TaxTMI 
TaxTMI 
Parallel Proceedings Under GST: When Overlap Is Not the Same as "Same Subject Matter"
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....arallel Proceedings Under GST: When Overlap Is Not the Same as "Same Subject Matter"<br>By: - Raj Jaggi<br>Goods and Services Tax - GST<br>Dated:- 24-9-2026<br>Section 6(2)(b) Turns on Identity of Contravention, Not Mere Procedural Overlap The judgment in Shri Krishna Industries Through It Proprietor Prop Mohan Lal Versus Commissioner of Central Goods And Services Tax And Ors. - 2026 (9) TMI 1365 - DELHI HIGH COURT, addresses a recurring issue under GST: whether one tax authority can proceed when another has already initiated proceedings involving the same taxpayer, same period, same supplier and same amount of Input Tax Credit. The petitioner invoked Section 6(2)(b) of the CGST Act, 2017 to contend that the Central GST authorities could not initiate proceedings under Section 74 after the State GST authority had already adjudicated ITC from M.R. Enterprises. The Delhi High Court rejected the challenge, holding that the statutory bar applies only when the proceedings are on the "same subject matter". A mere overlap of assessee, financial year, supplier name or ITC amount is not enough. The judgment is important because it clarifies that the phrase "same subject ma....
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....tter" must be understood with reference to the precise liability or contravention sought to be adjudicated. This approach prevents duplication while ensuring that a different and more serious infraction, such as fraudulent availment of ITC without actual supply, is not blocked merely because an earlier proceeding touched upon the same ITC claim in a broader or different context. Earlier Section 73 Proceedings Do Not Automatically Bar Subsequent Section 74 Proceedings The petitioner, Shri Krishna Industries, was a proprietorship concern engaged in manufacturing plastic products and registered under both the CGST Act and the DGST Act. The dispute arose over ITC allegedly availed on invoices issued by M.R. Enterprises. The State GST authority had earlier initiated proceedings for FY 2017-18. The State GST authority issued a Show Cause Notice dated 23.09.2023, proposing, among other things, a demand in respect of ITC claimed from M.R. Enterprises. An order was passed on 28.12.2023. In earlier proceedings, the petitioner approached the High Court, which directed the proper officer to re-adjudicate the matter after granting a personal hearing and passing a fresh speaking order. ....
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....Pursuant to that direction, the State authority passed a fresh order dated 29.07.2024. Thereafter, the Central GST authorities/DGGI initiated separate proceedings under Section 74 of the CGST Act. The authorities issued SCNs dated 02.08.2024 and 04.08.2024, alleging inadmissible ITC from M.R. Enterprises. These notices were founded on investigation and intelligence material indicating that invoices had allegedly been issued without actual supply of goods. The proceedings culminated in orders dated 31.01.2025 and 10.01.2025, confirming a demand of Rs. 6,12,000/- along with applicable interest and penalty. The petitioner challenged the Central SCNs and orders before the High Court. The principal grievance was that the State authority had already dealt with the ITC claimed from M.R. Enterprises; therefore, the Central proceedings were barred by Section 6(2)(b). The petitioner also raised objections regarding duplication, non-consideration of reply, non-supply of relied-upon documents, non-speaking orders, and wrongful invocation of Section 74. "Same Subject Matter" Means Same Liability or Same Contravention Section 6(2)(b) of the CGST Act, 2017 is intended to prevent paral....
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....lel proceedings by Central and State tax authorities on the same subject matter. It aims to avoid dual harassment and inconsistent adjudication where one authority has already taken up the same issue. However, the difficulty lies in determining what "same subject matter" means. Does it mean the same taxpayer? Same period? Same supplier? Same ITC amount? Or the same legal contravention and liability? The Court adopted the last approach. The expression "same subject matter" was understood to refer to the particular liability, deficiency or contravention sought to be adjudicated. If the two proceedings concern the same liability or the same contravention, the bar would operate. But if the proceedings arise from distinct infractions, they do not become the same subject matter merely because some surrounding facts overlap. This interpretation gives Section 6(2)(b) a functional and balanced meaning. It prevents authorities from splitting or repeating the same case, but it does not prevent investigating a distinct allegation merely because the same ITC entry appeared in an earlier proceeding. Change of Provision Is Irrelevant Unless the Underlying Contravention Is Also Differe....
