One Assessee, One Authority, One GST Assessment: Landmark SC Ruling

One Assessee- One Assessing Authority- One Assessment Proceedings – Landmark SC Ruling Prevents Repeat GST Proceedings Against Taxpayers

Introduction

The Supreme Court of India, in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr. (SLP 6092 of 2025), has delivered a landmark ruling clarifying the interpretation of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (“CGST Act”). The Court upheld the Delhi High Court’s dismissal of a writ petition that sought to challenge summons issued under Section 70 of the CGST Act. The Court categorically held that issuance of summons, search, inspection, or investigation constitutes only preliminary investigative measures and does not amount to “initiation of proceedings.” The commencement of formal proceedings, according to the Court, takes place only with the issuance of a show cause notice (“SCN”), which serves as the foundation for adjudicatory action.

Framework under Section 6 of the CGST Act and Relevant Circulars

The legislative scheme of the GST framework is premised upon two essential pillars:

• Single Administrative Interface: Designed to avoid dual administrative control and reduce taxpayer inconvenience by ensuring that each taxpayer is subject to a single interface for compliance.
• Cross-Empowerment of Authorities: Grants both Central and State tax authorities concurrent powers of enforcement, thereby ensuring flexibility in intelligence-based enforcement.

To give effect to this design, the Central Board of Excise and Customs (now CBIC) has issued several circulars:

• Circular No. 01/2017 dated 20.09.2017: Provided for allocation of taxpayers between Central and State tax administrations for purposes of assessment and audit.
• Circular No. 114/33/2018-GST dated 05.10.2018 and Clarification F. No. CBEC-20/10/07/2019-GST dated 22.06.2020: Emphasized that intelligence-based enforcement actions such as search, seizure, or investigation may be undertaken by either Central or State authorities, irrespective of taxpayer allocation. However, parallel adjudicatory proceedings cannot be initiated by both authorities on the same subject matter.

The Delhi High Court in Amit Gupta v. Union of India (2023 SCC OnLine Del 6664) confirmed this position, holding that Section 6 operates as a non obstante provision that ensures cross-empowerment while simultaneously prohibiting duplication of adjudicatory proceedings.

Scope of “Initiated Any Proceedings” under Section 6(2)(b)

The Supreme Court’s interpretation of the term “initiated any proceedings” in Section 6(2)(b) is crucial. The Court clarified:

• Meaning of Proceedings: Proceedings are to be understood in the context of adjudicatory actions. They formally begin only with the issuance of a show cause notice, which sets out the precise allegations, contraventions, and liabilities.
• Preliminary Steps: Summons under Section 70, inspections, searches, and collection of evidence are investigative steps, not adjudicatory proceedings. They serve the purpose of gathering material to decide whether proceedings should be initiated.
• Subject Matter Crystallization: The subject matter is identified only upon issuance of a show cause notice, which defines the scope of dispute between the assessee and the department.
• Applicability of the Statutory Bar: The bar under Section 6(2)(b) is attracted only when two different authorities initiate adjudicatory proceedings on the same subject matter. If the contraventions are distinct and unrelated, separate proceedings can be pursued by different authorities.

Thus, the issuance of summons by itself cannot be equated with the initiation of proceedings. The legal threshold for initiation is the issuance of a show cause notice.

Case Law Comparisons

The Court’s interpretation aligns with and clarifies earlier judicial pronouncements:

• Canon India Pvt. Ltd. v. Commissioner of Customs (2021) 376 ELT 3 (SC): The Supreme Court emphasized the importance of jurisdictional clarity and limitations on officers acting beyond statutory empowerment. While that case concerned customs law, its principle of restricting unauthorized parallel actions resonates with GST enforcement.
• Amit Gupta v. Union of India (2023 SCC OnLine Del 6664): The Delhi High Court underscored that Section 6 bars duplication of adjudicatory proceedings and functions as a shield against multiple proceedings on the same subject matter.
• Union of India v. Mohit Minerals Pvt. Ltd. (2022) 4 SCC 481: Though primarily addressing the validity of ocean freight levy, this case reiterated the constitutional ethos of GST as a harmonized, cooperative federal structure, which provides the backdrop to Section 6’s framework.

By situating Armour Security within this judicial context, the Court has reinforced the distinction between preliminary investigative powers and the formal initiation of adjudicatory proceedings.

Purport of an “Order” under Section 6(2)(a)

Section 6(2)(a) contains another important procedural safeguard. It provides that when a proper officer issues an order under the CGST Act, a corresponding order under the SGST/UTGST Act must also be passed. The rationale for this requirement is:

• To ensure coordination between authorities;
• To prevent duplication or multiplicity of orders;
• To maintain uniformity in adjudication and avoid conflicting outcomes between Central and State jurisdictions.

This safeguard strengthens the framework of single administrative interface by ensuring that taxpayers are not subjected to inconsistent or repetitive orders.

Guidelines for Handling Overlapping Proceedings

In light of the statutory framework and judicial clarifications, certain guiding principles emerge for both taxpayers and authorities:

1.Duty of the Assessee: Taxpayers are bound to comply with summons, notices, or requests for information. At the same time, they should promptly inform the concerned authority if parallel or overlapping inquiries are being made.

2. Duty of Authorities: Proper officers must verify whether multiple proceedings pertain to the same subject matter. Coordination between Central and State authorities is essential to determine jurisdiction and avoid duplication.

3. Resolution of Conflict: Where disagreement arises between authorities, the principle of priority applies—the authority which first initiated formal adjudicatory proceedings retains primacy. In case of a deadlock, judicial intervention may be invoked.

4. Systemic Improvements: The development of integrated IT infrastructure and robust data-sharing mechanisms is critical. Such measures will prevent harassment of taxpayers, enhance administrative efficiency, and ensure that enforcement efforts are streamlined.

Practical Implications for Taxpayers

• Clarity on Compliance: Taxpayers can now clearly distinguish between investigative summons and actual initiation of proceedings. This provides legal certainty and reduces the risk of challenging premature actions.
• Reduced Harassment: The ruling curtails the possibility of multiple authorities simultaneously initiating adjudicatory actions, protecting businesses from duplicative demands.
• Strategic Defence: Taxpayers can effectively contest any overlapping show cause notices, citing the bar under Section 6(2)(b).
• Ease of Doing Business: The judgment strengthens trust in GST administration, aligning with the government’s larger objective of promoting a fair and efficient tax regime.

Conclusion

The Supreme Court’s ruling in Armour Security provides much-needed clarity on the interpretation of Section 6(2)(b) of the CGST Act. The Court’s recognition that summons and investigative measures are preliminary in nature ensures that taxpayers are not wrongfully subjected to claims of parallel proceedings. By holding that formal proceedings commence only with the issuance of a show cause notice, the Court has reinforced legal certainty and procedural discipline.

Section 6, as interpreted, reflects a carefully calibrated balance between effective enforcement and protection of taxpayer rights. It prevents duplication of adjudicatory efforts, safeguards taxpayers from unnecessary harassment, and furthers the constitutional principle of cooperative federalism, which underpins the GST framework. This decision will serve as a guiding precedent for resolving disputes on jurisdictional overlaps and will help streamline the administration of GST enforcement going forward.

*****

( the views expressed in this article are strictly personal and author of this article can be reached at caprudhvigst@gmail.com)