The Supreme Court ruled that summons under Section 70 of the CGST Act do not amount to initiation of proceedings under Section 6(2)(b), allowing parallel investigations by Central and State GST authorities. It also issued a detailed nine-point framework to prevent duplication and ensure smooth enforcement.
New Delhi: On August 14, the Supreme Court clarified that summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) do not amount to the “initiation of proceedings” under Section 6(2)(b) of the Act, in the case.
This decision paves the way for both Central and State GST authorities to conduct parallel inquiries during the investigation stage.
The Bench of Justices JB Pardiwala and R Mahadevan examined conflicting High Court decisions on whether “proceedings” under Section 6(2)(b) include preliminary inquiries or investigations, and whether issuing summons qualifies as “initiation” of proceedings.
The Court said,
“Issuance of summons, by no stretch, can be considered as the initiation of proceedings, since at that stage, the Department still retains the discretion not to initiate any proceedings. A mere contemplation or possibility of initiating action cannot be equated with ‘proceedings’, as doing so would undermine the framework of cross-empowerment under the Act,”
The case involved Armour Security, a public limited company providing security services, which received a show cause notice from Delhi GST authorities in November 2024 for the tax period April 2020–March 2021.
The notice alleged under-declaration of turnover and wrongful input tax credit (ITC) claims, including credits claimed from cancelled dealers.
In January 2025, officers from the CGST Delhi East Commissionerate conducted a search of the company’s premises under Section 67(2), seized electronic devices and documents, and issued summons to company directors on January 16 and 23, directing them to produce relevant records.
The company argued that Section 6(2)(b) prevents a second authority from initiating proceedings on the same subject matter if another authority has already started action.
Armour Security contended that the CGST summons addressed the same issues already under inquiry by the State GST department.
The Supreme Court clarified that “proceedings” under Section 6(2)(b) refer to formal adjudicatory processes such as assessment, demand, and penalty under provisions like Sections 73 and 74, not preliminary investigative steps.
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Summons under Section 70 are merely tools for evidence gathering and do not constitute the initiation of proceedings.
The Court stated,
“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,”
The Court further explained that the “same subject matter” test depends on the nature and scope of proceedings, not just overlapping facts or tax periods. Adjudication on the same cause of action by two authorities is barred, but investigative overlaps during the inquiry stage are allowed.
The Bench ruled,
“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,”
The judgment reaffirmed the dual principles of the GST framework — the “single interface” model, which ensures that only one authority handles adjudication for a matter, and “cross-empowerment,” which allows both Central and State authorities to act on intelligence-based enforcement across taxpayers.
To address practical issues when both Central and State authorities investigate similar matters, the Court laid down a nine-point framework. The guidelines, without altering statutory provisions, provide a procedural roadmap for authorities and taxpayers.
These include mandatory compliance by taxpayers when served with summons or show cause notices, timely disclosure of overlaps, verification between authorities, communication when claims are untenable, the right to continue inquiry until overlap is confirmed, deciding the lead authority, default rules if no agreement is reached, remedies for breach of guidelines through High Court under Article 226, and continuous cooperation from taxpayers.
On the facts of the case, the Court found that the CGST Delhi East summons were part of an independent investigative process and did not amount to “initiation of proceedings” prohibited under Section 6(2)(b).
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Therefore, the appeal was dismissed, and the Court held that the statutory bar applies only when formal adjudication has begun on the same subject matter by another authority.
The petitioners were represented by Senior Advocate Sridhar Potaraju with advocates Srinivas Kotni, Rishabh Dev Dixit, Rohit Dutta, Gaichangpou Gangmei, Akshay Kumar, Aayush, Lalit Mohan, Niharika Singh, Sai Swaroop, and Gurdeep Singh. CGST was represented by Advocate Gurmeet Singh Makker.
Case Title:
Armour Security Vs Commissioner of CGST Delhi
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