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....nt The petitioner argued that the Department could not overcome Section 6(2)(b) merely by shifting the provision from Section 73 to Section 74. This argument is sound as a general proposition. If the underlying issue is the same, the Department cannot avoid the statutory bar simply by invoking another section. However, the Court found that the present case was not merely about a change of provision. The State proceedings under Section 73 concerned an ITC demand involving M.R. Enterprises. The subsequent Central proceedings under Section 74 were based on an investigation and intelligence alleging fraudulent availment of ITC through invoices not accompanied by actual supply of goods. Thus, the distinction was not cosmetic. Section 74 was invoked because the Central case was based on fraud-related allegations, including bogus transactions and ITC availment without supply. The Court found that the petitioner had not shown that the State authority had already adjudicated this contravention in the order dated 29.07.2024. The difference between Sections 73 and 74 mattered because the nature of the allegation mattered. Section 73 generally deals with non-fraud cases, whereas Se....
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....ction 74 deals with cases involving fraud, wilful misstatement or suppression. Where the subsequent proceeding is founded on an investigation into fraudulent availment, it cannot automatically be treated as a duplicate of an earlier general ITC proceeding. Common Assessee, Period, Supplier or Amount Does Not Establish Statutory Bar A major plank of the petitioner's case was that both sets of proceedings involved the same assessee, the same financial year, the same supplier, and the same ITC amount of Rs. 6,12,000/-According to the petitioner, this showed identity of subject matter. The Court rejected this approach. Similarity of amount or period may be relevant, but it is not conclusive. Section 6(2)(b) requires identity of the liability or contravention. Proceedings may involve the same ITC figure yet concern different legal questions. One proceeding may examine eligibility or mismatch, while another may examine whether the underlying transaction was fraudulent or unsupported by actual supply. The judgment therefore shifts the inquiry from surface similarity to substantive identity. The question is not simply whether the proceedings look similar; it is whether they....
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.... adjudicate the same contravention. If the later proceeding examines a distinct allegation arising from a subsequent investigation, the statutory bar may not apply. GSTIN Difference Is Relevant but Not Conclusive of Separate Subject Matter The two Central proceedings referred to M.R. Enterprises, bearing different GSTINs, namely GSTIN No. 07BDIPS1163G1ZI and GSTIN No. 07ejvps7789q1zc. The Department argued that the two proceedings arose from separate investigative material and related to different GSTINs. The Court treated the difference in GSTINs as a relevant circumstance, though not conclusive on its own. This is a practical and nuanced approach. In GST, the trade name may be the same or similar, but GSTINs may reveal different registrations, persons or transaction streams. At the same time, a GSTIN difference alone cannot mechanically decide the question. The real inquiry remains the nature of liability, transactions and the alleged contravention. Therefore, whether the two Central proceedings duplicated liability or concerned identical transactions was left for the appellate authority to examine. This required a comparison of the respective SCNs, adjudication recor....
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....ds and investigation material, which could not be effectively undertaken in writ jurisdiction on a limited record. Armour Security Supplies the Controlling Test under Section 6(2)(b) Both sides relied on the principle laid down by the Supreme Court in M/s ARMOUR SECURITY (INDIA) LTD. Versus COMMISSIONER, CGST, DELHI EAST COMMISSIONERATE & ANR. - 2025 (8) TMI 991 - Supreme Court. The Department relied on it to contend that proceedings involving distinct infractions are not barred merely because certain facts overlap. The petitioner relied on it to support the broader argument against parallel proceedings. The Court treated Armour Security as laying down the controlling principle: the statutory bar operates only where the proceedings concern the same subject matter. Where the proceedings arise out of distinct infractions or liabilities, the mere existence of a common factual or transactional background does not attract Section 6(2)(b). The petitioner also relied on Metalax Industries Versus GST Officer Ward 66 & Ors. - 2024 (12) TMI 438 - DELHI HIGH COURT. The Court held that Metalax did not advance the petitioner's case because the applicability of Section ....
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....6(2)(b) depends on the identity of the subject matter. It cannot be invoked merely because two proceedings have some common factual background or relate to the same assessee and period. The case law discussion therefore reinforces a clear test: Section 6(2)(b) is not triggered by overlap alone; it is triggered by the identity of the matter adjudicated. Natural Justice Objections Require Examination of the Adjudication Record The petitioner also raised serious procedural objections. It was argued that the reply dated 31.08.2024 had not been considered, the relied-upon documents had not been supplied, and the orders were non-speaking. Particular emphasis was placed on the order dated 10.01.2025, which recorded that the noticees had not submitted any reply, despite the petitioner's claim that the reply and supporting documents had been filed. The Court did not dismiss these objections on merits. Instead, the Court held that they required examination of the adjudication record. Whether the reply was actually filed, whether it was considered, whether the documents were supplied, and whether the adjudicating authority dealt with the defence properly were all matters suita....
