Prohibition of Parallel Adjudicatory Proceedings under GST
1. The Core Dispute: Overlapping Jurisdiction (Section 6(2)(b))
The petitioner-firm was subjected to scrutiny and demands from both Central GST (CGST) and State GST (SGST) for the periods 2019-20 and 2020-21. The firm sought the quashing of CGST’s Show Cause Notices (DRC-01) and Orders-in-Original (OIO), arguing that a parallel inquiry by the State GST on the same subject matter was legally barred.
Assessee’s Stand: The firm argued that since the State GST was already inquiring into the same matter, the CGST had no jurisdiction to issue fresh SCNs or pass orders, as it violated the “one subject matter – one authority” principle.
Revenue’s Stand: The authorities maintained that preliminary inquiries or summons do not necessarily block another authority from acting, especially if the scope of the investigation is broader or distinct.
2. Legal Analysis: The Armour Security Doctrine
The High Court relied heavily on the landmark Supreme Court ruling in Armour Security (India) Ltd. v. Commissioner, CGST [2025]. This judgment clarified the boundaries between “investigation” and “proceedings.”
I. “Inquiry” vs. “Proceedings”
The Supreme Court established a clear distinction:
Inquiry/Investigation: Preliminary steps like summons (Sec 70), searches (Sec 67), and evidence gathering are not “initiation of proceedings.” Both Central and State authorities may conduct these in parallel to probe evasion.
Initiation of Proceedings: A proceeding is officially “initiated” only when a formal Show Cause Notice (SCN) is issued under Section 73 or 74.
II. The Bar on Parallel Adjudication
Under Section 6(2)(b), once one authority issues a Show Cause Notice on a specific subject matter, the other authority is strictly prohibited from starting a second adjudicatory process for the same issue.
III. The “Same Subject Matter” Test
To determine if the bar applies, the Court uses a Twofold Test:
Identity of Facts: Is the authority proceeding on the same tax liability or offense based on identical facts?
Identity of Demand: Is the relief or demand sought (tax, interest, penalty) identical or overlapping?
3. Key Takeaways and Guidelines
Duty of Disclosure: Taxpayers are mandated to inform both authorities in writing about any overlapping inquiries they are facing.
Authority Coordination: Once an overlap is disclosed, Central and State officers must communicate and verify the claim. If the subject matter is indeed identical, only the authority that initiated first (issued the SCN first) can proceed to adjudication.
Investigation Remains Open: While dual adjudication is barred, bona fide investigations including summons may continue as long as they do not culminate in a duplicate SCN for the same cause of action.
Judicial Remedy: If authorities fail to coordinate or ignore the bar on parallel adjudication, the taxpayer can approach the High Court under Article 226 for protection.
Summary of Guidelines for Overlapping GST Actions
| Action Stage | Status under Section 6(2)(b) |
| Summons / Search | Permissible (Multiple authorities can investigate). |
| Show Cause Notice (SCN) | Exclusive (First authority to issue SCN gains sole jurisdiction). |
| Adjudication Order (OIO) | Barred (Second authority cannot pass an order on the same matter). |
HIGH COURT OF HIMACHAL PRADESH
Saraswati Spinning and Weaving Mills
v.
State of H.P.*
Vivek Singh Thakur and Romesh Verma, JJ.
Civil Writ Petition No. 3604 of 2025
JANUARY 7, 2026
J.S. Bedi, Adv. for the Petitioner. Sushant Keprate, Additional Adv. General, Vijay K. Arora, Sr. Adv. and Hitansh Raj, Adv. for the Respondent.
ORDER
Vivek Singh Thakur, J.- Petitioner, invoking provisions of Article 226 of the Constitution of India, has filed the present Writ Petition, praying for the substantive reliefs:
| (i) | For issuance of writ of certiorari for quashing the DRC-01 issued by respondent No.2 & 3 for the period of 2019-20 and 2020-21; |
| (ii) | For issuance of writ in the nature of mandamus directing respondents not to proceed further in pursuance to DRC-01 (Annexure P-5 & P-6) for the period of 2019-20 and 2020- 21 issued by Respondent No.2 & 3 as the proceedings in question are illegal and contrary to the provisions of the Central GST Act/Himachal Pradesh GST Act and IGST Act 2017 during the pendency of this writ petition; |
| (iii) | For issuance of writ of certiorari for quashing the order dated 05.02.2025 issued by respondent No.4 (Annexure P-7) as the same was passed in consolidation for the period of 2017- 18 to 2022-23 beside this petitioner has availed the input tax credit after complying all the provisions of the Act; |
| (iv) | It is further prayed that to avoid fait accompli, pending disposal of present petition, the respondent may be directed not to take coercive steps against the petitioner firm or the similar relief may please be granted.” |
2. Main issue involved in present Writ Petition is related to prohibition contained in Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (“CGST Act”), against initiation of parallel proceedings on the same subject-matter, despite an earlier initiation of proceedings by another jurisdictional authority.
