issued by both the State and Central GST authorities. The petitioner therein contended that simultaneous proceedings by both authorities on the same subject matter were impermissible. The Court held that it was not permissible for the State GST authorities to prosecute the petitioner therein again, as the Central GST authority had already initiated action in respect of the same matter. However, the Court granted the petitioner an opportunity to participate in the proceedings initiated by the State GST authority to ascertain whether both sets of proceedings indeed pertained to the same subject matter. The relevant observations are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Wing of the Central GST authority directing reversal of input tax credit along with interest and penalty, on the allegation of purchases from non-existent entities. While both Departments were seized of the matter, the DGGI conducted a search and effected seizures. The petitioner therein was also summoned at regular intervals by both the Preventive Wing of the Central GST authority and the DGGI. The High Court observed that the actions taken by any authority form part of a chain of events occurring under the Act, and that every enquiry or investigation initiated by any authority is interrelated. It held that as the State authorities had initiated the same proceeding for wrong/illegal availment of input tax credit, the DGGI does not possess any special powers exceeding those conferred on the officers of the State GST authorities. Accordingly, the Court directed the Preventive Wing of the Central GST authority and the DGGI to transfer their investigation in relation to the petitioner therein to the State GST authorities. The relevant observations read as under:- "14. Having heard the arguments advanced by respective parties and having perused the documents brought on reco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. In aid of this, the petitioner was directed to submit records, including ledger accounts, sales and purchase invoices, and proof of payment, up to 31 January 2021. Subsequently, fresh search and seizure proceedings were undertaken by the DGGI. The DGGI granted permission to the concerned Zonal Unit to conduct a centralized investigation against the petitioner for the period after 2019. In this context, the State GST authority transferred the proceedings to the concerned Zonal Unit of the DGGI. The High Court observed that the CGST Act does not contemplate the transfer of proceedings from one proper officer to another. Accordingly, no authority has the power to transfer a case from its jurisdiction to another, nor can any authority direct such a transfer. The Court held that actions taken by a proper officer under the Act were in the nature of judicial proceedings, which cannot be transferred through administrative orders. It further held that both the State and Central GST authorities are vested with equal powers under the relevant GST enactments, and once proceedings have been initiated by one authority, the same cannot be transferred to another. The relevant observations re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....construed the subject matter to be the proceedings initiated for the wrongful availment of input tax credit. On this basis, it held that the DGGI was precluded from initiating proceedings, even for a different period, where the State GST authority had already initiated proceedings on the same subject matter. The relevant observations read as under: "29. In the opinion of this court, the word "subject- matter" used in section 6(2)(b) of the Act would mean "the nature of proceedings". In the present case, thus, it would mean the proceedings initiated for wrongful availment of input-tax credit by fraudulent means. Thus, if the State has already initiated proceedings by issuing notice under section 74 of the Act for the period up to July 22, 2019, for the same subject- matter, the DGGI cannot be allowed to initiate proceedings for the availment of input-tax credit by fraudulent means for the period from July 28, 2019 to January 20, 2022. Such action, if allowed, would be contrary to the provisions contained in section 6(2)(b) of the Act." ( Emphasis supplied ) 33. The High Court of Himachal Pradesh in Kundlas Loh Udyog v. State of H.P., reported in 2024 SC....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er officer under the CGST Act had initiated proceedings on a subject matter, no proceedings would be initiated by proper officer authorized under the SGST Act or UGST Act on the same subject matter. 24. It is clear that the object of Section 6(2)(b) of the Act is to ensure that cross empowerment of officers of Central Tax and State Tax do not result in the taxpayers being subjected to parallel proceedings. 25. Noticeably, Section 6 (2) (b) of the Act treats the empowered officers under the SGTS/UGST Act at the central level to be at par and does not prescribe for transfer of investigation of the proceedings from State authority to the Central authority or vice-versa. 26. The object of Section 6(2)(b) of the Act is to avoid multiple proceedings by the Sales Tax Officer and Central Tax Officer on the same subject matter and the Rules of purposive interpretation requires Section 6(2)(b) of the Act to be read in light of this object. xxx 32. It would be an entirely different matter that if there would have been another firm which has also been found to be availing fraudulent ITC, then the central government authorities would not be precluded....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s introduced. Under this model, only one tax administration would exercise exclusive control over a taxpayer in relation to all aspects of GST compliance. This included matters pertaining to Central GST (CGST), State GST (SGST), and Integrated GST (IGST). 