As the Goods & Service Tax regime entered its nineth year it has been hailed as a revolutionary step towards a “One Nation, One Tax” system. However, with co-operative federalism in place, its dual administrative structure, where both Central and State tax authorities hold jurisdiction, sometimes created a significant challenge for taxpayers, being subjected to parallel investigations and proceedings from both departments for the same issue and probably in some cases in concurrent period. This jurisdictional quandary has been a persistent source of litigation.
In a landmark judgment dated August 14, 2025 , the honourable Supreme Court of India in the case of M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. In the special leave petition (C) No. 6092 of 2025 provided definitive clarity on the scope and application of the statutory bar against parallel proceedings under Section 6(2)(b) of the Central Goods and Services Tax (CGST) Act, 2017. This article attempts to have a threadbare analysis of this crucial decision, exploring the reasons for the dispute, the legal framework, the Supreme Court’s precise interpretation, and its far-reaching impact.
The Genesis of the Dispute:
The case of M/s Armour Security (India) Ltd., a Taxpayer engaged in supplying security services, encapsulated the conflict. The chronological timelines of events are as follows:
1. In November 2024, the company received a show-cause notice (SCN) under Section 73 of the CGST Act from the State GST authority of the union Territory of Delhi. This notice was for the tax period of April 2020 to March 2021 and raised a demand of ₹1,24,92,162/- for issues including undeclared turnover and excess claim of Input Tax Credit (ITC).
2. Subsequently, on January 2025, on the basis of an intelligence, officers of the Central GST (CGST) authority conducted a search at the company’s premises. During the course of search, they seized electronic gadgets and documents and issued a summons under Section 70 of the CGST Act to the company’s directors, directing them to appear in person and depose before the competent authority. As there was no response from the Taxpayer, a second summons was issued again in January 2025.
3. In the meantime, the petitioner argued that the State authority (SGST officers of Delhi) was already investigating the issue, on similar grounds, including ITC claimed from cancelled suppliers etc., Aggrieved by the parallel and concurrent action, the company filed a writ petition before the Delhi High Court, contending that the CGST authority lacked jurisdiction to initiate a second proceeding on the same issue for the same period, in view of the bar under Section 6(2)(b) of the CGST Act 2017.
The Delhi High Court dismissed the petition, holding that a search or summons was merely a precursor to formal proceedings and could not be considered “proceedings” for the purpose of the statutory bar. This set the stage for the appeal before the Supreme Court by the Taxpayer
Understanding Section 6 of the CGST Act 2017 – The Legal Framework:
The core of the dispute lies in the interpretation of Section 6 of the CGST Act, which was designed to facilitate a “single interface” for taxpayers and prevent the burden of dual administrative control.
This provision for cross-empowerment allows officers of the State to act as “proper officers” for the purposes of the CGST Act, and vice-versa. However, to prevent jurisdictional overlap, the law includes a crucial safeguard in Section 6(2)(b) of the CGST Act 2017 which reads as:-
Section 6(2)(b),:
“where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter.”
This provision led to two fundamental legal questions that the Supreme Court sought to answer:
1. What constitutes the “initiation of any proceedings”? Does it begin with an investigation, search, or summons, or only upon the issuance of a formal show-cause notice?
2. How should the term “same subject matter” be defined?
The Supreme Court, through a detailed and reasoned judgment provided a definitive interpretation of these terms, settling the long-standing ambiguity. What Constitutes “Initiation of Proceedings”? and whether issuance of the Show-Cause Notice is the Key?.
The Court’s most significant finding was that the expression “initiation of any proceedings” under Section 6(2)(b) refers specifically to the formal commencement of adjudicatory proceedings through the issuance of a show-cause notice18.
The Court reasoned that:
- Actions like conducting a search, seizing documents, or issuing a summons under Section 70 are part of the evidence-gathering or “inquiry” stage. They are precursors to proceedings and do not, by themselves, constitute the initiation of proceedings. A line of distinction was drawn clearly between Preliminary Steps vs. Formal Proceedings.
