2026-VIL-645-TRI
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SGST High Court Cases

GST – Benefit of Notification No.06/2020-CT dated 03.02.2020 to Revenue, Jurisdiction to initiate proceedings beyond statutory limitation period, Prohibition on parallel proceedings on identical subject matter - Appellant received a Demand-cum-Show Cause Notice for financial year 2017-18 issued on 22.07.2024, which was beyond five years from 31.12.2018 (the due date for furnishing annual return for 2017-18) - Whether the Respondent had jurisdiction to initiate proceedings under Section 74(1) of the CGST Act, 2017 for the financial year 2017-18 when the notice was issued beyond the statutory limitation period of five years – HELD - The Notification No.06/2020 dated 03.02.2020 extending the time limit for furnishing annual return for 2017-18 was intended for the benefit of assesses who had not filed their annual return by the original due date and was not intended to extend the time limit for the Respondent to initiate proceedings under Section 74(10). No other notification under Section 168A of the CGST Act, 2017 extending the time limit for exercising powers under Section 74 was placed before the Court. The notice issued by CGST authorities regarding wrongful deposit of VAT did not constitute initiation of proceedings under Section 74 as it was merely a notice for scrutiny and did not contain allegations of fraud or willful misstatement required under Section 74(1). Therefore, the Respondent acted without jurisdiction in issuing the show cause notice and passing the Order-in-Original for financial year 2017-18 – The SCN and Order-in-Original for 2017-18 are set aside and the writ petition is allowed - Prohibition on parallel proceedings on identical subject matter - Appellant received show cause notices from State GST authorities regarding mismatches between Input Tax Credit availed in Electronic Credit Ledger and amounts declared in Annual returns for financial years 2018-19 and 2019-20, which proceedings were subsequently dropped. Thereafter Respondent-CGST Authorities issued a Demand-cum-Show Cause Notice covering excess availment of ITC for the same financial years - Whether Respondent could initiate proceedings for the same subject matter of excess availment of ITC for 2018-19 and 2019-20 when proceedings on identical subject matter had already been initiated by SGST authorities – HELD - The Section 6(2)(b) of the CGST Act, 2017 prohibits initiation of any proceedings on the same subject matter, and identity of subject matter is a mandatory pre-condition for invoking the statutory bar, as established by the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate. The expression "initiation of proceedings" refers to formal commencement of adjudicatory proceedings by way of issuance of show cause notice and the term "subject matter" refers to any tax liability, deficiency or obligation arising from any particular contravention. Where two proceedings initiated by the Department seek to assess or recover an identical or partial overlap in tax liability, deficiency or obligation from the same contravention, the bar of Section 6(2)(b) is attracted. Since the SGST authorities had already issued SCNs covering the aspect of excess availment of ITC for 2018-19 and 2019-20, Respondent could not have initiated proceedings into the same aspect - Show cause notice and Order-in-Original are set aside to the extent they relate to excess availment of ITC for 2018-19 and 2019-20; however, proceedings relating to short payment of GST for these years, which was not subject matter of SGST proceedings, are permitted to continue.
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