37. The underlying objective of this arrangement was to simplify the taxpayer's engagement with the tax system by ensuring that all notices, audits, assessments, and other proceedings are handled by a single authority, thereby eliminating the complexity and duplication that would arise from dual control. It was envisioned that a taxpayer should not be compelled to respond to two different authorities for the same issue or transaction. 38. In the 5th GST Council Meeting held on 02.12.2016, the Chairman of the Council emphasized that for the effective implementation of the CGST and SGST, cross-empowerment was essential and should extend across the entire value chain of the taxpayer. The Minister from Karnataka observed that once the State administration had conducted the audit of a taxpayer, there was no justification for the matter to be transferred to the Central administration. The Secretary suggested that the functions suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted under the CGST Act to be proper officers for the purposes of the respective State enactments. The provision reads thus: "6. Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances.--(1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to the conditions specified in the notification issued under sub-section (1),-- (a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax; (b) where a proper officer under the State Goods and Services Tax Act or the Union Terr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ween the Centre and the States to ensure single interface: i. Of the total number of taxpayers below Rs. 1.5 crore turnover, all administrative control over 90% of the taxpayers shall vest with the state tax administration and 10% with the Central tax administration; the state ii. In respect of the total number of taxpayers above Rs. 1.5 crore turnover, all administrative control shall be divided equally in the ratio of 50% each for the Central and the State tax administration; iii. The division of taxpayers in each State shall be done by computer at the State level based on stratified random sampling and could also take into account the geographical location and type of the taxpayers, as may be mutually agreed;[...]" 45. While the latter decision that both the Central and State tax administrations shall have power to take intelligence-based enforcement action in respect of the entire value chain is reflected in the Circular dated 05.10.2018, as reproduced above, and Clarification F. No. CBEC-20/10/07/2019-GST dated 22.06.2020 by the Central Board of Indirect Taxes, GST Policy Wing, which reads thus: "To The Principal Director General....
X X X X Extracts X X X X
X X X X Extracts X X X X
....werment is to be subjected to conditions. It means that notification would be required only if any conditions are to be imposed. For example, Notification No. 39/2017-CT dated 13.10.2017 restricts powers of the State Tax officers for the purposes of refund and they have been specified as the proper officers only under section 54 and 55 of the CGST Act and not under rule 96 of the CGST Rules, 2017 (IGST Refund on exports). If no notification is issued to impose any condition, it means that the officers of State and Centre have been appointed as proper officer for all the purpose of the CGST Act and SGST Acts. 4. Further, it may kindly be noted that a notification under section 6(1) of the CGST Act would be part of subordinate legislation which instead of empowering the officer under the Act, can only be used to impose conditions on the powers given to the officers by the section. In the absence or any such conditions, the power of Cross- empowerment under section 6(1) of the CGST Act is absolute and not conditional. Yours faithfully, (Sumit Bhatia) Deputy Commissioner (GST)" 46. The GST regime operates on the principle of self-assessment, as enshrined i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f returns, we do not for a moment say, that there is no scope for tax administration to undertake scrutiny of returns or audit of accounts. Both the Central and the State tax administration are well empowered to undertake such actions, as long as these actions are initiated on the basis of any intelligence relating to tax evasion. 52. The High Court of Delhi in the decision of Amit Gupta v. Union of India, reported in 2023 SCC OnLine Del 6664, succinctly interprets Section 6 of the CGST Act. The relevant observations read thus: "24. It is clear from Section 6(1) of the Act that it contains a non obstante clause and also empowers officers appointed under the State Goods and Services Tax Act, 2017 (hereafter "the SGST Act") or the Union Territory Goods and Services Tax Act, 2017 (hereafter "the UGST Act") to be appointed as proper officers for the purposes of the Act. 25. Clause (a) of sub-section (2) of Section 6 of the Act expressly provides that if a proper officer issues an order under Act, he shall also issue an order under the SGST Act or the UGST Act as authorised by the said enactments under intimation of the jurisdictional officer. 