Delhi High Court Says Overlapping ITC Proceedings Not Barred Without Same Subject Matter:

The Delhi High Court has dismissed a writ petition filed by Shri Krishna Industries challenging proceedings initiated by Central GST authorities under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017. The Court held that the petitioner failed to establish that the subsequent Central GST proceedings concerned the “same subject matter” as the earlier proceedings initiated by State GST authorities under Section 73.

The petitioner had challenged Show Cause Notices (SCNs) dated August 2, 2024, and August 4, 2024, along with orders dated January 10, 2025, and January 31, 2025. It argued that the State GST authorities had already examined the Input Tax Credit (ITC) claimed from M.R. Enterprises for FY 2017-18, and, therefore, Section 6(2)(b) of the CGST Act barred the Central authorities from initiating another proceeding on the same issue.

The High Court noted that although both proceedings involved ITC claimed by the petitioner from M.R. Enterprises, the allegations forming the basis of the Central proceedings were different. The Central GST proceedings were based on an investigation and intelligence alleging fraudulent availment of ITC through invoices that were not supported by an actual supply of goods.

The Court observed that the mere fact that both proceedings related to the same financial year and involved an ITC of Rs 6.12 lakh was not sufficient to establish that they concerned the same subject matter. The Court also noted that the two Central proceedings referred to M.R. Enterprises under different GSTINs, although it clarified that the difference in GSTINs alone would not be conclusive.

The petitioner had also raised objections regarding non-consideration of its reply dated August 31, 2024, non-supply of relied-upon documents, alleged violation of natural justice and invocation of Section 74 without sufficient material establishing fraud, wilful misstatement or suppression of facts.

The High Court held that these issues required examination of the adjudication record and disputed facts. Since the impugned orders were appealable under Section 107 of the CGST Act, the petitioner could raise these grounds before the appellate authority.

Accordingly, the Court dismissed the writ petition while allowing Shri Krishna Industries to pursue the statutory appeal. It clarified that all contentions, including those concerning Section 6(2)(b), overlapping proceedings, non-supply of documents, Section 74 and the merits of the demand, interest and penalty, would remain open before the appellate authority.

The court held that "the appellate authority shall consider the aforesaid contentions independently and in accordance with law, without being influenced by any observation contained in the present judgement except to the extent expressly decided herein."