M/S Armour Security (INDIA) LTD. vs. Commissioner, CGST, Delhi East Commissionerate & Anr.

Held

The Supreme Court held that Section 6(2)(b) of the CGST Act bars the initiation of any proceedings on the same subject matter if proceedings have already been initiated by another tax administration. However, the Court clarified that 'proceedings' within the meaning of Section 6(2)(b) refer to the formal commencement of adjudicatory proceedings, such as the issuance of a show cause notice. Actions like issuing summons, conducting searches, or seizures are considered part of an inquiry or investigation to gather evidence and do not constitute 'proceedings' in themselves. The Court reasoned that at the stage of issuing a summons, the department is primarily engaged in gathering information regarding a possible contravention, and it is yet to be determined whether formal proceedings should be initiated. Therefore, the mere issuance of a summons cannot be equated with proceedings barred under Section 6(2)(b). The Court affirmed the High Court's decision that the issuance of summons is a precursor to formal proceedings and does not violate Section 6(2)(b). The Court also issued detailed guidelines for handling parallel inquiries and investigations by different tax authorities to avoid duplication and ensure efficient resource utilization.

Facts

The petitioner, M/s Armour Security (India) Ltd., engaged in security services, received a show cause notice on November 18, 2024, from Respondent No. 2, demanding Rs. 1,24,92,162/- under Sections 50 and 74 of the CGST Act, 2017. Subsequently, on January 16 and 23, 2025, Respondent No. 1 issued summons to a director of the petitioner, requesting the production of relevant documents. Aggrieved by these summons, the petitioner filed a writ petition before the High Court, arguing that Respondent No. 2 had already investigated the same issue, and Respondent No. 1 lacked jurisdiction under Section 6(2)(b) of the CGST Act. The High Court dismissed the writ petition, holding that the term 'any proceeding' in Section 6(2)(b) does not include searches or investigations, and that summons are precursors to formal proceedings.

Key Issues

1. Whether the issuance of summons by Respondent No. 1, under Section 70 of the CGST Act, 2017, constitutes 'initiation of any proceedings' within the meaning of Section 6(2)(b) of the CGST Act, 2017, thereby barring Respondent No. 1 from proceeding when Respondent No. 2 had already initiated proceedings by issuing a show cause notice under Section 73 of the CGST Act, 2017, on the same subject matter? Petitioner's Argument: The petitioner contended that since Respondent No. 2 had already initiated proceedings by issuing a show cause notice concerning the same issue, Respondent No. 1 was barred from initiating further proceedings under Section 6(2)(b) of the CGST Act, as it would amount to parallel proceedings on the same subject matter. The issuance of summons by Respondent No. 1 was seen as an initiation of proceedings. Revenue's Argument: The revenue argued that the issuance of summons is part of an inquiry or investigation to gather information and does not constitute 'proceedings' as contemplated under Section 6(2)(b). They contended that 'proceedings' are formally initiated only upon the issuance of a show cause notice. The High Court's dismissal of the writ petition was upheld.