Court holds Section 6(2)(b) bars only same-subject proceedings; Section 73 demand and earlier DGGI Section 74 action were found materially different.
The Delhi High Court has dismissed a writ petition filed by M/s Vertilink Media Solutions Private Limited challenging a GST show cause notice and subsequent adjudication order raising a demand of over Rs. 10.57 crore. The company had argued that the proceedings initiated by the Delhi GST authorities were barred because the Directorate General of GST Intelligence (DGGI) had already initiated action on related transactions.
A Division Bench of Justice Anil Kshetarpal and Justice Rajneesh Kumar Gupta held that the petition was not maintainable in writ jurisdiction, particularly because the petitioner had an effective statutory remedy of appeal against the adjudication order but failed to avail it within time. The Court also noted that the writ petition was filed nearly two years after the impugned order, and the only explanation offered was the pendency of a rectification application, which the Court found insufficient to explain the delay.
The dispute arose after the petitioner was first subjected to search and investigation, which was later transferred to the DGGI, Mumbai Zonal Unit. The DGGI issued a common show cause notice on 31 March 2023 to 45 noticees, including the petitioner, alleging fraudulent availment of input tax credit. Subsequently, the Delhi GST officer issued a separate show cause notice on 29 May 2024 under Section 73 of the CGST Act for the period April 2019 to March 2020, alleging non-disclosure of correct tax liability and wrongful availment of input tax credit.
The petitioner contended that the second proceeding was barred under Section 6(2)(b) of the CGST Act, which prohibits parallel proceedings on the same subject matter by different GST authorities. It relied on the earlier DGGI action and also argued that the later proceedings could not continue once the DGGI case concluded after payment by the principal noticee.
Rejecting these arguments, the Court clarified that Section 6(2)(b) applies only when the two proceedings are in respect of the “same subject matter.” Mere overlap of the assessee, the period involved, or some transactions is not enough. The Court found that the DGGI proceedings under Section 74 concerned fraudulent availment of input tax credit without actual supply of goods or services, whereas the Delhi GST proceedings under Section 73 were directed at determining the petitioner’s correct tax liability and denial of input tax credit under Section 16(2)(c). Since the nature, statutory basis, and allegations in the two proceedings were different, the bar under Section 6(2)(b) was not attracted.
The Court further held that the conclusion of the earlier DGGI proceedings did not automatically extinguish the separate liability determined under the Delhi GST proceedings. It also rejected reliance on Section 75(13) of the CGST Act, observing that no prior penalty had been shown to have been imposed on the petitioner for the same act or omission.
Finding no jurisdictional error, no sufficient explanation for delay, and an available alternative remedy, the High Court dismissed the petition. It, however, left it open to the petitioner to pursue any remedy available in law in relation to the pending rectification application.
Bottom Line :
GST - Writ petition challenging show cause notice and adjudication order dismissed on ground of availability of alternative statutory remedy, delay and laches - Bar under Section 6(2)(b) of CGST Act applies only when two proceedings are on same subject matter - Mere overlap of assessee, period or transactions is insufficient - Proceedings under Sections 73 and 74 founded on different allegations and statutory basis are not barred as parallel proceedings - Section 75(13) not attracted in absence of prior penalty on same act or omission.
Statutory provision(s): Section 6(2)(b), Section 16(2)(c), Section 73, Section 74, Section 75(13) of the Central Goods and Services Tax Act, 2017, Article 226 of the Constitution of India, 1950
