SC to Examine Validity of Central SCN When State Proceedings Close Without Adjudication

Interpretation of Section 6(2)(b): Does the statutory bar on parallel proceedings prevent Central GST authorities from issuing a Show Cause Notice (SCN) on a subject matter for which State GST authorities had already issued an SCN, even if the State proceedings were subsequently “closed without adjudication”?
Application of Precedent: Does allowing the Central SCN in such circumstances contradict the Supreme Court’s ruling in Armour Security, which emphasizes the “single interface” principle to prevent multiple authorities from harassing a taxpayer?

The Dispute: The assessee, South Eastern Coalfields Limited, was facing scrutiny regarding a substantial tax liability (approx. ₹120 Crores).
Central Action: The Central GST authorities conducted an inspection and issued a payment memo demanding the tax.
State Action: The State GST authorities subsequently issued a formal Show Cause Notice (SCN) on the same subject matter.
Closure: The State GST proceedings were eventually “closed without adjudication”—meaning no final assessment, penalty, or recovery order was passed by the State officer.
Central SCN: Following this, the Central GST authorities issued their own SCN.
Assessee’s Challenge: The assessee challenged the Central SCN before the High Court, arguing that once the State had initiated proceedings (by issuing an SCN), Section 6(2)(b) barred the Central authority from initiating any proceeding on the same subject matter.

The High Court ruled in favour of the Revenue (allowing Central proceedings) on two grounds:

No Adjudication = No Bar: Since the State’s SCN was closed without adjudication (i.e., no order on merits was passed), the Court held that the bar under Section 6(2)(b) did not apply. The rationale was that Section 6(2)(b) prevents concurrent proceedings or double orders, but does not prevent a fresh proceeding if the first one was aborted without result.
Prior Initiation: The Court noted that Central authorities had inspected and issued a payment memo before the State issued its SCN, implying the Centre had “initiated” the investigation first.

The Assessee approached the Supreme Court, arguing that the High Court’s reasoning contradicts the single interface mechanism mandated by the GST Council and upheld in the Armour Security judgment.
The Supreme Court found merit in examining the legal question and issued notice to the Revenue. The matter is now sub judice.

The “Single Interface” Dilemma: GST law promises a single interface (either State or Centre) for taxpayers. This case tests the limits of that promise—can the department switch interfaces if one authority drops the ball without a final order?
“Initiation” of Proceedings: The definition of when a proceeding is “initiated” (Inspection vs. SCN) remains a contentious issue in jurisdictional battles between Centre and State.
Section 6(2)(b) Scope: The Supreme Court’s final decision will clarify whether “closed without adjudication” resets the jurisdictional clock or if the issuance of the first SCN permanently locks the jurisdiction with that specific authority.
Impact on Taxpayers: If the SC upholds the High Court’s view, taxpayers could face sequential enquiries from different authorities if the first one doesn’t result in a formal order, potentially increasing compliance burdens.