When Do “Proceedings” Commence Under GST?

When Do “Proceedings” Commence Under GST? – Revisiting Section 6(2)(b) in Light of Judicial Clarification**

1. Introduction

Section 6(2)(b) of the CGST Act is a jurisdiction-controlling provision intended to prevent parallel proceedings on the same subject matter by Central and State tax authorities. While cross-empowerment under GST permits officers of both administrations to act, Section 6(2)(b) draws a clear statutory boundary once proceedings are initiated by one authority. However, the Act does not define the expression “proceedings”, and this legislative silence has resulted in a persistent interpretational conflict. In practice, tax authorities have frequently treated issuance of summons, initiation of investigation, or audit actions as initiation of proceedings, thereby asserting exclusivity of jurisdiction or justifying parallel action. Recent judicial pronouncements, particularly the decision of the Supreme Court of India in Armour Security (India) Ltd., have brought much-needed clarity by affirming that investigative actions do not amount to initiation of proceedings, and that proceedings begin only when the statute contemplates a determinative adjudicatory step. This article examines the meaning of “proceedings” under GST law and the implications of this judicial clarification.

2. Legislative Purpose of Section 6(2)(b)

The object of Section 6(2)(b) is not to restrict investigation or information gathering by tax authorities, but to avoid duplication at the stage of adjudication. The provision ensures that once one authority initiates proceedings on a subject matter, the other authority does not undertake parallel adjudicatory action leading to conflicting determinations. The emphasis of the provision is therefore on proceedings that culminate in determination of tax liability, not on preliminary or preparatory actions. Any interpretation that treats investigative steps as “proceedings” would defeat the legislative purpose by prematurely triggering the jurisdictional bar and disrupting the statutory scheme of assessment and adjudication.

3. Statutory Context: Meaning of “Proceedings” under the CGST Act

Although the CGST Act uses the term “proceedings” at multiple places, it consistently does so in contexts involving civil consequences, such as assessment, adjudication, recovery, and appeal. Proceedings under the Act are those actions which are capable of determining rights and liabilities and which culminate in an appealable order. In contrast, powers relating to summons under Section 70, inspection and search under Section 67, or audit under Sections 65 and 66 are enabling and investigative in nature. These provisions do not determine tax liability by themselves and are statutorily designed to assist the adjudicatory process. Reading investigative actions as “proceedings” would conflate distinct statutory stages and render the adjudicatory framework redundant.

4. Judicial Clarification: Proceedings Do Not Begin with Summons or Investigation

The Supreme Court in Armour Security (India) Ltd.decisively rejected the proposition that issuance of summons or initiation of investigation constitutes initiation of proceedings for the purposes of Section 6(2)(b). The Court held that summons are merely tools for collection of information and do not amount to commencement of proceedings. The Court’s reasoning rests on a clear doctrinal distinction between fact-finding exercises and determinative legal action. Proceedings, in the legal sense, commence only when the tax authority crystallises its allegations into a statutory action capable of affecting the taxpayer’s rights—most notably, by issuance of a show cause notice under Sections 73 or 74.

This interpretation restores coherence to the statutory scheme and ensures that the jurisdictional bar under Section 6(2)(b) operates only at the appropriate stage.

5. Misapplication in Practice: Treating Investigation as Proceedings

Despite the statutory framework and judicial guidance, enforcement practice has often proceeded on an expanded understanding of “proceedings”. In several instances, the first issuance of summons or initiation of inquiry has been treated as initiation of proceedings, either to resist challenges to parallel action or to justify continued jurisdiction without progression to adjudication. Such an approach effectively allows investigative actions to acquire adjudicatory significance without statutory backing. Courts have increasingly disapproved this practice, emphasising that investigation cannot be a substitute for adjudication, and that statutory consequences cannot be attached to actions which the legislature never intended to be determinative.

6. Proceedings and Jurisdictional Exclusivity under Section 6(2)(b)

Once it is accepted that proceedings commence only with issuance of a show cause notice or equivalent adjudicatory action, the operation of Section 6(2)(b) becomes clear and predictable. Prior to initiation of proceedings, both Central and State authorities may exercise investigative powers in accordance with law. However, once proceedings are initiated by one authority, the jurisdictional bar applies, and parallel adjudicatory action by another authority on the same subject matter is impermissible. This interpretation preserves investigative flexibility while preventing duplicative adjudication, thereby aligning enforcement practice with legislative intent.

7. Conclusion

The question of when proceedings begin under GST is fundamental to the administration of the tax. Judicial clarification has now firmly established that proceedings do not begin with inquiry, investigation, audit, or issuance of summons, but only with a determinative adjudicatory step such as issuance of a show cause notice. This interpretation restores doctrinal clarity to Section 6(2)(b), prevents premature invocation of jurisdictional bars, and ensures that GST enforcement operates within clearly defined statutory stages. For taxpayers and administrators alike, this clarity is essential to ensuring certainty, consistency, and fairness in GST administration.