TaxTMI 
TaxTMI 
Multiplicity of Proceedings Under GST - When Two Authorities Cannot Pursue the Same Dispute Part II - From Judicial Conflict to the Supreme Court Roadmap
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....ultiplicity of Proceedings Under GST - When Two Authorities Cannot Pursue the Same Dispute Part II - From Judicial Conflict to the Supreme Court Roadmap<br>By: - Raj Jaggi<br>Goods and Services Tax - GST<br>Dated:- 10-8-2026<br>A Brief Recap - What Part I Established Part I of this Article examined the basic problem of multiplicity of proceedings under GST. GST is administered by both the Centre and the States, and the law permits cross-empowerment of their officers. However, this shared authority includes an important safeguard. Section 6(2)(b) of the CGST Act, 2017 provides that where a proper officer under the State GST Act or the Union Territory GST Act has already initiated proceedings on a particular subject matter, a proper officer under the CGST Act cannot initiate another proceeding on the same subject matter. The real difficulty lies in applying this apparently simple Section 6(2)(b). A taxpayer may receive a summons from one authority while another authority is already examining its transactions. This raises two basic questions: Does every summons, inquiry, search or investigation amount to the initiation of "proceedings"? And when can two actions be said to relate....
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.... to the "same subject matter"? Part I explained that the same taxpayer or the same financial year does not, by itself, establish multiplicity. The real enquiry is whether the authorities are examining the same transactions, the same alleged contravention and the same or overlapping tax liability. Part I also examined the two judicial approaches that emerged from the High Courts. One line of decisions, represented by M/s G.K. Trading Company Versus Union of India And 4 Others - 2021 (1) TMI 130 - ALLAHABAD HIGH COURT, and Kuppan Gounder P.G. Natarajan Versus Directorate General of GST Intelligence, New Delhi - 2021 (8) TMI 136 - MADRAS HIGH COURT, distinguished an inquiry or investigation from formal adjudicatory proceedings. The other line, including Anurag Suri Versus The Director General of Goods and Services Tax Intelligence and others - 2021 (4) TMI 73 - ORISSA HIGH COURT, M/s M/s. R.P. Buildcon Private Limited & Anr. Versus The Superintendent, CGST & CX, Circle - II, Group - 10 & ors. - 2022 (10) TMI 501 - CALCUTTA HIGH COURT, and Vivek Narsaria Versus The State of Jharkhand, The Commissioner of State Taxes, Joint Commissioner of Stat....
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....e Taxes, Ranchi, The Principal Commissioner, Central Goods & Service Tax and Central Excise, The Senior Intelligence Officer, Directorate General of GST Intelligence, Jamshedpur - 2024 (1) TMI 809 - JHARKHAND HIGH COURT, focused more closely on the hardship caused by overlapping governmental action. M/s Kundlas Loh Udyog Versus State of H.P. & Anr. - 2024 (9) TMI 1236 - HIMACHAL PRADESH HIGH COURT, added an important practical dimension by recognising that fresh intelligence available with another authority can be shared with the authority already dealing with the matter, instead of necessarily starting another proceeding. Part I thus ended with two equally important concerns. Genuine investigation should not be stopped merely because another authority has acted first; at the same time, cross-empowerment should not become a reason for repeated proceedings on substantially the same dispute. The need was therefore for a clear and workable principle capable of balancing effective tax enforcement with protection against duplication. The Supreme Court Steps In - Armour Security Settles the Controversy The conflicting judgments from different High Courts were....
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.... finally brought before the Supreme Court in M/s ARMOUR SECURITY (INDIA) LTD. Versus COMMISSIONER, CGST, DELHI EAST COMMISSIONERATE & ANR. - 2025 (8) TMI 991 - Supreme Court and is significant not just for its outcome but also for the Court' s analysis of the GST cross- empowerment scheme, approaches taken by various High Courts, and the meanings of "initiation of proceedings" and "same subject matter" in Section 6(2)(b). Armour Security, engaged in providing security services, received a show cause notice on November 18, 2024, for the period April 2020 to March 2021, citing discrepancies in turnover, e- way bill data, and ITC claims, indicating an ongoing formal tax process. Subsequently, on January 16, 2025, Central GST officers conducted a search at the company's premises, seized documents and gadgets, and issued summons to its directors. The company argued that another GST authority was already examining similar issues, and that the later actions were an impermissible duplication. The Delhi High Court declined to interfere, viewing summons as preliminary steps not equivalent to formal proceedings. Armour Security appealed to the Supreme Court. Althoug....