3. The aforesaid issue is no-longer res-integra, but stands substantially resolved by the Apex Court in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate GST 400/101 GSTL 289 (SC)/AIR 2025 SC 3854, which lays down binding directions regarding the scope of ‘initiation of proceedings’, ‘subject-matter’, and the ‘inter-relationship between Central and State GST authorities’. Relevant paragraphs No.96 and 97, containing conclusions including guidelines, read as under:
E. CONCLUSION
96. We summarize our final conclusion as under: –
| i. | Clause (b) of sub-section (2) of Section 6 of the CGST Act and the equivalent State enactments bars the “initiation of any proceedings” on the “same subject matter”. |
| ii. | Any action arising from the audit of accounts or detailed scrutiny of returns must be initiated by the tax administration to which the taxpayer is assigned. |
| iii. | Intelligence based enforcement action can be initiated 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 particular contravention, the bar of Section 6(2)(b) would be immediately attracted. |
| ix. | Where the proceedings concern distinct infractions, the same would not constitute a “same subject matter” even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted. x. The twofold test for determining whether a subject matter is “same” entails, first, determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and secondly, if the demand or relief sought is identical. |
97. We issue the following guidelines to be followed in cases where, after the commencement of an inquiry or investigation by one authority, another inquiry or investigation on the same subject matter is initiated by a different authority.
a. Where a summons or a show cause notice is issued by either the Central or the State tax authority to an assessee, the assessee is, in the first instance, obliged to comply by appearing and furnishing the requisite response, as the case may be. We say, so because, mere issuance of a summons does not enable either the issuing authority or the recipient to ascertain that proceedings have been initiated.
b. Where an assessee becomes aware that the matter being inquired into or investigated is already the subject of an inquiry or investigation by another authority, the assessee shall forthwith inform, in writing, the authority that has initiated the subsequent inquiry or investigation.
c. Upon receipt of such intimation from the assessee, the respective tax authorities shall communicate with each other to verify the veracity of the assessee’s claim. We say, so as this course of action would obviate needless duplication of proceedings and ensure optimal utilization of the Department’s time, effort, and resources, bearing in mind that action initiated by one authority enures to benefit of all.
d. If the claim of the taxable person regarding the overlap of inquiries is found untenable, and the investigations of the two authorities pertain to different “subject matters”, an intimation to this effect, along with the reasons and a specification of the distinct subject matters, shall be immediately conveyed in writing to the taxable person.
e. The taxing authorities are well within 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 are unable to reach a decision as to which of them shall continue with the inquiry or investigation then in such circumstances, the authority that first initiated the inquiry or investigation shall be empowered to carry it to its logical conclusion, and the courts in such a case would be competent to pass an order for transferring the inquiry or investigation to that authority.
h. If it is found that the authorities are not complying with these aforementioned guidelines, it shall be open to the taxable person to file a writ petition before the concerned High Court under Article 226 of the Constitution of India.
i. At the same time, taxable persons shall ensure complete cooperation with the authorities. It is incumbent upon them to appear in response to a summons and/or reply to a notice.”
4. The petitioner has challenged the action of the Central GST authorities as well as the State GST authorities by challenging Summary of Show Cause Notice dated 6.10.2023, FORM GST DRC-01 (Annexure P-3), Summary of Show Cause Notice dated 30.11.2023, FORM GST DRC-01 (Annexure P-4), Summary of the order dated 5.2.2025, FORM GST DRC- 07 (Annexure P-5) as well as Order-in-Original dated 3.2.2025 passed by the CGST authorities on the ground that the State GST authorities have also initiated inquiry/proceedings with respect to the same subject matter.
5. It is contended on behalf of the petitioner that in view of Section 6(2)(b) of the CGST Act, the Central Authority is barred from initiating any further proceedings with respect to the subject matter for which the State GST authority has issued the notice and is also barred by passing any order including the order dated 3.2.2025, whereas Mr. Vijay Kumar Arora, Senior Advocate has submitted that the proceedings initiated by the CGST have been culminated in the order dated 3.2.2025, which have been communicated to him through summary of order dated 5.2.2025 and, therefore, in view of the aforesaid provision, proceedings initiated by the State GST are to be closed with respect to the subject matter of the order dated 3.2.2025.
