South Eastern Coalfields Limited vs. Principal Commissioner

Held

The Court held that Section 6(2)(b) of the CGST Act prohibits a proper officer under the CGST Act from initiating proceedings on a subject matter if a proper officer under the State GST Act has already initiated proceedings on the same subject matter. However, the Court clarified that for Section 6(2)(b) to apply, there must be some adjudication proceedings, which include assessment proceedings, proceedings for penalties, or proceedings for demands and recovery under Sections 73 and 74. In the present case, the Central GST authorities initiated the first proceeding on August 27, 2021, by conducting an inspection. The proceedings initiated by the State GST authorities were either closed or not proceeded with without any adjudication. Therefore, the Court found that the proceedings initiated by the Central GST were not barred by Section 6(2)(b). The Court agreed with the learned Single Judge's decision to dismiss the writ petition, finding no merit in the writ appeal.

Facts

South Eastern Coalfields Limited (SECL), the appellant, is challenging a High Court order that dismissed its writ petition. The writ petition had challenged a show cause notice dated January 6/16, 2023, issued by the Additional Commissioner (Preventive), CGST, Raipur, under Section 73 of the CGST Act. SECL was engaged in mining and was subject to GST. An inspection under Section 67(1) of the CGST Act was conducted by Central GST authorities on August 27, 2021, concerning non-payment of GST under Reverse Charge Mechanism (RCM) on Development Cess and Environment Cess for the period July 2017 to August 2021. Subsequently, various notices (DRC-01, DRC-02) were issued by both Central and State GST authorities, and replies were filed by SECL. Proceedings were closed and reopened at different stages, with some being dropped without adjudication. The core of the dispute lies in whether the show cause notice issued by the Central GST authorities was barred by Section 6(2)(b) of the CGST Act due to prior proceedings initiated by State GST authorities.

Key Issues

1. Whether the show cause notice dated 6/16-1-2023 issued by the Additional Commissioner (Preventive), CGST, Raipur, under Section 73 of the CGST Act, is barred by Section 6(2)(b) of the CGST Act, considering prior proceedings initiated by State GST authorities? Petitioner's arguments: The appellant contended that the show cause notice is barred by Section 6(2)(b) of the CGST Act because earlier show cause notices had already been issued and subsequently closed by orders dated April 27, 2022, and June 13, 2022. They relied on decisions from the Allahabad High Court in G.K. Trading Company v. Union of India and others and the Madras High Court in Kuppan Gounder P.G. Natarajan v. Directorate General of GST Intelligence, New Delhi. Respondents' arguments: The State GST authorities argued that the inspection by Central GST was conducted before the issuance of DRC-01 by the State GST. They contended that mere issuance of DRC-01 does not constitute initiation of proceedings, and issuance without DRC-01A (when mandatory) does not constitute proper proceedings to act as a bar under Section 6(2)(b). They also argued that there was no adjudication by State authorities for dropping proceedings. They relied on the Allahabad High Court's decision in G.K. Trading Company and the Orissa High Court's decision in Sonam Berlia v. State of Odisha.