M/S Friends Alloys vs. UOI And Others

Held

The 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 Supreme Court's conclusions and guidelines, particularly paragraphs 96 and 97, were applied. The Court noted that Section 6(2)(b) bars the initiation of proceedings on the same subject matter. While legitimate investigative steps like summons under Section 70 are permissible, they should not result in parallel adjudication. 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 contentions as per the Armour Security judgment. The petitioner was also directed to comply with the State Authority's summons and inform them about the Central Authority's 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, following the Armour Security verdict. The adjudicatory authority would then proceed in accordance with law, providing the petitioner an opportunity to be heard. The Court clarified 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 core issue was the prohibition under Section 6(2)(b) of the CGST Act against initiating parallel proceedings on the same subject matter when another jurisdictional authority has already initiated proceedings. The petitioner contended that the State GST Authority had initiated proceedings in 2022 concerning the same subject matter, thus barring the Central GST authorities from issuing a show cause notice dated August 3, 2024, and summons under Section 70 of the CGST Act. The respondents, including the State and Central GST authorities, agreed to abide by the statutory mandate 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 August 3, 2024, by the Central GST authority under Section 74 of the CGST Act, in light of prior summons and notices issued by the State GST Authority in 2022 concerning the same subject matter, constitutes parallel proceedings barred by Section 6(2)(b) of the CGST Act? Petitioner's contention: The petitioner argued that the State GST Authority had already initiated proceedings in 2022 regarding the same subject matter. Therefore, the Central GST Authority was barred from initiating any further proceedings, including the issuance of the show cause notice and summons, as per Section 6(2)(b) of the CGST Act. They relied on the principle that parallel proceedings on the same subject matter are prohibited. Respondents' contention: The State and Central GST authorities stated they would abide by Section 6(2)(b) of the CGST Act and the guidelines laid down by the Supreme Court in the Armour Security case. They assured that appropriate coordination would be maintained to prevent parallel adjudicatory proceedings. The respondent No.4 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.