Metalax Industries vs. GST Officer Ward 66 & Ors.

Facts

The petitioner, Metalax Industries, filed two writ petitions challenging proceedings initiated by the State GST authorities. These proceedings involved Show Cause Notices (SCNs) dated August 31, 2022, and subsequent final orders dated December 29, 2023 (for W.P.(C) 4710/2024) and April 30, 2024 (for W.P.(C) 6915/2024). The tax periods under scrutiny were Financial Years 2017-18 and 2018-19. The core of the petitioner's challenge was based on Section 6(2)(b) of the Central Goods and Services Tax Act, 2017, arguing that once a central authority (DGGI) had commenced an investigation into the same period, the State GST authorities were precluded from examining it or passing assessment orders.

Held

The Court allowed the writ petitions and quashed the impugned orders and SCNs. The Court found merit in the petitioner's contention that Section 6(2)(b) of the CGST Act, 2017, prevents parallel proceedings by different authorities for the same tax period. The Court reiterated its previous view expressed in the DLF Home Developers cases, where it held that an authority cannot adjudicate a demand that is also the subject matter of other proceedings. The reasoning was that since the period covered by the impugned orders was also subsumed in the SCN issued by the DGGI, both proceedings could not be carried on simultaneously. The Court directed that the impugned orders and SCNs be set aside. This decision is subject to the final outcome of the investigation by the DGGI. The Court clarified that it would be open for the State GST authorities to review steps upon the culmination of the DGGI's proceedings, and all rights and contentions of the parties on merits were kept open.

Key Issues

1. Whether the State GST authorities could initiate or continue proceedings for Financial Years 2017-18 and 2018-19 when the Directorate General of GST Intelligence (DGGI) had already commenced an investigation into the same period, in light of Section 6(2)(b) of the CGST Act, 2017? Petitioner's Contention: The petitioner argued that Section 6(2)(b) of the CGST Act, 2017, prohibits parallel proceedings by different tax authorities for the same tax period and issue. They contended that the SCN dated August 31, 2022, and the subsequent orders issued by the State GST authorities were impermissible as the DGGI had already initiated proceedings, as acknowledged in the impugned orders themselves. They relied on the High Court's previous decisions in DLF Home Developers Limited vs. Sales Tax Officer Class II Avato Ward 107 Special Zone 12 Delhi & Anr. and DLF Home Developers Limited v. Sales Tax Officer Class II. Revenue's Contention: The judgment does not record any specific arguments made by the respondents (GST Officer Ward 66 & Ors.) against the petitioner's primary contention based on Section 6(2)(b).