6. Learned counsel for the petitioner submits that not only the notices and the order assailed in the present petition, but the CGST and the State GST are issuing repeated notices on the same subject matter by initiating overlapping the proceedings with respect to the same subject matter.
7. The learned counsel representing the State and Central GST authorities submit that they shall abide by the statutory mandate under Section 6(2)(b) of the CGST Act and the principles laid down in paras 96 and 97 of the judgment of the Apex Court in Armour Security (India) Ltd. (supra). It has been further submitted that appropriate coordination shall be maintained between the authorities to ensure that no parallel adjudicatory proceedings take place.
8. Mr. Vijay Kumar Arora, Senior Advocate, under instructions, has referred judgments passed by various High Courts i.e. Agrawal Soya Extracts (P.) Ltd. v. UOI (Madhya Pradesh); Sensation Infracon (P.) Ltd. v. State of Telangana GST 76/102 GSTL 76 (Telangana); and Ravi Steel Industries v. UOI GST 239/103 GSTL 266 (Bombay), whereby directions were issued to the petitioner therein to present its case before the competent authorities by furnishing all the supportive documents related to summons and Show Cause Notice with a further directions to GST Authorities to decide the same in terms of para 96 and 97 of the Armour case Judgment.
9. The Apex Court, in Armour Security case, has held that once one authority, Central or State, has initiated proceedings first in point of time, any subsequent parallel adjudicatory proceedings on the same cause of action by the other authority are barred under Section 6(2)(b). The Apex Court has emphasized the need to avoid overlapping proceedings and multiplicity, while at the same time clarifying that legitimate investigative steps by either authority may continue so long as they do not result in parallel adjudication.
10. In Armour Security case, referred supra, particularly paras 96 and 97, it has been laid down that once one authority (Central or State) has initiated proceedings first in point of time, the other authority is barred from commencing parallel adjudicatory proceedings on the same subject matter; however, bona fide steps for investigation, such as summons under Section 70, are permissible unless they amount to initiation of a parallel proceeding; and any subsequent proceedings, if inconsistent with Section 6(2)(b), must give way to the proceedings first initiated.
11. The issue involved in the present case is that whether the summons/show cause notices issued by CGST and State GST are overlapping the one and the same subject matter or the order passed by the CGST with respect to the subject matter of the order dated 3.2.2025 has been re-opened either by the CGST or the State GST and both the authorities are initiating and conducting ‘parallel proceedings’ which are barred by Section 6(2)(b) of CGST Act.
12. Applying the conclusions and guidelines, contained in Armour Security case, to the facts of this case, we are of the considered opinion that no further adjudication is required, except issuing directions consistent with the law declared in Armour Security case (supra).
13. Accordingly, petition is disposed of in the following terms:
| (i) | Petitioner is directed to appear before the Central Authority and file the response of Show Cause Notice, so issued, and raise the contentions along with relevant documents in terms of the judgment passed by the Apex Court in Armour case on or before 31.01.2026. |
| (ii) | With respect to summons and intimations i.e DRC-01(A) under Rule 142 (1A) of the Act, the petitioner is directed to comply with the summons and raise the contentions available with him including informing the State Authorities regarding issuance of Show Cause Notice in terms of para 97(a) & (b) of the Armour judgment (supra). The petitioner shall respond to all lawful requisitions and assist in the inquiry/investigation as required. |
| (iii) | Thereafter, the State Authority shall communicate with the Central Authority to verify the claim of the assesse in terms of Para 97 (c) of the Armour judgment. |
| (iv) | Both authorities shall coordinate to ensure that the assesse is not subjected to multiple adjudicatory processes on the same subject matter by following verdict of the Armour Security case. |
| (v) | Thereafter, the adjudicatory authority shall proceed further in accordance with law including providing the petitioner opportunity of being heard. |
14. It is made clear that this Court has not expressed any opinion on the merits of the allegations or on the validity of the Show Cause Notice or the summons/notices. All rights and contentions of the parties are kept open. Again there is no reason to believe that such a contention or for that matter, the decision of the Apex Court in the case of Armour Security (supra), will not be considered by the authority that has issued Show Cause Notice.
15. In the present petition, validity of order dated 3.2.2025 has also been assailed but have not adjudicated the same. In view of the nature of the order passed in the present petition here-in-before, the petitioner shall have liberty to assail the order dated 3.2.2025 communicated through summary of order dated 5.2.2025 (Annexure P-5) by taking legal recourse, as admissible and permissible under law, if desired and advised so.
Pending application, if any, also stands disposed of, in aforesaid terms.