One Taxpayer, Two Authorities, One Liability: The Protection Against Parallel GST Proceedings
Summary: Section 6(2)(b) of the CGST Act is presented as a statutory protection against parallel adjudicatory proceedings where State/UT GST and Central GST authorities pursue the same subject matter and the same or overlapping tax liability. The supplied material explains that “same subject matter” should be assessed with reference to the tax period, disputed transactions, alleged contravention, tax, interest and penalty proposed, invoices or suppliers, statutory provision and liability sought. It distinguishes preliminary investigation, searches, summons and audits from formal adjudication, stating that a formal show-cause notice is ordinarily the point at which adjudicatory proceedings commence. Referring to H.M. Steels Ltd. v. Union of India & Others and M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Another, the material states that duplicate adjudication should not continue where authorities pursue the same liability or overlapping liability arising from the same alleged contravention. It also discusses Section 64 summary assessment, Section 65 audit, Sections 73, 74 and 74A adjudication, NGTP intelligence, taxpayer records and practical objections against overlapping proceedings.
Introduction
The GST law was introduced as a coordinated system of taxation, administration and adjudication. In practice, however, taxpayers are increasingly receiving notices from different wings of the department—Enforcement, Administration, Audit, Intelligence, Central Tax and State Tax—on the basis of the same portal data, the same NGTP alert and the same alleged supplier discrepancy.
A genuine registered taxpayer may first receive a notice under Section 64, then an audit notice under Section 65, and thereafter a show-cause notice under Section 73, 74 or 74A. Sometimes separate officers even pass separate orders for the same financial year and the same alleged ITC mismatch. This raises a serious question:
> Can two different GST authorities independently adjudicate the same tax liability against the same taxpayer?
The answer is generally **no**, where the proceedings concern the same subject matter and seek to recover the same or overlapping tax liability. Section 6(2)(b) of the CGST Act was enacted precisely to prevent such duplication.
Section 6(2)(b): the statutory protection
Section 6(2)(b) of the CGST Act provides, in substance, that where a proper officer under the State GST Act or UTGST Act has initiated proceedings on a subject matter, no proceedings shall be initiated by a proper officer under the CGST Act on the same subject matter, and conversely.
The object is simple:
– One taxable event should not be adjudicated twice.
– One tax liability should not be pursued by two authorities.
– The taxpayer should not receive conflicting orders.
– The department should not make the taxpayer answer the same allegation repeatedly.
– Cross-empowerment of officers should not become a source of harassment.
Section 6(2)(b) does not mean that a taxpayer is protected from every type of investigation by every authority. The protection applies when the later proceeding is a formal adjudicatory proceeding concerning the **same subject matter**.
What is “same subject matter”?
The expression does not mean merely the same taxpayer or the same financial year. The comparison should be made with reference to:
– The tax period.
– The disputed transaction.
– The alleged contravention.
– The tax, interest and penalty proposed.
– The invoices or suppliers involved.
– The statutory provision invoked.
– The liability or deficiency sought to be recovered.
The Supreme Court has explained that the bar applies where two proceedings seek to assess or recover an identical or partially overlapping tax liability arising from the same alleged contravention. It has also clarified that a search, summons or preliminary inquiry does not by itself amount to initiation of adjudicatory proceedings; formal adjudication ordinarily begins with the issue of a show-cause notice.
The H.M. Steels principle
In **H.M. Steels Ltd. v. Union of India & Others**, CWP No. 6070 of 2024, stated to have been decided by the Himachal Pradesh High Court on 16 July 2026, the issue concerned overlapping action by State and Central GST authorities in relation to ITC proceedings.
The important principle emerging from the case is that Section 6(2)(b) must be applied to prevent parallel adjudicatory proceedings where two authorities are pursuing the same tax liability or an overlapping liability arising from the same alleged contravention.
The Court’s approach is consistent with the Supreme Court’s decision in **M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Another, 2025 INSC 982**:
– Investigation and summons are not automatically adjudication.
– A formal SCN is the normal point at which adjudicatory proceedings commence.
– Two authorities cannot proceed independently on the same subject matter.
– The department must coordinate internally.
– The taxpayer cannot be compelled to face duplicate adjudication merely because different wings issued separate assignments.
The available case summaries indicate that the High Court directed coordination between the authorities so that duplicate proceedings would not continue. It did not decide the taxpayer’s underlying ITC liability on merits.
The exact certified copy and case number should be verified before quoting the judgment in a formal pleading, because publicly available references also show a separate H.M. Steels proceeding bearing CWP No. 6800 of 2024. The legal principle, however, is supported by the Supreme Court decision in *Armour Security*.
How duplication occurs in practice
Example 1: Section 64 followed by Section 73
A registered dealer files returns regularly for FY 2024-25. An Administration officer issues an order under Section 64 alleging ITC mismatch based on an NGTP report and creates a DRC-07 demand.
