Manisha Yadav
On 14 August 2025, the Supreme Court decided that summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) do not count as “initiation of proceedings” according to Section 6(2)(b). This ruling allows both Central & State GST authorities to carry out investigations at the same time.
The Court also provided guidelines to avoid overlap in decision-making between Central and State GST authorities. These guidelines aim to uphold the GST system’s principles of having a “single interface” and “cross-empowerment.” A Bench of Justices JB Pardiwala and R Mahadevan looked at different High Court decisions regarding whether proceedings include inquiries or investigations and whether summons represent initiation for this purpose.
The Supreme stated,
“Issuance of summons cannot be seen as the initiation of proceedings, because the Department still has the option not to start any proceedings at that point. Simply considering the possibility of action cannot be equated with ‘proceedings,’ as this would weaken the idea of cross-empowerment in the Act.”
A public company called Armour Security, which provides security services, received a show cause notice in November 2024 from the Delhi GST authorities for the tax period from April 2020 to March 2021. This notice claimed that the company under-declared its revenue and made incorrect input tax credit claims, including credits taken from canceled dealers. In January 2025, officers from the CGST Delhi East Commissionerate searched the company’s premises under Section 67(2), confiscated electronics and documents, and issued summons to the company’s directors on January 16 and 23, asking them to present relevant documents.
The company argued that Section 6(2)(b) of the CGST Act prevents a second authority from starting proceedings on same issues once another authority has acted. They claimed that the Central GST summons touched on the same matters already being investigated by the State GST department. The Court explained that “initiation of any proceedings” in Section 6(2)(b) refers to starting formal adjudication through a show cause notice, and does not include issuing summons or conducting searches or seizures.
The Court also clarified that the same subject matter standard depends on the nature and scope of the proceedings, not just overlapping facts or time periods. It stated that two authorities can’t adjudicate the same issue but can investigate similar matters. When the proceedings concern different violations, they do not fall under same subject matter even if the tax liability or obligations are similar, the Bench determined.
In its decision, the Court reaffirmed that the GST system is based on two key principles: a “single interface” model, which ensures that only one authority handles the adjudication of a specific matter, and “cross-empowerment,” which allows both Central and State authorities to act on intelligence-based enforcement within the taxpayer community. The Court established a nine-point framework to help manage cases where both authorities investigate related matters. These guidelines do not change the law but provide a procedural roadmap for authorities and taxpayers.
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