2026-VIL-673-KAR
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SGST High Court Cases

GST - Section 6(2)(b) of CGST Act, 2017 - Parallel Proceedings – Petitioner, engaged in iron and steel waste scrap business, was subjected to investigation by State GST authorities starting May 2025 for alleged discrepancies in GST payment. Subsequently, Central GST authorities (DGGI) commenced investigation based on intelligence input regarding fake invoices and fraudulent input tax credit availment - Challenge to proceedings initiated by the DGGI on the ground that parallel investigations by State and Central GST authorities violate Section 6(2)(b) of the CGST Act, 2017 – HELD - The prohibition against parallel proceedings under Section 6(2)(b) applies only when both proceedings seek to assess or recover identical tax liability or alleged offences on the same facts - The Supreme Court judgment in Armour Security (India) Limited case establishes that intelligence-based enforcement action can be initiated by either Central or State tax administrations despite the taxpayer being assigned to the other administration and that mere inquiry or gathering of evidence does not constitute "proceedings" within the meaning of Section 6(2)(b) - In the present case, the State GST authorities had initiated inquiry based on discrepancies in GST payment, whereas the DGGI commenced investigation based on specific intelligence input indicating involvement in receiving fake invoices from fictitious suppliers, which constitutes a distinct subject-matter – Further, after the complaint was received, the SGST authorities transferred the pending investigation to the CGST authorities, in accordance with the Armour Security judgment – Since the investigations pertain to different subject-matters and the transfer of investigation follows the prescribed guidelines, the challenge to parallel proceedings is dismissed – The petition is dismissed - Arrest and Compliance with GST Investigation Guidelines - The petitioner challenges his arrest on the grounds that it violates Article 22 of the Constitution and Section 47 of the BNS, 2023, claiming that grounds of arrest were not communicated to him in writing and that the arrest was effected without proper notice – Whether the arrest of the petitioner pursuant to Section 69(1) of the CGST Act, 2017 complies with the procedural requirements - HELD - The Apex Court in Radhika Agarwal v. Union of India and subsequent judgments has established that arrest under the GST Act requires satisfaction of conditions specified in Section 132(5) where the amount of tax evaded or input tax credit wrongly availed exceeds the statutory threshold and that reasons to believe must be based on credible material and objective assessment rather than mere suspicion – The CBIC Instruction No. 01/2025-GST dated 13 January 2025 mandates that grounds of arrest must be explained to the arrested person and furnished in writing as an annexure to the arrest memo with acknowledgment taken from the arrestee - In the present case, the petitioner fraudulently availed ineligible ITC exceeding the statutory threshold, engaged in obstruction and destruction of evidence during search proceedings, attempted to flee, and displayed non-cooperation with investigation, thereby satisfying the legal ingredients for arrest including the necessity to secure custodial interrogation and prevent further destruction of evidence. The arrest memo and grounds of arrest were duly communicated to the petitioner in writing and acknowledged by him - The arrest was undertaken in compliance with the Apex Court's guidelines and the amended GST investigation instructions; therefore, the arrest cannot be deemed illegal. The petition stands dismissed.
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