SC: Summons u/s 70 not “initiation of proceedings” under Section 6(2)(b) of CGST Act

The petitioner, a company dealing with security services, was served a show cause notice dated 18.11.2024 under Section 73 of the CGST Act for the financial year April 2020 to March 2021. The notice suggested a demand of Rs.1.24 crore together with interest under Section 50 and penalty under Section 74. Thereafter, on 16.01.2025, a search under Section 67(2) was conducted at its office, and documents and electronic records were seized. Section 70 summons were issued to its directors as well.
The company objected, submitting that since another authority had already initiated proceedings on similar issues, further summons were barred under Section 6(2)(b). The assessee company thereby requested the return of seized materials and moved the High Court, which dismissed its writ petition. Aggrieved, the company approached the Supreme Court.

Issue Before SC
Whether a summons under Section 70 can be regarded as “initiation of proceedings” under Section 6(2)(b) where another authority has already acted on the same subject matter.

SC’s Decision: The Court held that summons under Section 70 are an inquiry tool and, by themselves, do not constitute “initiation of proceedings” within Section 6(2)(b). On the facts, the taxpayer had a Section 73 show-cause notice from one authority and later faced a search/summons by another on similar aspects. The Court clarified that Section 6(2)(b) is not attracted merely because summons have been issued; the bar operates to prevent parallel substantive proceedings on the very same subject matter once one authority has actually initiated them, but a summons, being only a step to obtain information, does not, per se, trigger that bar. Therefore, the dismissal of the challenge to the summons was affirmed.

To reduce taxpayer hardship and avoid institutional friction, the Court laid down operational guidelines. Where overlap is evident, a nodal officer (not below Additional/Joint Commissioner) must promptly decide which authority proceeds; the second authority should ordinarily stand down, unless exceptional circumstances warrant limited action. If the first-seized authority is already undertaking inquiry/investigation on the same subject matter and period, it should carry it to its logical conclusion, with coordinated data-sharing to prevent duplication. Non-compliance with these directions may be addressed by writ before the jurisdictional High Court, and taxpayers are expected to cooperate with summons/notices. The Court also suggested strengthening common IT systems for real-time visibility and coordinated intelligence between Central and State formations.

The special leave petition was disposed of accordingly, with any other pending applications as dismissed.

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