M/S Vardhman Ispat Udyog vs. Adjudicating Authority Cum Deputy Commissioner And Others

Held

The Court held that the Supreme Court's decision in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. mandates that where a show cause notice (SCN) has been issued, the authority that issued the SCN has precedence to continue and complete the proceedings. All other proceedings on the same subject matter should follow the outcome of the proceedings initiated by the SCN. In this case, the first show cause notice was issued on March 11, 2025. Therefore, the Court directed the petitioner to file a detailed reply to this SCN. All other proceedings initiated or proposed to be initiated on the same subject matter were ordered not to be proceeded further. Information from such other authorities was to be forwarded to the authority that issued the SCN on March 11, 2025, with prior intimation to the petitioner, to enable the petitioner to respond. The competent authority was directed to pass an appropriate order expeditiously. The ratio is that the issuance of a show cause notice by an authority grants it precedence for adjudication on the same subject matter, and other parallel proceedings should be consolidated or deferred to this primary proceeding.

Facts

The petitioner, M/s Vardhman Ispat Udhyog, approached the Himachal Pradesh High Court seeking to quash a show cause notice dated March 11, 2025, issued by the Adjudicating Authority cum Deputy Commissioner, Central Goods & Service Tax Division, Dharamshala, along with earlier communications dated July 22, 2024, and February 13, 2025. The petitioner contended that these actions were arbitrary, illegal, and without jurisdiction, alleging the initiation of parallel proceedings by various authorities on the same subject matter. The proceedings stemmed from communications regarding the petitioner's business, including verification of Input Tax Credit (ITC) availment and allegations of depositing fake ITC. The Directorate General of Goods and Services Tax Intelligence had also sent information concerning the petitioner's business.

Key Issues

1. Whether the issuance of multiple communications and a show cause notice by different tax authorities on the same subject matter violates Section 6(2)(b) of the CGST Act and equivalent State enactments, as interpreted by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr.? Petitioner's argument: The petitioner argued that once a notice was issued by one authority and a detailed reply was filed, no other notices on the same subject matter should have been issued by other respondents. They relied on the principle that proceedings should be taken to their logical end by the initial authority. Revenue/State's argument: The judgment does not explicitly record arguments from the revenue/State. However, the court's decision implies that the revenue/State's actions were being examined against the backdrop of the Armour Security judgment.