- A summons is a tool to gather information and statements. At this stage of issuing of Summons under Section 70 of the CGST Act 2017, the department is still investigating a possible contravention and has not yet made a final decision to proceed against the taxpayer. The Court affirmed the view of the honorable High Courts of Allahabad and Kerala on the matter, that an “inquiry” under Section 70 cannot be conflated with “proceedings” thereby clearly defining the Purpose and objective of a Summons.
- The Show Cause Notice is the bedrock of any formal taxes’ adjudication. It marks the culmination of the investigation and the formal commencement of a quasi-judicial process that must lead to a definitive order, following the principles of natural justice. The SCN sets out the specific charges, the legal provisions invoked, and the tax liability proposed, thereby crystallizing the “subject matter” of the dispute, which are Centrality of the Show-Cause Notice (SCN).
- Therefore, issuance of a Show Cause Notice is the key recognition for initiation of proceedings and not otherwise.
The second point that required an elucidation was on the question What is the “Same Subject Matter”? The Court clarified that the “subject matter” is intrinsically linked to the specific liability, deficiency, or contravention that the department seeks to assess or recover, as articulated in the show-cause notice. A mere overlap in an aspect under investigation is not sufficient ground to render the subject matter the “same”. To determine if two proceedings are on the “same subject matter,” the Supreme Court laid down a clear twofold test:
1. Has an authority already initiated proceedings based on an identical liability of tax or alleged offence against the assesses on the same set of facts?
2. Is the demand or relief sought identical?
If the proceedings concern distinct infractions or different liabilities, they are not on the “same subject matter,” and the bar under Section 6(2)(b) will not apply.
Recognizing the need for a practical approach, the honorable Court did not stop just at interpreting the law but proactively also gave a Prescription formulating parameters for Harmony and Coordination between two authorities. It issued a set of comprehensive guidelines to be followed by both to prevent needless duplication and futile labour both from Taxpayer’s perspective as well as tax officer’s domain ending in futile work.
- If a taxpayer receives a summons or notice from a second authority on a matter already under investigation, they must immediately inform that authority in writing about the proceedings already initiated by one authority. This is a Duty of the taxpayer at the first place to avoid duplication.
- Upon receiving such information, the respective tax authorities must communicate with each other to verify the claim of overlap. A proper Inter-Departmental Communication will vitiate the problem.
- If an overlap is confirmed, the authorities must decide inter-se which one will continue the investigation. The other authority must then transfer all relevant materials to the designated authority. If the authorities cannot agree, the one that first initiated the inquiry, or investigation is empowered to carry it to its logical conclusion.
- The Court also suggested that a robust IT mechanism may be developed for real-time data sharing to ensure both authorities have visibility of actions initiated by the other, thereby fostering harmony and cooperative federalism.
Before bidding adieu…..
The Supreme Court’s judgment in the Armour Security case is a seminal ruling that brings much-needed clarity to the vexed issue of parallel proceedings under GST. The decision is a double-edged sword. On one hand, it provides absolute protection from parallel adjudication, once an SCN is issued by one authority, the other is completely barred from proceeding on the same matter. On the other hand, it allows for parallel investigations and inquiries to continue until the point of SCN issuance. However, the new guidelines provide stakeholders with a clear mechanism to flag overlaps and seek resolution. In fact, the ruling establishes a clear jurisdictional boundary. While intelligence-based enforcement can be initiated by either the Centre or the State authorities, the issuance of an SCN by one, will act as a definitive firewall. The judgment mandates enhanced inter-departmental communication and strict adherence to the laid-down guidelines, preventing administrative overreach even by inadvertence.
This decision reinforces the legislative intent behind Section 6, which is to balance robust tax enforcement with the principle of “ease of doing business.” By defining the “initiation of proceedings” as the issuance of a show-cause notice, the Supreme Court has drawn a clear line in the sand, ensuring that while investigations can be concurrent, the formal legal process of adjudication remains singular. This landmark verdict will go a long way in streamlining GST litigation resolution mechanism and providing certainty to taxpayers as well as Tax officers across India.
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Excellent article and good analysis. 🙏🏽