After that order, an Enforcement officer issues DRC-01 under Section 73 for the same FY, the same suppliers and the same ITC amount.
This is not a lawful second adjudication merely because the second notice is issued by the Enforcement wing. If both notices concern the same ITC and the same supplier report, the taxpayer should raise:
– Section 6(2)(b);
– Duplication of proceedings;
– Risk of double demand;
– Lack of coordination;
– Violation of natural justice; and
– Absence of a distinct subject matter.
Example 2: Section 65 audit followed by Section 74 notice
An Audit officer examines the taxpayer’s books and issues audit objections regarding purchases from three suppliers. While the audit proceedings are continuing, an Enforcement officer issues a Section 74 notice alleging that the same purchases are fraudulent and proposes tax, interest and penalty.
An audit by itself may not always amount to adjudication. But if a formal SCN has already been issued on the same liability, a second formal SCN by another authority is vulnerable under Section 6(2)(b).
The department cannot avoid the statutory bar simply by changing the description from “audit objection” to “intelligence-based fraud.”
Example 3: CGST notice followed by SGST notice
A Central Tax officer issues a Section 73 SCN for denial of ITC on invoices from non-existent suppliers. Later, a State Tax officer issues another SCN for the same invoices and the same tax amount.
The taxpayer should compare whether the second notice contains:
– The same invoices;
– The same suppliers;
– The same tax period;
– The same ITC amount; and
– The same allegation of bogus purchase.
If yes, the later proceeding is likely to be treated as an overlapping proceeding, even if the Central and State components are separately quantified.
Example 4: Different issues in the same financial year
A taxpayer receives:
– A Section 73 notice for excess ITC in April to June;
– A separate Section 74 notice for suppression of outward supplies in October to December; and
– An audit objection concerning RCM on legal services.
These may be separate matters. The same financial year alone does not activate Section 6(2)(b). The decisive question is whether the proceedings seek to assess the same liability arising from the same contravention.
Section 64, Section 65 and Sections 73/74 are not interchangeable
Section 64: summary assessment
Section 64 is an exceptional provision. It is intended for cases where there are sufficient grounds to believe that delay in determining the tax liability may adversely affect the interest of revenue.
It should not become a shortcut for dealing with every discrepancy appearing in an NGTP report. A regular registered taxpayer who maintains books, files returns and conducts identifiable business ordinarily requires proper verification before an adverse demand is created.
A Section 64 order passed without:
– Recording the exceptional circumstances;
– Obtaining the required approval;
– Examining books and records;
– Giving an effective opportunity; and
– Explaining the basis of computation,
can be challenged as an improper exercise of statutory power.
Section 65: audit
An audit is a verification mechanism. It may result in audit observations and further proceedings. But the audit report itself is not automatically a demand order. The officer must follow the prescribed procedure before creating tax, interest or penalty.
An audit cannot be used as a device to create a second adjudication where another officer has already issued a formal SCN on the same issue.
Sections 73, 74 and 74A: adjudication
These provisions lead to formal tax adjudication. The notice must clearly disclose:
– The period involved;
– The tax proposed;
– The basis of calculation;
– The relevant transactions;
– The statutory provision;
– The reason for invoking penalty;
– The material relied upon; and
– The time and manner of reply.
The notice should not merely reproduce Section 74 and say that the taxpayer committed fraud or suppression. The Chhattisgarh High Court has recently emphasised that a Section 74 notice must disclose the factual foundation for invoking the provision and supply the material connecting the taxpayer with the alleged wrongful ITC. A statutory reproduction is not a substitute for reasons
NGTP tags and portal data
An NGTP tag may be a useful intelligence input. It may alert the department that:
– A supplier’s premises was not found;
– A registration was cancelled;
– Returns were not filed;
– The supplier’s purchase chain appears doubtful; or
– The supplier’s business activity does not match the reported turnover.
But an NGTP tag is not, by itself, a final adjudication against every customer of that supplier.
The officer must examine the taxpayer’s own transaction:
– Was there a tax invoice?
– Was the taxpayer registered?
– Were the goods or services received?
– Was payment made through banking channels?
– Was the purchase recorded in the books?
– Was the ITC reflected in GSTR-2B?
– Was the transaction reported in GSTR-3B?
– Was there a corresponding sale or business use?
– Was tax charged on the outward supply?
– Did the taxpayer participate in creating a false transaction?
A supplier may subsequently be declared non-existent, but that fact alone does not establish that every earlier transaction was fictitious. The date of the alleged non-existence, the verification report and the material connecting the particular taxpayer must be disclosed.
