Supreme Court Up Held The Validity Of The CGST Summons, And Section 6(2)(b) Is Inapplicable To Parallel Investigations.

BRIEF FACTS OF THE CASE

• The Petitioner who is in the business of providing security services and is registered under GST in Delhi, was issued a show cause notice on 18.11.2024 by the Delhi GST (State authority) under Section 73 of the CGST Act on the grounds of turnover mismatch and excess availment of input tax credit for the period April 2020 to March 2021.
• Subsequently, on 16.01.2025, the Central GST (Delhi East Commissionerate) conducted a search of the petitioner's premises under Section 67(2) of the CGST Act, seizing documents and electronic devices, followed by the issuance of a summons under Section 70 to the company's directors. Further summons was issued on 23.01.2025.
• The Petitioner objected vide letter dated 24.01.2025, contending that since the State GST authority had already initiated proceedings through the show cause notice, the Central GST authority was barred under Section 6(2)(b) of the Act from undertaking a parallel investigation.
• A writ petition was therefore filed before the Delhi High Court seeking to quash the summons on the grounds of lack of jurisdiction and to prevent parallel proceedings by both State and Central authorities
• The Delhi High Court, however, dismissed the petition, holding that issuance of summons under Section 70 does not amount to initiation of proceedings under Section 6(2)(b). The Court reasoned that Section 6(2)(b) bars only parallel adjudication proceedings, whereas summons and searches are merely preliminary steps for gathering information. The Court distinguished the case from Vivek Narsaria v. State of Jharkhand, noting that in that matter both State and Central authorities were engaged in parallel adjudications, whereas in the present case the Central authority was only at the stage of investigation.
• The Petitioner filed a Special Leave Petition before the Hon'ble Supreme Court, and the issue under consideration was whether the issuance of summons under Section 70 amounts to initiation of "proceedings" on the same subject matter to attract the bar under Section 6(2)(b).
• The Hon'ble Supreme Court has held that the issuance of a summons under Section 70 does not amount to the initiation of proceedings. A summons or investigation is merely a preliminary step for gathering information and evidence. It cannot be equated with adjudicatory proceedings such as assessment, demand, recovery, or penalty under Sections 73 and 74 of the Act.
• The Court emphasized that Section 6(2)(b) is intended to prevent taxpayers from being subjected to parallel adjudication by both State and Central authorities on the same subject matter. Still, the provision does not prohibit simultaneous investigation or inquiry. Referring to the framework of cross-empowerment under GST and the clarificatory circulars issued by the CBIC, the Court reiterated that both Central and State authorities are empowered to initiate intelligence-based enforcement action across the entire value chain, irrespective of administrative allocation.
• Accordingly, the Court upheld the Delhi High Court's decision and dismissed the Special Leave Petition, thereby holding that the summons issued by the Central GST authorities were valid and not barred under Section 6(2)(b).
• The ruling draws a vital distinction between investigation and adjudication under the GST framework. Investigative measures such as summons, search, and seizure are fact-finding in nature and do not determine liability, whereas adjudication is a determinative process that results in quantification and enforcement of tax liability. By clarifying this distinction, the Court ensured that Section 6(2)(b) cannot be misapplied to obstruct legitimate inquiries.
• The Court also reaffirmed the principle of cross-empowerment under GST, rooted in the concept of "one nation, one tax, one interface." It held that both Central and State tax administrations are empowered to conduct intelligence-based enforcement action across the value chain, regardless of administrative allocation. In doing so, the Court reconciled divergent High Court rulings by clarifying that parallel adjudication is barred but parallel investigation is permissible, thus harmonizing GST jurisprudence across jurisdictions.
• However, this approach stands in contrast to earlier decisions of the Calcutta High Court in M/s R.P. Buildcon Pvt. Ltd. v. Superintendent ¹ , where it has been observed that in the age of electronic communication, parallel proceedings by multiple wings of the same department—Audit, Anti-Evasion, and Range—on the same subject matter and for the same period were impermissible. Once audit proceedings under Section 65 had commenced, the other wings were restrained from pursuing separate actions for the same period. Similarly, in M/s Ideal Unique Realtors Ltd. v. UOI ² , the Court quashed the repeated notices and summons issued by different wings of the department on the same TRAN-1 issue, holding that taxpayers cannot be subjected to repetitive action by different authorities without first concluding earlier proceedings.
• Going forward from a litigation standpoint, the ruling narrows the scope for taxpayers to challenge summons before High Courts and strengthens the enforcement powers of the tax department. While the Calcutta High Court stressed the importance of avoiding multiplicity of proceedings by the same department, the Supreme Court has settled the law in favor of the revenue by permitting simultaneous investigations but barring parallel adjudication. Practically, taxpayers should anticipate an increased compliance burden and prepare for closer scrutiny by maintaining robust documentation and adopting coordinated compliance strategies.

Footnotes

1. (2022) 1 Centax 284 (Cal.)/ 2023 (68) G.S.T.L. 114 (Cal.)

2. (2022) 1 Centax 169 (Cal.)/ 2023 (68) G.S.T.L. 376 (Cal.)

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