Metalax Industries Vs GST Officer Ward 66 & Ors. (Delhi High Court)
The Delhi High Court, in the case of Metalax Industries vs. GST Officer Ward 66 & Ors., examined the validity of tax proceedings initiated by State GST authorities for Financial Years 2017-18 and 2018-19. The petitioners challenged the proceedings based on Section 6(2)(b) of the Central Goods and Services Tax (CGST) Act, 2017, arguing that once an investigation had commenced by the Directorate General of GST Intelligence (DGGI), the State GST authorities could not conduct parallel proceedings. The court referred to its earlier rulings in DLF Home Developers Limited vs. Sales Tax Officer, where it had clarified that simultaneous investigations by different tax authorities on the same issue were not permissible. Given that the DGGI had already issued a show cause notice (SCN) covering the relevant period and tax demands, the court found merit in the petitioners’ claim that State GST authorities could not issue separate orders for the same matter.
The High Court subsequently quashed the SCNs issued by the State GST department and the corresponding tax demands. However, it clarified that the final adjudication on the matter would be determined by the ongoing DGGI investigation. The ruling reaffirmed that State GST authorities could review and take necessary actions based on the outcome of the DGGI proceedings but could not independently pursue parallel assessments for the same issue and time period. The court’s decision highlights the need for clear jurisdictional demarcations between tax authorities to avoid duplication of proceedings and potential taxpayer hardship.
