Parallel Summons by State Excise & SCN by CGST: Himachal Pradesh HC Directs Authorities to Coordinate to Avoid Multiple Adjudication [Read Order]

The Himachal Pradesh High Court recently addressed a petition concerning the prohibition of parallel proceedings under the Central Goods and Services Tax (CGST) Act, 2017, and issued directions for both the State Excise and Central Goods and Services Tax departments to work in tandem with each other to avoid multiple adjudication.

The decision came against a writ petition filed by M/s J.B. Rolling Mills Limited, challenging multiple show-cause notices and summons issued by both the Central GST authorities and the State Excise Department.

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The State Authority had first initiated its inquiry with summons and notices on February 5, 2019, and January 20, 2024. Despite this, the Central GST authorities issued parallel summons and notices on November 1, 2019, April 23, 2024, and May 11, 2024, leading to a Show Cause Notice dated February 23, 2023 issued under Section 74 of the CGST Act, 2017.

The petitioner, represented by Ajay Vaidya, put forth the challenge on the ground that inquiry has been initiated firstly by the State GST Authority in respect of the same subject matter. It was contended that in view of Section 6(2)(b) of the CGST Act, the Central Authority is barred from initiating any further proceedings.

Section 6 - Authorisation of officers of State tax or Union territory tax as proper officer in certain circumstances

(2) (b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.

Conversely, Narinder Singh Thakur, Sushant Keprate, Vijay Arora, Aastha Kohli and Hitansh Raj, appearing for the other respondents submitted that they shall abide by the statutory mandate under Section 6(2)(b) of the CGST Act and the principles laid down by the Supreme Court in Armour Security (India) V/s Commissioner, CGST, Delhi East Commissionerate & Another (2025 TAXSCAN (SC) 240).

The Bench comprising Justice Vivek Singh Thakur and Justice Sushil Kukreja examined the scope of Section 6(2)(b) in light of the Supreme Court’s ruling in Armour Security (supra) where it was clarified that while either administration - Central or State may initiate intelligence-based enforcement action, however parallel proceedings on the same subject matter are impermissible once one authority has begun investigation.

With respect to the summons and intimation notices issued in Form DRC-01A under Rule 142(1A) of the CGST Rules, the Court instructed the petitioner to comply with the summons and raise all permissible contentions before the State authorities, including informing them about the issuance of the Central show cause notice, as per paragraphs 97(a) and 97(b) of the Armour Security judgment.

Upon such intimation, the State authority was to communicate with the Central authority to verify the assessee’s claim in accordance with paragraph 97(c) of the Armour Security decision.

The High Court further clarified that no opinion on the merits or validity of the allegations of the notices or summons are being made and the rights and contentions of the parties are kept open.

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