The Supreme Court in the case, Armour Security (India) ltd. Vs. Commissioner, CGST, Delhi East Commissionerate and Ors. through a Special Leave Petition (C) No. 6092 of 2025 decided on 14.08.2025, held that the restriction imposed under Section 6 (1)(b) of CGST Act on parallel proceedings is triggered when a Show Cause Notice (hereinafter referred to as “SCN”) is issued and not by Summons, search or seizure.
FACTS
Armour Security (India) Ltd., (herein referred as “the Petitioner”), is a public limited company which is registered with the Delhi GST authorities and is engaged in the business of providing security services.
The State GST Authority, (herein referred as “the Respondent 2”), on 18.11.2024 issued a SCN to the Petitioner, under Section 73 of the CGST Act. The SCN stating the tax period of April 2020 – March 2021raised a demand of Rs. 1,24,92,162/- (aggregate of CGST, SGST, IGST) alongside the applicable interest and penalty, imposed under Section 50 and 74 of the CGST Act respectively. The Respondent issued SCN was issued on the grounds of under declared tax credit and excess claim of Input Tax Credit.
Consequently, the Central GST Authority, (herein referred as “the Respondent 1”), initiated actions against the Petitioner. On 16.01.2025, the CGST authorities conducted a search at the Petitioner’s residence, seizing electronic gadgets and documents. In addition, a summon under Section 70 of the CGST Act was issued by the CGST authorities to the directors of the Petitioner’s company.
Further, the Petitioner, on date 23.02.2025, was issued another summon which directed the directors to present the documents in question, to which the Petitioner responded with a letter. The letter was served to the Respondent 1 on 24.01.2025, stating that tha Petitioner is already being investigated by the SGST authorities regarding the similar matter, including ITC claimed from cancelled suppliers. The Petitioner also requested the release of the seized documents and devices.
The Petitioner approached the High Court of Delhi challenging the summons through a writ petition. He contested on the ground of Section 6(2)(b) of the CGST Act, that the Respondent 1 has no jurisdiction to initiate parallel proceedings as the Respondent 2 has already started an investigation on the same subject matter, hence the bar.
The High Court rejected the Petitioner’s claim stating that issuing summon is only a form of inquiry and a precursor to the formal proceedings. Summon does constitute the ‘initiation of proceedings’ rather is intended to elicit. The Petitioner hence filed a Special Leave Petition in the Supreme Court challenging the High Court’s decision.
ISSUES BEFORE THE SUPREME COURT
- Whether or not both the Respondents initiated proceedings for the same subject matter?
- Whether or not issuing summons is counted as initiating proceedings?
CONTENTIONS OF THE PARTIES
The Appellant argued that the investigation initiated by the Respondent 1 was not in line with ascertained law given under Section 6(1)(b) of the CGST Act and this has contravened the legislative intent of the legislated law. The Appellant’s core argument was based on the interpretation of the initiation of any proceedings on the “same subject matter” when proceedings have already been brought into action by one authority, in this case by the state authority.
They substantiated their claim by arguing that that the subject matter that is, the availability of the Input Tax Credit in respect of cancelled supplies was same as the issue that was covered under the summons issued by the state GST authority, thus violating the principle of cooperative federalism.
The Appellant laid emphasis on the phrase “any proceedings” shall be given a wider scope to make all actions inclusive within the GST enactment. The Appellant relied on the Supreme Court decision in the case of Mohammed Salim v. CIT, (2008) 11 SCC 573. Further, they also relied on the Supreme Court’s decision in Chief Commissioner of Central Goods and Service Tax v. Safari Retreats Pvt. Ltd. (2025) 2 SCC 523 to bring focus on the CGST Act being an self-contained code which must be interpretated in a literal, plain and strict manner, therefore “any proceedings” done parallelly shall be prohibited.
They also drew the court’s attention to the common GST portal reflecting the status of all the proceedings undertaken by the state authority were made aware to the central GST authority as well. Heavy reliance was placed on the Central board of Excise and Customs Circular dated 05.10.2018 which clarifies that the authority which initiates an intelligence-based enforcement action is empowered to get done with entire process, implying another authority must restrict themselves from undertaking any action.
On the other side, the Respondents relied their argument on upholding the High Court’s distinction between a preliminary inquiry and any formal proceedings. They argued that the actions taken by both the authorities were not barred by Section 6(2)(b) of the CGST Act.
The Respondents contested this interpretation aligns with the intention of the statute to prevent dual assessment proceedings which are initiated under Sections 73 and 74, rather than the initial evidence collection as done here in this matter.
They further argued that the expression “any proceeding” shall be interpreted narrowly and thus it does not include any search, investigation or issuances of summons. The Respondent added that a summons is merely a tool to elicit information and it serves as a precursor to formal proceedings which begins only after a SCN is served.
The High Court in its ruling supported the Respondent’s claim citing that the case relied by the Petitioner, Vivek Narsaria v. State of Jharkhand (2022) MANU/JH/0030/2024, was different as both the authorities conducted parallel inquiries that required the assessee to reverse the Input Tax Credit which is a formal action.
DECISION AND FINDING
The Supreme Court ruled in the favour of the Respondents, ultimately upholding the decision ruled by the High Court of Delhi. The Supreme Court affirmed that the High Court was right in validating the summons issued by the Central GST Authority. The court stated that the interpretation of Section 6(2)(b) of the CGST Act, refers exclusively to the formal proceedings initiated after the issuance of Show Cause Notice through the phrase “initiation of any proceedings”. The Court ruled that Section 6(2)(b) of the CGST Act does not encompass preliminary steps taken like issuance of summons, or conducting any search, or seizures.
The Supreme Court appreciated the decision given by the High Courts of Allahabad in the case of G.K. Trading v. Union of India and Ors. (2020) MANU/UP/2373/2020 and High Courts of Kerala in K.T. Saidalavi v. State Tax Officer, (2024) MANU/KE/3819/2024, who held the similar reasoning that a summon does not institute a part of formal proceedings.
In relation to “same subject-matter”, the court clarified that it refers to specific defiance, deficiency, tax liability or obligation arising from a contravention that the department aims to recover. A two-fold test was established by the court to determine if the subject -matter is “same” or not. First, whether an authority has already initiated on an identical tax liability or alleged offence based on the same facts and circumstances, Secondly, whether the demand or relief sought is identical.
The court cited other cases including the case of Vallabh Das v. Dr. Madan Lal, (1970) 1 SCC 761 to support its interpretation. The court concluded that since Central GST Authority only issued summons and not the SCN, no formal proceedings has been initiated and thus the bar under Section 6(2)(b) is not attracted in this case.
AMLEGALS REMARKS
The Supreme Court in this case gave a judgement that was necessary to dilute the complexity and define the interpretation of Section 6(2)(b) to balance the tax enforcement and taxpayer protection. By this ruling, the court maintains an operational space for both the Central and State GST authorities to conduct investigation based on intelligence and also struck down the chances of legal paralysis which would occur if every initial inquiry would have been barred by a parallel action.
This judgement prevents the meagre stifling of inquires ensuring that the investigation and evidence-gathering stage remains permissible even when a related though distinct case is already in existence. Albeit the ruling relies only on the issuance of SCN as the trigger for the bar brings a burden on taxpayer to stay vigilant and prevent the potential overlaps. Eventually this judgement is a mix of efforts trying to define the boundaries of the legislative interpretations and enabling a robust strategy for tax related matters.
Incase of any query, please feel free to reach out to shreya.verma@amlegals.com