Facts of the Case

M/s Adarsh Global Trades and Services Pvt Ltd challenged a show-cause notice dated 30.05.2022 and a consequential order dated 18.07.2023 demanding roughly Rs. 17.17 crore, issued by the State GST authority (respondent no.6). The petitioner's core grievance was that the Directorate General of GST Intelligence (DGGI), a Central authority, had already initiated proceedings on the same subject-matter, and the State authority could not simultaneously initiate a fresh proceeding for the same cause of action, since this would be barred under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 — the provision that prevents both Central and State GST authorities from proceeding on the same matter at once (cross-empowerment/single-authority principle).

Issues Involved

  1. Whether the State GST authority (respondent no.6) could initiate and continue proceedings under the impugned show-cause notice when the DGGI (a Central authority) had already initiated and was proceeding with an investigation into the same subject-matter.
  2. Whether such simultaneous proceedings by both authorities were barred under Section 6(2)(b) of the CGST Act, 2017.

Petitioner's Arguments

  • Simultaneous proceedings on the same cause of action by both the DGGI and the State GST authority were impermissible under Section 6(2)(b) of the CGST Act, 2017.
  • The impugned show-cause notice and order dated 18.07.2023 were arbitrary, illegal, and in violation of Articles 14 and 19 of the Constitution as well as the principles of natural justice, and the State authority lacked jurisdiction to pass the order.

Respondent's Arguments

  • The Standing Counsel for the State Department produced correspondence dated 26.09.2023 informing the Court that the State authorities had themselves decided to refrain from proceeding further with the show-cause notice, since the matter had already been investigated and proceeded with by the DGGI.

Court Order / Findings

  • The Court did not render any final ruling interpreting Section 6(2)(b) of the CGST Act, since the State authority's own concession resolved the practical grievance.
  • Since the petitioner's grievance stood redressed by the State's decision to refrain from proceeding further, the Court held that the cause in the writ petition no longer survived for adjudication.
  • It expected that any material/documents collected by the State authority during the impugned proceedings could be transferred to the DGGI to enable it to take further action, if any.
  • The writ petition was accordingly dismissed as infructuous, without costs.

Important Clarification

The Court did not lay down a binding interpretation of Section 6(2)(b) of the CGST Act on parallel proceedings by Central and State GST authorities — the issue became moot only because the State authority itself chose to step back once the DGGI's parallel investigation was pointed out. Taxpayers facing genuinely simultaneous proceedings by both wings of the GST administration on the same subject-matter should flag Section 6(2)(b) early, as it is squarely designed to prevent exactly this kind of duplication.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Section 6(2)(b), barring simultaneous proceedings by Central and State tax authorities on the same subject-matter.
  • Constitution of India, 1950 — Articles 14 and 19 (equality and freedom to carry on business), and Article 226, under which the writ petition was filed.

Decision – In Favour of

Disposed of as infructuous — the petitioner's grievance was resolved by the State authority's own decision to step back in favour of the DGGI's investigation, and the writ petition was dismissed without a ruling on the merits of the Section 6(2)(b) argument.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case Number: Writ Petition No. 25699 of 2023
  • Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice Laxmi Narayana Alishetty
  • Date of Order: 27.09.2023

Link to Download the Order

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