M/S Friends Alloys vs. UOI And Others

Held

The High Court held that the issue was substantially resolved by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. The Court applied the principles from this judgment, which clarifies that Section 6(2)(b) of the CGST Act bars the initiation of parallel adjudicatory proceedings on the same subject matter once proceedings have been initiated by one authority (Central or State). However, legitimate investigative steps, such as issuing summons under Section 70, are permissible as long as they do not constitute parallel adjudication. The Court directed the petitioner to appear before the Central Authority and file a response to the Show Cause Notice by 15.12.2025, raising all contentions in terms of the Armour Security judgment. The petitioner was also directed to comply with summons from the State authorities and inform them about the Show Cause Notice issued by the Central Authority. Both authorities were directed to communicate to verify the petitioner's claim and coordinate to avoid multiple adjudicatory processes on the same subject matter, in line with the Armour Security verdict. The Court explicitly stated it had not expressed any opinion on the merits of the allegations or the validity of the notices.

Facts

The petitioner, M/s Friends Alloys, filed a writ petition challenging notices and summons issued by the Central GST authorities. The petitioner contended that the State GST Authority had already initiated proceedings concerning the same subject matter, and therefore, the Central Authority was barred from initiating parallel proceedings under Section 6(2)(b) of the CGST Act. The petitioner sought to quash the impugned notices/summons or, alternatively, direct the Central Authority to keep its proceedings in abeyance until the State Authority completed its proceedings initiated under Section 70 of the Act. The State and Central GST authorities submitted 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 initiation of proceedings by the Central GST authorities, in the form of a Show Cause Notice dated 3.8.2024 under Section 74 of the CGST Act, is barred by Section 6(2)(b) of the CGST Act, given that the State GST Authority had previously initiated proceedings (summons/notices dated 13.5.2022, 10.1.2023, 14.3.2023, 16.3.2023, and DRC-01A dated 01.04.2024) concerning the same subject matter? Petitioner's contention: The Central Authority is barred from initiating further proceedings as the State Authority initiated proceedings first on the same subject matter, invoking Section 6(2)(b) of the CGST Act. Revenue/State's contention: They will abide by the statutory mandate under Section 6(2)(b) of the CGST Act and the principles laid down in the Supreme Court's judgment in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr., and will ensure appropriate coordination to prevent parallel adjudicatory proceedings.