Armour Security Case: SC Clarifies Section 6(2)(b) & GST Investigation Guidelines

The Supreme Court Judgment dated 14.08.2025, M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. in Special Leave Petition (C) No. 6092 of 2025 addresses an important question under the Central Goods and Services Tax (CGST) Act, 2017 — whether the issuance of summons under Section 70 amounts to “initiation of proceedings” within the meaning of Section 6(2)(b), which prohibits parallel proceedings by both State and Central GST authorities on the same subject matter.

It means if the GST department issues a summons under Section 70 (for inquiry or investigation), does it mean that “proceedings” under Section 6(2)(b) have started which would stop the other (State or Central) GST authority from taking action on the same issue?

This landmark Supreme Court decision clarifies the scope of Section 6(2)(b) of the CGST Act, 2017, particularly whether the issuance of summons under Section 70 amounts to “initiation of proceedings.” There were conflicting High Court views, some said summons is equal to as start of proceedings, others said it doesn’t. The Supreme Court has now given a final clarification.

The Hon’ble Supreme Court has finalized in para 96 this judgment as under-

i. Clause (b) of sub-section (2) of Section 6 of the CGST Act and the equivalent State enactments bars the “initiation of any proceedings” on the “same subject matter”.

It means Section 6(2)(b) stops both Central and State GST departments from starting proceedings on the same issue against the same taxpayer.

ii. Any action arising from the audit of accounts or detailed scrutiny of returns must be initiated by the tax administration to which the taxpayer is assigned.

It means if a taxpayer is assigned to either Central or State GST, only that department can do audits or detailed scrutiny of returns.

iii. Intelligence based enforcement action can be initiated by any one of the Central or the State tax administrations despite the taxpayer having been assigned to the other administration.

It means for intelligence-based cases (like fraud, evasion, or fake invoicing), either the Central or the State GST can take action — even if the taxpayer belongs to the other.

iv. Parallel proceedings should not be initiated by other tax administration when one of the tax administrations has already initiated intelligence-based enforcement action.

It means if one authority has already started an intelligence-based enforcement action, the other must not start another one on the same issue.

v. All actions that are initiated as a measure for probing an inquiry or gathering of evidence or information do not constitute “proceedings” within the meaning of Section 6(2)(b) of the CGST Act.

It means simply issuing a summons, search, or seizure is not the start of proceedings.
These are only steps to gather information or evidence, not formal action.

vi. The expression “initiation of any proceedings” occurring in Section 6(2)(b) refers to the formal commencement of adjudicatory proceedings by way of issuance of a show cause notice, and does not encompass the issuance of summons, or the conduct of any search, or seizure etc.

It means proceedings formally start only when a show cause notice (SCN) is issued — that is the beginning of adjudication.

vii. The expression “subject matter” refers to any tax liability, deficiency, or obligation arising from any particular contravention which the Department seeks to assess or recover.

 It means the same tax issue, liability, or default that the department wants to assess or recover.

viii. Where any two proceedings initiated by the Department seek to assess or recover an identical or a partial overlap in the tax liability, deficiency or obligation arising from any particular contravention, the bar of Section 6(2)(b) would be immediately attracted.

It means if two departments start actions on the same or overlapping tax issue, Section 6(2)(b) bars the second one.

ix. Where the proceedings concern distinct infractions, the same would not constitute a “same subject matter” even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted.

It means if the actions relate to different infractions or violations, both can proceed, even if the tax type is similar.

x. The twofold test for determining whether a subject matter is “same” entails, first, determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and secondly, if the demand or relief sought is identical.

To decide if both proceedings are on the same issue, check:

• Are both about the same tax liability or offence on same facts?
• Is the demand or relief sought identical? If yes → then it’s the same subject matter and only one department can act.

