M/S Friends Alloys vs. UOI And Others

Held

The High Court, applying the conclusions and guidelines from the Supreme Court's judgment in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr., held that while parallel adjudicatory proceedings on the same subject matter are barred, legitimate investigative steps may continue. The Court directed the Petitioner to appear before the Central Authority and file a response to the Show Cause Notice by December 15, 2025, raising all contentions. The Petitioner was also directed to comply with summons and intimations from the State Authorities and inform them about the Show Cause Notice issued by the Central Authority, as per para 97(a) & (b) of the Armour judgment. Subsequently, the State Authority was to communicate with the Central Authority to verify the Petitioner's claim, and both authorities were to coordinate to avoid multiple adjudicatory processes on the same subject matter. The adjudicatory authority would then proceed in accordance with law, providing the Petitioner an opportunity to be heard. The Court explicitly stated it was not opining on the merits of the allegations or the validity of the notices, keeping all rights and contentions open.

Facts

The Petitioner, M/s Friends Alloys, filed a writ petition challenging notices and summons issued by the Central GST authorities. The core issue was the prohibition under Section 6(2)(b) of the CGST Act against initiating parallel proceedings on the same subject matter when proceedings have already been initiated by another jurisdictional authority. The Petitioner contended that the State GST Authority had initiated proceedings earlier, making the subsequent actions by the Central GST authorities impermissible. The State and Central GST authorities stated they would abide by Section 6(2)(b) and the principles laid down by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr.

Key Issues

1. Whether the issuance of a Show Cause Notice dated 3.8.2024 by the Central Authority under Section 74 of the CGST Act, 2017, is barred by Section 6(2)(b) of the CGST Act, 2017, due to prior initiation of proceedings by the State GST Authority on the same subject matter? Petitioner's contention: The Petitioner argued that Section 6(2)(b) of the CGST Act prohibits the initiation of parallel proceedings by one tax administration when another has already commenced proceedings on the same subject matter. They relied on the Supreme Court's decision in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. Respondents' contention: The State and Central GST authorities submitted that they would adhere to the statutory mandate of Section 6(2)(b) and the guidelines from the Armour Security case. They assured that appropriate coordination would be maintained to prevent parallel adjudicatory proceedings. They also referred to various High Court judgments directing petitioners to present their case before competent authorities for decision in terms of the Armour Security judgment.