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....h the petition was ultimately dismissed, the Supreme Court issued a detailed judgment given the broader implications, as different High Courts had expressed conflicting views. The Court addressed three key questions: When do proceedings officially commence? What defines the "same subject matter"? And how should overlapping actions by Central and State GST authorities be handled? A central issue was clarifying when proceedings begin under Section 6(2)(b). The Court distinguished the investigation, a fact-finding phase involving summons, searches, and evidence collection, from adjudication, which involves forming a view on violations. An investigation does not automatically start a proceeding; only when the department examines the material and forms a view does a formal proceeding begin. This distinction was crucial for Armour Security, as the Court ruled that searches and summons, aimed at gathering evidence, do not constitute the initiation of a second proceeding under the law. The Court found support in earlier High Court decisions. The Allahabad High Court, in M/s G.K. Trading Company Versus Union of India And 4 Others - 2021 (1) TMI 130 - ALLAHABAD HIGH COURT,....
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.... distinguished an "inquiry" under Section 70 from the "proceedings" contemplated by Section 6(2)(b). The Kerala High Court, in K.T. Saidalavi, Mozart Global Furniture, Tip Top Furniture Industries, CASA Furniture (P) Ltd., Tip Top Furniture Land, Versus The State Tax Officer, Senior Intelligence Officer, Directorate General of GST Intelligence, Thiruvananthapuram, The Superintendent (Prev), Central Tax And Central Excise, Calicut, The Commissioner, Central Tax And Central Excise, Kozhikode, State Tax Officer (Intelligence), Malappuram, The Commissioner of State GST, Thiruvananthapuram. The Asst. Commissioner (Assmnt), Malappuram - 2024 (10) TMI 1119 - KERALA HIGH COURT, also proceeded on the basis that the initiation of an inquiry or the issuance of summons does not, by itself, amount to the initiation of proceedings. The practical reason for this approach is compelling. Suppose a State authority first issues a summons for a suspected ITC mismatch. DGGI later receives separate intelligence that the taxpayer has suppressed substantial outward supplies. If the first summons alone were enough to confer exclusive jurisdiction, DGGI could be prevented from investigating an ....
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....entirely different violation. Section 6(2)(b), intended to prevent duplication, could then unintentionally become a shield against legitimate investigation. The principle can therefore be stated simply: investigation is the process of determining whether there is a case; a formal proceeding begins when the Department identifies the case and sets the adjudicatory process in motion. A summons, search or seizure may lead to proceedings, but it is not, merely for that reason, the proceeding itself. The Show Cause Notice - The Document That Defines the Dispute The importance of the show cause notice in Armour Security goes beyond marking the beginning of formal proceedings. It also helps identify the "subject matter" of the dispute. At the investigation stage, the inquiry may still be broad, covering ITC, turnover, suppliers or connected transactions. Once the show cause notice is issued, however, the Department must ordinarily specify the allegations and the liability which the taxpayer is required to answer. This approach is consistent with Section 75(7), under which the adjudication cannot ordinarily travel beyond the amount or grounds stated in the notice. The show cause....
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.... notice therefore sets the boundaries of the dispute and becomes the most reliable basis for comparing the earlier and later proceedings. For purposes of Section 6(2)(b), the relevant comparison should therefore focus on the transactions covered, the alleged contravention and the liability proposed in the respective notices. In this sense, the show cause notice acts as the jurisdictional compass for identifying the subject matter of the adjudicatory proceeding. The Same Taxpayer Is Not Enough - What Does "Same Subject Matter" Really Mean? The Supreme Court clarified that even where two authorities have initiated formal proceedings, Section 6(2)(b) applies only when they concern the same subject matter. The same taxpayer or financial year is not enough. The real enquiry is whether the proceedings relate to the same transactions, alleged contravention and resulting tax liability. For example, if a State authority issues a notice to Aayra Ltd. for FY 2024-25 alleging wrongful ITC from non-existent suppliers, while the Central authority proceeds against it for non-payment of GST on taxable outward supplies during the same year, the subject matters are different. However, if....
