Metalax Industries vs. GST Officer Ward 66 & Ors.

Facts

The Petitioner, Metalax Industries, filed two writ petitions challenging proceedings initiated by the State Goods and Service Tax authorities. These proceedings involved Show Cause Notices (SCNs) dated August 31, 2022, and final orders passed for 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. The petitioner contended that since the Directorate General of GST Intelligence (DGGI) had already commenced an investigation for the same period, it was impermissible for the State GST authorities to proceed with their own examination and pass orders. The High Court had previously dealt with a similar issue in the case of DLF Home Developers Limited.

Held

The Court allowed the writ petitions, quashing the impugned orders dated December 29, 2023, and April 30, 2024, as well as the impugned SCNs dated August 31, 2022, for Financial Years 2017-18 and 2018-19. The Court reiterated its view expressed in the DLF Home Developers Limited cases, holding that respondent No. 1 (State GST authority) could not adjudicate a demand that was also the subject matter of proceedings initiated by the DGGI. Since the period covered by the impugned orders was subsumed within the SCN issued by the DGGI, both proceedings could not be carried on simultaneously. The Court directed that the impugned demand be set aside to the extent it overlapped with the DGGI's proceedings. The final outcome of the DGGI's investigation was stated to be subject to review, and it would be open for the State GST authorities to take steps upon the culmination of those proceedings. All rights and contentions of the respective parties on merits were kept open.

Key Issues

1. Whether the State GST authorities could initiate and adjudicate proceedings for Financial Years 2017-18 and 2018-19 when the Directorate General of GST Intelligence (DGGI) had already commenced an investigation for the same period, in light of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017? Petitioner's Arguments: The petitioner argued that Section 6(2)(b) of the CGST Act, 2017, prohibits parallel proceedings by different tax authorities for the same issue and period. They relied on the principle that once an authority has commenced an investigation, another authority cannot examine the same matter. The petitioner cited the High Court's own 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 Arguments: The judgment does not record any specific arguments made by the respondents (GST Officer Ward 66 & Ors.).