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....ble for appellate scrutiny. This part of the judgment is important. The writ petition failed, but the petitioner's natural justice objections were not extinguished. The Court kept them open for the statutory appellate authority. Thus, the Court declined to convert writ jurisdiction into first appellate review, but preserved the taxpayer's right to raise these grounds in appeal. Existence of Fraud or Suppression Is a Merits Issue for Statutory Appeal The petitioner contended that Section 74 could not have been invoked because there was no fraud, wilful misstatement or suppression. It also asserted that the transactions were genuine, the goods were actually received, and ITC was validly availed. These contentions go to the heart of the adjudication under Section 74. However, they require appreciation of facts, documents, investigation material and the taxpayer's defence. The Court therefore treated them as issues for statutory appeal. This approach reflects a consistent writ principle. Where a jurisdictional defect is apparent on the face of the record, writ interference may be justified. But where the dispute turns on factual evaluation, including genuinen....
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....ess of transactions, receipt of goods, satisfaction of Section 16 conditions, or existence of fraud, the appellate authority is ordinarily the proper forum. The judgment therefore does not approve the Department's fraud allegation on the merits. It simply holds that such issues cannot be finally examined in writ proceedings at that stage. Appellate Remedy under Section 107 Prevails Where Disputed Facts Dominate The impugned orders dated 10.01.2025 and 31.01.2025 were appealable under Section 107 of the CGST Act, 2017. The Court acknowledged that the existence of an alternate remedy does not render a writ petition non-maintainable in every case. However, where the dispute involves the adjudication record and disputed facts, the High Court ordinarily does not exercise extraordinary jurisdiction under Article 226 in substitution of a statutory appeal. The principal jurisdictional objection based on Section 6(2)(b) was found unsustainable on the material placed before the Court. Once that objection failed, the remaining issues were essentially appellate. They concerned the correctness of the adjudication, consideration of the reply, supply of documents, duplication of d....
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....emand, invocation of Section 74, and the merits of tax, interest, and penalty. Accordingly, the Court dismissed the writ petition with liberty to file a statutory appeal. Importantly, the Court kept all contentions open and directed the appellate authority to consider them independently and in accordance with law. Duplication Must Be Tested on SCNs, Records and Actual Liability The ruling carries an important caution for taxpayers. When invoking Section 6(2)(b), it is not enough to show that two proceedings relate to the same period, supplier name or amount. The taxpayer must demonstrate that the very same liability or contravention has already been dealt with by another authority. This requires careful comparison of SCNs, allegations, statutory provisions, investigation material and adjudication findings. A broad assertion of overlap may not be sufficient. The taxpayer must show identity of subject matter, not merely similarity of facts. At the same time, the judgment gives taxpayers a clear route to raise genuine concerns about duplication. If two proceedings result in overlapping liability or double demand, the taxpayer can raise this contention before the appella....
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....te authority with reference to the complete record. Distinct Fraud-Based Proceedings Are Not Barred Merely Because Earlier ITC Proceedings Existed For the Department, the judgment confirms that Section 6(2)(b) does not bar legitimate proceedings based on distinct contraventions. If a subsequent investigation reveals fraudulent ITC availed without actual supply, Central authorities are not automatically barred merely because State proceedings earlier dealt with some aspect of ITC. However, the Department must still demonstrate that the subsequent proceeding concerns a distinct contravention. A mere change from Section 73 to Section 74 will not suffice if the underlying subject matter is identical. The substance of the allegation, not the label of the provision, will determine the applicability of Section 6(2)(b) of the CGST Act, 2017. The judgment therefore protects genuine investigation while discouraging duplicative or repetitive adjudication. Section 6(2)(b) Protects Against Repetition, Not Against Distinct Liability The central lesson from Shri Krishna Industries is that GST law recognises the distinction between factual overlap and legal identity. Proceedings ....
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....may share a taxpayer, supplier, period or amount yet remain distinct if the contraventions differ. Conversely, proceedings cannot be repeated merely by changing the statutory label if the same liability has already been adjudicated. The Court's approach gives Section 6(2)(b) a disciplined meaning. It prevents parallel proceedings on the same matter but does not allow the provision to become a shield against investigating fraud-based allegations that were not earlier adjudicated. The writ petition failed because the petitioner could not establish that the State proceedings and the Central Section 74 proceedings involved the same subject matter. Nevertheless, the door remained open for appellate scrutiny on natural justice, duplication, invocation of Section 74 and the merits of the demand. The judgment therefore balances two competing concerns: protection against duplicative proceedings and preservation of the Department's authority to pursue distinct GST contraventions discovered through investigation. *** =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....