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.... both authorities seek recovery of the same ITC on the same invoices and substantially the same allegations, the proceedings would concern the same subject matter. The enquiry must therefore move beyond broad labels such as an "ITC matter", "suppression case" or "same financial year". What matters is the underlying dispute-its transactions, alleged contravention and proposed liability. It is this substantive comparison, rather than the identity of the taxpayer or period, that determines whether Section 6(2)(b) is attracted. Partial Overlap Also Matters - The Second Notice Need Not Be an Exact Copy Armour Security makes it clear that complete identity between two proceedings is not always necessary. Two notices may differ in amount, period or number of transactions and yet substantially overlap. What matters is whether the later proceeding covers a liability already wholly or partly included in the earlier proceeding. For example, if the first notice seeks recovery of Rs. 50 lakh of ITC relating to five suppliers and the second notice seeks Rs. 30 lakh relating to three of those very suppliers on the same allegations, the smaller demand does not make the second proceedin....
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....g independent. To the extent that the transactions, contravention and liability overlap, Section 6(2)(b) applies. Thus, minor differences in drafting, amount or coverage cannot convert the same dispute into a different subject matter. The real test is whether the later proceeding seeks to assess or recover the same or partially overlapping liability arising from the same alleged contravention. Distinct Infractions Can Still Be Proceeded With Separately Section 6(2)(b) does not bar action against genuinely distinct infractions merely because they concern the same taxpayer or financial year. A taxpayer may, for example, have availed fake ITC, suppressed outward turnover, or wrongly claimed a refund. Each may involve different transactions, facts, and statutory obligations. Thus, if one authority has initiated proceedings regarding fictitious ITC while another has independent material concerning suppressed outward supplies, the second matter is not barred merely because the taxpayer and period are common. The protection under Section 6(2)(b) is against proceedings on the same subject matter, not against every separate contravention involving the same taxpayer. The balan....
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....ce is therefore clear: a taxpayer is protected against repeated proceedings on the same controversy, but an earlier proceeding cannot become a shield against action for a genuinely different contravention. A Two-Fold Test for Identifying the Same Subject Matter The Supreme Court's reasoning can be distilled into a simple two-fold test: first, whether both proceedings concern substantially the same alleged contravention or liability based on the same facts; and second, whether the demand or relief sought is identical or overlapping. The comparison must focus on the underlying transactions, the nature of the default, and the proposed liability, rather than merely the wording of the notices. Thus, the same financial year or a broad issue such as wrongful ITC is not enough; equally, minor differences in description or quantification cannot convert a substantially the same dispute into a different subject matter. This test strikes the necessary balance: a genuinely different contravention may be pursued separately, but the same or overlapping dispute cannot be adjudicated twice merely by presenting it differently. Para 96 - The Supreme Court Brings the Governing Princ....
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....iples Together Paragraph 96 of Armour Security summarises the principal conclusions of the judgment. It distinguishes routine administration from intelligence-based enforcement. Audit and detailed scrutiny ordinarily remain with the tax administration to which the taxpayer is assigned, thereby preserving the concept of a single interface. Intelligence-based enforcement is different. Information regarding tax evasion may reach either Central or State authorities, and the taxpayer's administrative assignment does not prevent a competent authority from acting on such intelligence. However, investigative freedom cannot result in two independent adjudications of the same subject matter. Paragraph 96 thus balances three principles: single interface in routine administration, cross-empowerment in intelligence-based enforcement, and protection against duplicate adjudication of the same dispute. Para 97 - The Supreme Court's Operational Roadmap Paragraph 97 explains how apparent overlap should be handled in practice. A taxpayer receiving a summons or communication from a second authority should not simply refuse to comply. Instead, the earlier inquiry or proceeding sh....