26. In confor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Territory tax authorities. Clause (b) of sub-section (2) yet again affirms the principle of cross- empowerment, albeit operating within the narrower confines of intelligence-based enforcement action. c. Scope and Ambit of "initiated any proceedings" under Section 6(2)(b) of the CGST Act 54. Before addressing what constitutes "proceedings" under Section 6(2)(b) of the CGST Act, it is apposite to first consider the petitioner's contention that the phrase "any proceedings" is intended to encompass all proceedings initiated under the relevant GST enactments. We may reproduce the provision in discussion; "(2) Subject to the conditions specified in the notification issued under sub-section (1),-- xxx (b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter." 55. Section 6(2)(b) of the CGST Act precludes a proper officer under the CGST Act to initiate any proceedings on a subject matter if a proper officer under the SGST or the UGST Act has in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pra) respectively. The High Court of Allahabad rightly held that the issuance of summons cannot be conflated with a statutory step taken upon conclusion of an inquiry. Similarly, the High Court of Kerala was correct in holding that initiation of inquiry or the issuance of summons does not amount to the initiation of "any proceedings". The phrase "initiation of any proceedings" refers specifically to the issuance of a notice under the relevant provisions of the GST enactment. 60. At this juncture, we wish to refer to the Guidelines on Issuance of Summons under Section 70 of the CGST Act issued by the Central Board of Indirect Taxes & Customs (GST - Investigation Wing) dated 17.08.2022. In view of the facts of the present case in hand, we would like to inject thrust into the Guidelines dated 17.08.2022, and direct the concerned Departments to adhere to the said Guidelines, in both letter and spirit. 61. In the present case, the petitioner was served with a show cause notice dated 18.11.2024 by the respondent no. 2 under Section 73 of the CGST Act, thereby initiating proceedings. The petitioner has impugned the summons dated 16.01.2025 and 23.01.2025 respectively issued by the r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ontaining charges that a specific person is called upon to answer. In other words, it sets out the alleged violations of legal provisions and requires the assessee to explain why the duty should not be recovered from them. Thus, a show cause notice cannot be vague, nor can any allegations be made without evidence being commensurate with the gravity of the charges levelled against the noticee. 67. It sets forth the framework for the proceedings proposed to be undertaken and provides the noticee with an opportunity to submit their explanation before the adjudicating authority. It outlines the background for the initiation of such proceedings, whether arising from an audit of accounts by the internal audit wing, scrutiny of returns, or intelligence gathered by officers of the Audit and Intelligence Commissionerate. It is further mandated that the authority issuing the notice must meticulously set out all relevant legal provisions under which the alleged contraventions are framed. The materials obtained through summons and relied upon for issuing the show cause notice must be appended and disclosed to the assessee. In essence, a show cause notice enumerates the charges levelled agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case there are more than one noticees mentioned in the show cause notice having their principal places of business falling in multiple Commissionerates, the show cause notice shall be adjudicated by the competent central tax officer in whose jurisdiction, the principal place of business of the noticee from whom the highest demand of central tax and/or integrated tax (including cess) has been made falls." 72. The statutory framework of the CGST Act does not admit of any interpretation of the phrase "initiation of proceedings" under Section 6(2)(b) other than one which ties it to the issuance of a show cause notice. An action qualifies as 'proceedings' only when it is undertaken with the object of attaining a determinate outcome. In the present context, the issuance of a show cause notice partakes the character of proceedings, as it is inherently required to culminate in a definitive determination; there must exist a point of finality or conclusion thereto. 73. Proceedings, by their very nature, cannot be said to be initiated in the absence of certainty, nor can they culminate without adherence to the principles of natural justice. A show cause notice marks the commencement of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "viii. Both the Central and State tax administrations shall have the power to take intelligence-based enforcement action in respect of the entire value chain" 3. It is accordingly clarified that the officers of both Central tax and State tax are authorized to initiate intelligence based enforcement action on the entire taxpayer's base irrespective of the administrative assignment of the taxpayer to any authority. The authority which initiates such action is empowered to complete the entire process of investigation, issuance of SCN, adjudication, recovery, filing of appeal etc. arising out of such action. 4. In other words, if an officer of the Central tax authority initiates intelligence based enforcement action against a taxpayer administratively assigned to State tax authority, the officers of Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case. to its logical conclusions. 5. Similar position would remain in case of intelligence based enforcement action initiated by officers of State tax authorities against a taxpayer administratively assigned to the Central tax authority. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tirety of the dispute so as to avoid multiplicity of proceedings, conflicting determinations, or jurisdictional overlap. 