TaxTMI 
TaxTMI 
2026 (9) TMI 1365
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....es dated 02.08.2024 and 04.08.2024 issued under Section 74 of the CGST Act, as well as the Orders dated 31.01.2025 and 10.01.2025 passed pursuant thereto. 3. The principal grievance of the Petitioner is that the aforesaid proceedings constitute proceedings on the same subject matter which had already been dealt with by the State GST authorities and are, therefore, barred by Section 6(2)(b) of the CGST Act. The Petitioner also assails the Impugned Orders on the grounds of violation of principles of natural justice, non-consideration of its reply, non-supply of relied upon documents and alleged non-application of mind. FACTUAL MATRIX 4. In order to appreciate the controversy involved in the present Petition, the relevant facts, in brief, are required to be noticed. 5. The Petitioner is a proprietorship concern of Mr. Mohan Lal and is stated to be engaged in the manufacture of plastic products. The Petitioner was registered under the CGST Act as well as the Delhi Goods and Services Tax Act, 2017 ["DGST Act"] with GSTIN No. 07ACLPL9679D1Z2. Its principal place of business is stated to be situated at Plot No. E-23, Pocket-E, Sector-5, DSIIDC, Bawana, North West Delhi. 6. ....
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.... upon investigation and intelligence material gathered by the DGGI regarding availment and passing on of inadmissible ITC through invoices allegedly not accompanied by actual supply of goods. 11. A further Show Cause Notice dated 04.08.2024 was issued by Respondent No.1, CGST Delhi North, under Section 74 of the CGST Act in respect of alleged ineligible ITC availed by the Petitioner from M.R. Enterprises bearing GSTIN No. 07EJVPS7789Q1ZC. The Petitioner was included amongst the recipients against whom inadmissible ITC was proposed to be recovered. 12. The Petitioner states that it submitted a reply dated 31.08.2024 to the Show Cause Notices along with supporting documents. According to the Petitioner, the said reply specifically brought to the notice of the adjudicating authorities the earlier proceedings conducted by the State GST authority and the alleged bar contained in Section 6(2)(b) of the CGST Act. The Petitioner further asserted that the transactions were genuine, that the goods had actually been received at its premises and that there was no fraud, wilful misstatement or suppression of facts so as to warrant invocation of Section 74 of the CGST Act. 13. The proce....
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.... the Petitioner was not duly considered. Particular emphasis was placed upon the observation contained in the Order dated 10.01.2025 that the noticees had not submitted any reply, despite the Petitioner having submitted its reply along with supporting documents. It was submitted that such non-consideration constitutes violation of the principles of natural justice. 16.5. It was also contended that the relied-upon investigation material was not supplied to the Petitioner and that the Impugned Orders are non-speaking orders. It was submitted that the Petitioner had specifically disputed the allegation of bogus transactions and asserted that the goods had actually been received at its premises. 16.6. It was lastly submitted that there was no fraud, wilful misstatement or suppression of facts so as to justify invocation of Section 74 of the CGST Act. The demand and penalty imposed upon the Petitioner are, therefore, stated to be unsustainable. 17. Contentions of the Respondents 17.1. Per contra, learned standing counsel for the Respondents submitted that the challenge based upon Section 6(2)(b) of the CGST Act proceeds on an erroneous understanding of the expression "same s....
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....ioner is required to be examined in the context of Section 6(2)(b) of the CGST Act. The said provision seeks to prevent initiation of proceedings by one tax authority where proceedings on the same subject matter have already been initiated by the other tax authority. 20. The expression "same subject matter" is, therefore, of central significance. The Supreme Court in Armour Security (supra) has explained that the expression has to be understood with reference to the particular liability, deficiency or contravention which is sought to be adjudicated. Where the proceedings concern the same liability or the same contravention, the statutory bar would operate. Conversely, distinct infractions would not become the same subject matter merely because they relate to the same assessee, the same period or involve a similar tax liability. 21. The question which consequently arises is whether the proceedings initiated by the State GST authority and the subsequent proceedings initiated by the Central GST authorities concern the same liability or contravention. 22. The State proceedings in the present case were initiated under Section 73 of the CGST Act in respect of Financial Year 2017....
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....on invoked is undoubtedly correct as a general proposition. However, the applicability of Section 6(2)(b) cannot be determined merely by comparing the provisions under which the proceedings have been initiated. The underlying liability and contravention have to be examined. 29. In the present case, the subsequent proceedings under Section 74 are founded upon intelligence and investigation concerning alleged bogus transactions and fraudulent availment of ITC without actual supply of goods. The Petitioner has not placed sufficient material before this Court to establish that this very contravention had already been adjudicated upon by the State GST authority in the proceedings culminating in the order dated 29.07.2024. 30. The reliance placed by the Petitioner upon the judgment of this Court in Metalax Industries (supra) does not advance its case. The applicability of Section 6(2)(b) necessarily depends upon the identity of the subject matter of the two proceedings. The said provision cannot be invoked merely because the two proceedings have some common factual background or relate to the same assessee and period. 31. The judgment of the Supreme Court in Armour Security (sup....
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....t. The remaining objections essentially concern the correctness of the adjudication and are capable of being examined by the appellate authority. 38. The contention of the Petitioner regarding the alleged duplication between the two Central proceedings also cannot, in the present proceedings, furnish a basis for interference with the impugned orders. The two proceedings refer to M.R. Enterprises bearing different GSTINs and the Respondents assert that they arise from separate investigative material. Whether any liability has, in fact, been duplicated or whether the two proceedings concern identical transactions is a matter which would require examination of the respective Show Cause Notices and adjudication records. 39. The Petitioner is, therefore, not precluded from raising the aforesaid contention before the appellate authority. The statutory appellate authority, while examining the appeals, would be competent to consider the complete record and determine whether there is any duplication or overlapping liability in accordance with law. 40. This Court has also considered the Petitioner's submission that Section 74 could not have been invoked in the absence of material es....