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....ould be disclosed in writing, with relevant particulars, so that the subsequent authority can properly examine the claimed overlap. The concerned authorities should then communicate and compare the scope of their respective actions. If the subject matters are genuinely different, both may proceed. If they are the same or overlapping, duplicate adjudication should be avoided, and the relevant documents, statements or intelligence collected by one authority can be shared with the authority continuing the matter. The practical principle is therefore simple: information can travel even where the proceeding should not. This preserves valuable evidence while protecting the taxpayer from multiple adjudications of the same dispute. The First-in-Time Principle - Important, but Not the Only Question Armour Security should not be understood as laying down a simple rule that "whoever acts first gets the case". The first question is not who issued the first summons, but what kind of action was taken-an inquiry, search or formal proceeding-and what subject matter it covered. Chronology becomes relevant only after this examination. If one authority has already initiated formal proc....
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....eedings on a particular subject matter, another authority cannot independently pursue the same or overlapping liability merely because it also possesses statutory power. Thus, "who acted first?" is relevant, but not decisive by itself. The proper approach is first to identify the nature of the action and then determine whether the subject matter of the two proceedings is the same or overlapping. When a Later Show Cause Notice Covers the Same Liability Investigations may temporarily overlap while the exact liability is still under examination. However, once the first show cause notice identifies a particular contravention and proposed liability, another authority cannot ordinarily pursue an independent adjudication of the same or overlapping liability. This is where Section 6(2)(b) assumes real significance. Its purpose is to protect the taxpayer from facing two adjudicatory proceedings that could produce duplicate or conflicting demands. Even partial overlap matters, since the same liability should not have to be defended before two different authorities. Cross-Empowerment Requires Coordination, Not Competition Armour Security also reflects the cooperative federal....
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.... structure of GST. Cross-empowerment enables Central and State authorities to act on relevant information, but it should not lead to competition to investigate or adjudicate the same dispute. The Supreme Court's emphasis on communication, coordination and sharing of evidence ensures that legitimate enforcement continues without subjecting the taxpayer to unnecessary duplication. In this sense, cross-empowerment requires coordination, not competition, among tax authorities. The Taxpayer Also Has a Responsibility - Multiplicity Is Not a Ground for Silence Armour Security also assigns responsibility to the taxpayer. When there is an overlap in actions, the taxpayer should inform the subsequent authority in writing about the prior proceeding, including relevant summons, notices, or documents. They should clearly specify the period, transactions, alleged violations, and the purported overlap in liability. Providing a clear documentary comparison allows authorities to review the objection thoroughly and bolsters the taxpayer's case if judicial review becomes necessary. However, the taxpayer cannot simply ignore summons because another authority has already intervened; th....
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....e legal process must be followed while the overlap claim is scrutinised. Article 226 Remains Available Where Coordination Fails Where a taxpayer has properly disclosed overlapping proceedings but substantially identical adjudicatory actions continue, the jurisdictional High Court can be approached under Article 226 of the Constitution. The earlier and later notices, the taxpayer's written disclosure, and the authorities' response would assist the Court in determining whether the subject matters are the same or overlapping. Thus, Armour Security does not exclude judicial review. It essentially favours administrative coordination first, with judicial intervention remaining available where necessary. One Dispute, One Adjudicatory Path - The Message of Armour Security Armour Security has brought much-needed clarity to the conflicting approaches of the High Courts. It preserves legitimate investigation by recognising that summons, search and seizure, by themselves, do not amount to the initiation of proceedings under Section 6(2)(b). At the same time, it protects the taxpayer once the same or overlapping liability arising from the same contravention becomes the su....
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....bject of formal adjudicatory proceedings. The judgment therefore strikes a practical balance: investigation may proceed, but adjudication of the same dispute should not be multiplied. Where overlap arises, disclosure by the taxpayer, communication between the authorities and sharing of relevant evidence provide the appropriate solution. Part III, the concluding part of this Article, will examine, through comparative tables, how the earlier High Court decisions stand after Armour Security, the subsequent judicial developments and the two competing lines of authority. It will then turn to the converse problem of forum shopping and bring the entire discussion together around a simple principle: powers may exist in more than one authority, but the same tax dispute should ultimately follow one fair and coordinated adjudicatory path. *** =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....