M/S J.B. Rolling Mills LTD vs. Union Of INDIA And Others

Held

The High Court, applying the principles laid down by the Supreme Court 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 by Section 6(2)(b) of the CGST Act, bona fide investigative steps like summons under Section 70 are permissible as long as they do not result in parallel adjudication. The Court noted that the Supreme Court's judgment clarified that 'initiation of proceedings' refers to the formal commencement of adjudicatory proceedings by way of a show cause notice, not the issuance of summons or conduct of searches. 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 inform the State authorities about the show cause notice. The State and Central authorities were directed to communicate to verify the claim of overlap and coordinate to avoid multiple adjudicatory processes on the same subject matter, adhering to the Armour Security verdict. The adjudicatory authority was to proceed thereafter, providing the petitioner an opportunity to be heard. 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 J.B. Rolling Mills Limited, filed a writ petition challenging notices and a show cause notice issued by the Central GST authorities. The petitioner contended that these actions violated Section 6(2)(b) of the CGST Act, 2017, as the State GST Authority had already initiated proceedings on the same subject matter. The State GST Authority had issued summons/notices on February 5, 2019, and January 20, 2024. The Central GST authorities issued summons/notices on November 1, 2019, April 23, 2024, and May 11, 2024, and a show cause notice on February 23, 2023. The petitioner sought to quash these notices or keep them in abeyance until the State's proceedings were completed.

Key Issues

1. Whether the issuance of summons/notices and a show cause notice by the Central GST authorities constitutes initiation of parallel proceedings on the same subject matter, thereby being barred by Section 6(2)(b) of the CGST Act, 2017, given that the State GST Authority had already initiated proceedings? Petitioner's contention: The petitioner argued that the Central GST authorities' actions were barred by Section 6(2)(b) of the CGST Act, 2017, as the State GST Authority had already initiated proceedings concerning the same subject matter. They relied on the principle that parallel proceedings on the same subject matter by different jurisdictional authorities are prohibited. Respondents' contention: The State and Central GST authorities submitted that they would abide by Section 6(2)(b) of the CGST Act and the principles laid down by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr. 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.