 Summary Table – Key Principles under Section 6(2)(b) of CGST Act 

Further, the Hon’ble Supreme Court in its aforesaid judgment in para 97, has issued the guidelines to be followed in cases where after the commencement of an inquiry or investigation by one authority, another inquiry or investigation on the same subject matter initiated by a different authority as under-

a. Where a summons or a show cause notice is issued by either the Central or the State tax authority to an assessee, the assessee is, in the first instance, obliged to comply by appearing and furnishing the requisite response, as the case may be. We say, so because, mere issuance of a summons does not enable either the issuing authority or the recipient to ascertain that proceedings have been initiated.

It means if you get a summons or show cause notice from either Central or State GST, you must appear and provide the required information. Just receiving a summons doesn’t mean formal proceedings have started.

b. Where an assessee becomes aware that the matter being inquired into or investigated is already the subject of an inquiry or investigation by another authority, the assessee shall forthwith inform, in writing, the authority that has initiated the subsequent inquiry or investigation.

It means if you know the same issue is already being investigated by another authority, immediately inform the second authority in writing.

c. Upon receipt of such intimation from the assessee, the respective tax authorities shall communicate with each other to verify the veracity of the assessee’s claim. We say, so as this course of action would obviate needless duplication of proceedings and ensure optimal utilization of the Department’s time, effort, and resources, bearing in mind that action initiated by one authority enures to benefit of all.

It means when they get your information, the two authorities must talk to each other to verify if there is overlap. This prevents duplication and saves time, effort, and resources.

d. If the claim of the taxable person regarding the overlap of inquiries is found untenable, and the investigations of the two authorities pertain to different “subject matters”, an intimation to this effect, along with the reasons and a specification of the distinct subject matters, shall be immediately conveyed in writing to the taxable person.

If it turns out the two investigations are about different issues, the authorities must inform you in writing, explaining the difference.

e. The taxing authorities are well within their rights to conduct an inquiry or investigation until it is ascertained that both authorities are examining the identical liability to be discharged, the same contravention alleged, or the issuance of a show cause notice. Any show cause notice issued in respect of a liability already covered by an existing show cause notice shall be quashed.

Each authority can keep investigating until it’s clear that both are acting on the same tax liability or offence. If a SCN is issued for a matter already covered, it must be quashed (cancelled).

f. However, if the Central or the State tax authority, as the case may be finds that the matter being inquired into or investigated by it is already the subject of inquiry or investigation by another authority, both authorities shall decide inter-se which of them shall continue with the inquiry or investigation. In such a scenario the other authority shall duly forward all material and information relating to its inquiry or investigation into the matter to the authority designated to carry the inquiry or investigation to its logical conclusion. We say, so because, the taxable person except for being afforded the statutory protection from duplication of proceedings, otherwise has no locus to claim which authority should proceed with the inquiry or investigation in a particular matter.

If both authorities are investigating the same matter, they must decide among themselves which one will continue. The authority that does not continue must share all information with the one that will complete the investigation. The taxpayer cannot decide which authority should proceed.

g. However, where the authorities are unable to reach a decision as to which of them shall continue with the inquiry or investigation, then in such circumstances, the authority that first initiated the inquiry or investigation shall be empowered to carry it to its logical conclusion, and the courts in such a case would be competent to pass an order for transferring the inquiry or investigation to that authority.

If they cannot agree, the authority that started first continues. Courts can intervene to transfer the case to the first authority if needed.

h. If it is found that the authorities are not complying with these aforementioned guidelines, it shall be open to the taxable person to file a writ petition before the concerned High Court under Article 226 of the Constitution of India.

 If authorities don’t follow these rules, the taxpayer can file a writ petition in the High Court under Article 226.

i. At the same time, taxable persons shall ensure complete cooperation with the authorities. It is incumbent upon them to appear in response to a summons and/or reply to a notice.

Even while claiming protection from duplication, taxpayers must fully cooperate — appear for summons and reply to notices.

Guidelines Chart 

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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the author whatsoever and the content is to be used strictly for informational and educational purposes. While due care has been taken in preparing this article, certain mistakes and omissions may creep in. the author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.