HC Allows Petition Against Duplicate GST Show-Cause Proceedings

The High Court held that parallel GST proceedings by different tax authorities on the same subject matter are impermissible once proceedings have already been initiated by a competent authority under the CGST framework. The Court quashed the Show Cause Notice and summons issued by the Directorate General of GST Intelligence (DGGI), Coimbatore Zonal Unit, against M/s DP Jain & Co. Infrastructure Private Limited.

A Division Bench observed that Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 bars the initiation of parallel proceedings by another authority where a proper officer has already initiated action on the same issue. The dispute arose after the Maharashtra State Tax authorities had already commenced investigation proceedings against the assessee for the relevant tax period.

Subsequently, the DGGI, Coimbatore Zonal Unit issued summons and Show Cause Notice No. 02/2025-GST concerning the very same subject matter. The assessee challenged the proceedings, contending that once the State Tax authorities had seized jurisdiction, the Central authorities could not simultaneously continue separate proceedings on identical issues.

The High Court observed that the subsequent proceedings initiated by the DGGI were hit by the statutory prohibition against parallel proceedings under Section 6(2)(b) of the CGST Act.

The petitioner had also challenged the constitutional validity of Rule 28(2) of the GST Rules, contending that the provision was ultra vires. However, the Court declined to interfere with the rule and held that framing and amendment of fiscal and administrative rules fall within the policy domain of the Government, particularly in matters concerning revenue administration.

The Bench reiterated that courts exercise limited judicial review in matters involving economic and taxation policy unless clear arbitrariness or illegality is established.

Accordingly, while refusing to strike down Rule 28(2), the High Court allowed the petition in part and quashed the Show Cause Notice and summons issued by the DGGI, Coimbatore, holding that the proceedings could not continue once the State GST authorities had already initiated action on the same cause of action.