A valid portal entry is not conclusive proof of ITC, but it is certainly relevant evidence. The officer cannot ignore GSTR-1, GSTR-3B, GSTR-2B, e-way bills, invoices and bank records and decide the matter only on the basis of an internal intelligence tag.
The burden cannot be shifted indefinitely upstream
A genuine purchaser can be expected to prove:
– Its own purchase;
– The supplier’s invoice;
– Receipt of goods or services;
– Payment;
– Accounting;
– Stock or business use; and
– Subsequent sale, where applicable.
The taxpayer cannot ordinarily be required to prove the entire chain of purchases made by the supplier’s supplier. If the department believes that an upstream dealer is fictitious, it should investigate that dealer and proceed against the person responsible.
This does not mean that an innocent purchaser is immune where the department proves participation in a fraudulent chain. If the taxpayer issued invoices without receiving goods, used accommodation entries, paid cash for fake invoices or knowingly colluded with the supplier, action may be justified.
The distinction is important:
> A doubtful supplier creates a reason to investigate. It does not automatically prove the purchaser’s fraud.
Practical defence for a taxpayer facing overlapping proceedings
The taxpayer should not merely write that the notice is “illegal.” A proper objection should contain a factual comparison.
| Point | Earlier proceeding | Later proceeding |
| Officer | Administration/Audit/Central Tax | Enforcement/State Tax |
| Financial year | 2024-25 | 2024-25 |
| Tax period | April–March | April–March |
| Allegation | ITC from non-existent suppliers | ITC from same suppliers |
| Report relied upon | NGTP report | Same NGTP report |
| ITC | Determind (reversal) | Determind (reversal) |
| Section invoked | Section 64/73 | Section 73/74/74A |
| Order/SCN | ASMT-16/DRC-07(order-) | DRC-01 |
| Documents considered | Not verified/partly verified | Not supplied |
| Relief requested | Quash/withdraw | Drop the proceedings |
The taxpayer should then request:
1. Withdrawal of the later proceeding.
2. Identification of the officer who will proceed.
3. Supply of the NGTP report and relied-upon documents.
4. A transaction-wise computation.
5. Confirmation that no duplicate demand will be recovered.
6. Personal hearing.
7. Stay of recovery arising from overlapping proceedings.
8. A speaking order on the Section 6(2)(b) objection.
What should be done when an order has already been passed?
A taxpayer must act separately against each adverse order.
If the order is under Section 64
Consider:
– Application for withdrawal under Section 64(2), if within time;
– Appeal under Section 107;
– Writ petition where there is lack of jurisdiction or serious breach of natural justice;
– Application for stay of recovery.
If the order is under Section 73 or 74
File:
– Appeal in FORM GST APL-01;
– Application for stay or payment of the statutory pre-deposit;
– Detailed grounds against the tax, interest and penalty;
– Objection that the same liability was already adjudicated;
– Request for adjustment or deletion of any duplicate demand.
If only DRC-01 has been issued
File a detailed reply in DRC-06 and raise the jurisdictional objection before dealing with the merits. Do not remain silent merely because an earlier order is already under challenge.
The duty of the department
The GST officer is not only a revenue collector. The officer is also a statutory adjudicator.
A proper officer must:
– Examine the taxpayer’s documents;
– Distinguish intelligence from proof;
– Disclose relied-upon material;
– Give a real opportunity of hearing;
– Avoid duplicate proceedings;
– Record independent reasons;
– Calculate liability accurately; and
– Protect the taxpayer from double recovery.
A demand order cannot be justified by saying that the taxpayer should prove his innocence after the department has ignored the taxpayer’s records. Nor can the department’s internal communication failure become the taxpayer’s financial burden.
The Supreme Court’s interpretation of Section 6(2)(b) is particularly important because it recognises that the provision is not a technical formality. It is a statutory safeguard against parallel adjudication where the same liability is pursued by more than one authority
Conclusion
Section 6(2)(b) is a protection against **duplicate adjudication**, not a licence to avoid legitimate tax investigation. It applies when another authority has already initiated formal proceedings concerning the same tax liability, deficiency or obligation arising from the same contravention.
A taxpayer facing multiple notices should not be intimidated by the different names of the departments or officers. The taxpayer should ask one simple question:
> Are these genuinely different proceedings, or are they two routes to recover the same tax?
If the answer is the latter, the taxpayer should immediately raise Section 6(2)(b), challenge the overlapping jurisdiction, demand disclosure of the relied-upon material and seek one coordinated and lawful adjudication.
The GST system must not become a system in which a genuine taxpayer is treated as guilty merely because an NGTP tag appears against a supplier. Portal data may start an inquiry; it cannot replace evidence. An assignment may authorise an officer to act; it cannot authorise two officers to adjudicate the same liability twice. A summary assessment may protect revenue in exceptional cases; it cannot become a shortcut around books, hearing and reasoned adjudication.