80. The High Court of Allahabad, in G.K. Trading (supra), interpreted the phrase "subject matter" to mean 'cause of action' in relation to the same dispute in a proceeding before a proper officer under the relevant GST enactment. The relevant extracts are reproduced hereinbelow: "14. Thus, the phrase "subject-matter", or the phrase "on the same subject- matter", used in section 6(2)(b) of the UPGST Act/CGST Act with reference to any proceedings, means same cause of action for the same dispute involved in a proceeding before proper officer under the UPGST Act and the CGST Act. xxx 17. Thus, section 6(2)(b) of the CGST Act prohibits separate initiation of proceedings on the same subject-matter by the proper officer under the CGST Act when proceeding on the same subject-matter by the proper officer under the State Act has been initiated, whereas section 70 of the UPGST/CGST Act merely empowers the proper officer to summon any person in any inquiry. The word "proceedings" used in section 6(2)(b) is qualified by the words "subject- matter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee, who is invited to show cause as to why adverse action must not be taken against him on the basis of the apprehensions that the authority contemplates. 83. We shall now consider the contents of a show cause notice, bearing in mind the manner in which they facilitate the determination of the subject matter of the proceedings. In Gorkha Security Services v. Govt. (NCT of Delhi), reported in (2014) 9 SCC 105, this Court poignantly explained the cardinal principles behind the issuance of a show cause notice. It held that the service of a show cause notice is made in order to inform the noticee about the case that has been set up against him, which he has to meet. The relevant paragraphs have been supplied below: "Contents of the show-cause notice 21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would be impermissible for an authority to invoke such rules, claims or grounds at a later stage which do not figure in the show cause notice. That is to say, any ground, reasoning or claim which does not figure out in the show cause notice cannot be permitted to adversely affect the noticee. Such recognition has even been made statutorily, as per sub-section (7) of Section 75 of the Act, which reads as thus: "75. General provisions relating to determination of tax.-... xxx (7) The amount of tax, interest and penalty demanded in the order shall not be in excess of the amount specified in the notice and no demand shall be confirmed on the grounds other than the grounds specified in the notice." 86. The expression "subject matter" contemplates proceedings directed towards determining the taxpayer's liability or contravention, encompassing the alleged offence or non-compliance together with the relief or demand sought by the Revenue, as articulated in the show cause notice through its charges, grounds, and quantification of demand. Accordingly, the bar on the "same subject matter" is attracted only where both proceedings seek to assess or recover an ident....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the SGST Act or the UGST Act in order to intimate the jurisdictional officer of the State tax or Union territory tax. The provision reads thus: "(2) Subject to the conditions specified in the notification issued under sub-section (1),-- (a) where any proper officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax;" 92. In construing Section 6(2)(a), it is imperative to have due regard to the legislative intent permeating the GST enactments. Section 6, in particular, advances the objective of establishing a unified national market for goods and services and to prevent taxpayers from the undue hardship of being subjected to the rigours of multiple jurisdictions. 93. The provision serves a twofold purpose: first, to insulate taxpayers from the prospect of being proceeded against by more than one authority for the same subject matter; and secondly, to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by any one of the Central or the State tax administrations despite the taxpayer having been assigned to the other administration. iv. Parallel proceedings should not be initiated by other tax administration when one of the tax administrations has already initiated intelligence-based enforcement action. v. All actions that are initiated as a measure for probing an inquiry or gathering of evidence or information do not constitute "proceedings" within the meaning of Section 6(2)(b) of the CGST Act. vi. The expression "initiation of any proceedings" occurring in Section 6(2)(b) refers to the formal commencement of adjudicatory proceedings by way of issuance of a show cause notice, and does not encompass the issuance of summons, or the conduct of any search, or seizure etc. vii. The expression "subject matter" refers to any tax liability, deficiency, or obligation arising from any particular contravention which the Department seeks to assess or recover. viii. Where any two proceedings initiated by the Department seek to assess or recover an identical or a partial overlap in the tax liability, deficiency or obligation arising from any particu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithin their rights to conduct an inquiry or investigation until it is ascertained that both authorities are examining the identical liability to be discharged, the same contravention alleged, or the issuance of a show cause notice. Any show cause notice issued in respect of a liability already covered by an existing show cause notice shall be quashed. f. However, if the Central or the State tax authority, as the case may be finds that the matter being inquired into or investigated by it is already the subject of inquiry or investigation by another authority, both authorities shall decide inter-se which of them shall continue with the inquiry or investigation. In such a scenario the other authority shall duly forward all material and information relating to its inquiry or investigation into the matter to the authority designated to carry the inquiry or investigation to its logical conclusion. We say, so because, the taxable person except for being afforded the statutory protection from duplication of proceedings, otherwise has no locus to claim which authority should proceed with the inquiry or investigation in a particular matter. g. However, where the authorities....