Introduction:

The Himachal Pradesh High Court, while dealing with a writ petition filed by M/s J.B. Rolling Mills Limited against the Union of India and other tax authorities, has reiterated an important safeguard embedded in the Central Goods and Services Tax Act, 2017, namely the prohibition against parallel adjudicatory proceedings by State and Central GST authorities on the same subject matter. A Division Bench comprising Justice Vivek Singh Thakur and Justice Sushil Kukreja examined the scope and effect of Section 6(2)(b) of the CGST Act in light of the authoritative pronouncement of the Supreme Court in Armour Security (India) v. Commissioner, CGST, Delhi East Commissionerate. The case arose from the grievance of the assessee that despite initiation of proceedings by the State GST Authority in respect of a particular transaction and subject matter, the Central GST Authority had proceeded to issue summons under Section 70 and a Show Cause Notice under Section 74 of the CGST Act, thereby exposing the assessee to multiple adjudicatory processes for the same alleged tax liability. The petitioner contended that such action was barred by statute and contrary to settled law, while the tax authorities maintained that they would adhere to the statutory mandate and the principles laid down by the Supreme Court, emphasising the need for coordination between the two wings of GST administration. The High Court’s decision thus assumes significance in clarifying the contours of jurisdiction, coordination and taxpayer protection under the dual GST framework.

Arguments on Behalf of the Petitioner/Assessee:

The assessee argued that the very foundation of the GST regime rests on the principle of avoiding multiplicity of proceedings and harassment of taxpayers through overlapping jurisdictional actions. It was submitted that Section 6 of the CGST Act creates a clear demarcation between the powers of the Central and State tax authorities and specifically bars parallel proceedings once one authority has already initiated adjudication on a particular subject matter. The petitioner pointed out that the State GST Authority had initiated inquiry and proceedings first in point of time in respect of the same transactions, tax period and alleged discrepancies. In such circumstances, the issuance of summons under Section 70 and a Show Cause Notice under Section 74 by the Central GST Authority amounted to parallel adjudicatory proceedings, which are expressly prohibited under Section 6(2)(b) of the CGST Act. The assessee relied heavily on the judgment of the Supreme Court in Armour Security (India), where it was categorically held that once proceedings are initiated by either the Central or State authority, the other authority is barred from initiating adjudicatory proceedings on the same cause of action. It was argued that permitting both authorities to proceed independently would defeat the object of the statute, cause uncertainty, and subject the assessee to double jeopardy-like consequences in fiscal administration. The petitioner also contended that even if investigative powers such as issuance of summons are available, they cannot be exercised in a manner that effectively results in parallel adjudication or coercive proceedings, particularly when a Show Cause Notice under Section 74, which is a clear adjudicatory step, has already been issued. On these grounds, the petitioner sought quashing of the Central Authority’s proceedings and appropriate directions to ensure compliance with Section 6(2)(b).

Arguments on Behalf of the State and Central GST Authorities:

The State and Central GST authorities, appearing through their respective counsel, submitted that they were fully conscious of the statutory mandate under Section 6(2)(b) of the CGST Act as well as the binding principles laid down by the Supreme Court in the Armour Security case. It was contended that the dual GST structure necessarily involves coordination between Central and State authorities and that mechanisms exist within the statute and judicial precedents to prevent overlapping adjudication. The respondents submitted that investigative actions such as issuance of summons under Section 70 of the CGST Act are permissible and do not, by themselves, amount to initiation of adjudicatory proceedings unless they culminate in a Show Cause Notice or adjudication on the same subject matter. They further assured the Court that appropriate coordination would be maintained between the authorities to ensure that the assessee is not subjected to multiple adjudicatory processes. Reliance was placed on paragraphs 96 and 97 of the Supreme Court’s judgment in Armour Security (India), where the Apex Court clarified that while parallel adjudication is barred, bona fide investigative steps may continue so long as they do not result in multiplicity of adjudication. The respondents submitted that the matter could be appropriately resolved by directing the assessee to place its objections before the concerned authority and by ensuring inter-departmental communication between the State and Central wings of GST.

Court’s Judgment and Reasoning:

After considering the rival submissions, the Himachal Pradesh High Court undertook a detailed examination of Section 6(2)(b) of the CGST Act and the law laid down by the Supreme Court in Armour Security (India). The Bench noted that the prohibition contained in Section 6(2)(b) is explicit and intended to avoid parallel adjudicatory proceedings on the same subject matter. Referring extensively to paragraphs 96 and 97 of the Armour Security judgment, the Court reiterated that once one authority—whether Central or State—has initiated proceedings first in point of time, any subsequent parallel adjudicatory proceedings by the other authority on the same cause of action are barred by law. The Court emphasised that the Apex Court has drawn a clear distinction between adjudicatory proceedings and investigative steps, clarifying that while investigation may continue, it must not culminate in parallel adjudication in violation of Section 6(2)(b). The High Court observed that the object of the provision is to prevent harassment of taxpayers, ensure certainty in tax administration, and promote cooperative federalism under the GST regime. It further noted that multiplicity of proceedings not only burdens the assessee but also leads to inefficiency and inconsistency in tax administration. In the present case, the Court found it appropriate to direct coordination rather than outright quashing at this stage, in line with the approach adopted by the Supreme Court. Accordingly, the Bench directed the assessee to appear before the Central Authority and file its response to the Show Cause Notice by raising all contentions, including the bar under Section 6(2)(b), along with relevant documents, on or before the specified date. Simultaneously, the Court directed the State GST Authority to communicate with the Central Authority to verify the assessee’s claim in terms of paragraph 97(c) of the Armour Security judgment. The Bench categorically directed that both authorities shall coordinate with each other to ensure that the assessee is not subjected to multiple adjudicatory processes on the same subject matter. With these observations and directions, the writ petition was disposed of, reaffirming the binding nature of the Supreme Court’s ruling and the statutory bar against parallel proceedings.