Friends Alloys Vs Union of India (Himachal Pradesh High Court)
The petitioner filed a writ petition under Article 226 of the Constitution seeking to quash certain notices and summons, including Annexure P-6 and P-15, or alternatively to direct the Central Authority to keep Annexure P-15 in abeyance until the proceedings initiated by the State Authority under Section 70 of the CGST Act were completed. The central issue raised was whether the prohibition in Section 6(2)(b) of the CGST Act barred one authority from initiating parallel proceedings on the same subject matter when another jurisdictional authority had already initiated proceedings. The High Court noted that this issue stands substantially resolved by the Supreme Court in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr., AIR 2025 SC 3854. The judgment in Armour Security provides binding directions on the meaning of initiation of proceedings, subject matter, and the interrelationship between Central and State GST authorities. Paragraphs 96 and 97 of that judgment set out several principles, including that Section 6(2)(b) bars initiation of proceedings on the same subject matter; audit-based actions must be initiated by the assigned authority; intelligence-based actions may be initiated by either administration; parallel proceedings should not occur once one authority has initiated intelligence-based enforcement; and only formal adjudicatory proceedings such as show cause notices constitute “initiation of proceedings,” whereas steps like summons, search, and seizure do not. The expression “subject matter” pertains to tax liability, deficiency, or obligation arising from a particular contravention, and if two proceedings concern identical or overlapping liabilities or obligations, the bar under Section 6(2)(b) applies. Paragraph 97 sets out guidelines directing that assessees must comply with summons or notices in the first instance; inform authorities of any overlap; require authorities to verify overlap claims; require disclosure when inquiries pertain to distinct subject matters; allow inquiries to continue until overlapping liabilities are confirmed; require the quashing of any show cause notice issued on a liability already covered by an existing one; require coordination between authorities; designate the first authority to proceed if coordination fails; and permit assessees to approach the High Court if authorities do not comply with these guidelines.
