GST · F2J-C-2841
Shri Krishna Industries v. Commissioner of CGST & Ors.
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Holding (ratio)
The bar on parallel proceedings for the same subject matter requires identity of the underlying liability or contravention. The same taxpayer, period or amount does not by itself bar a distinct Central investigation into alleged fraudulent input-tax credit.
Operative order (extract)
44. In view of the aforesaid discussion, the present Writ Petition is devoid of merit and is, accordingly, dismissed. 48. The present Petition, along with the pending application, stands disposed of in the aforesaid terms.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
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Complete searchable judgment text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 07.08.2026
Judgment pronounced on: 18.09.2026
Judgment uploaded on: 18.09.2026
# CNR No. DLHC010211512025
+ W.P.(C) 4897/2025 and CM APPL. 22525/2025
SHRI KRISHNA INDUSTRIES THROUGH IT PROPRIETOR
PROP MOHAN LAL .....Petitioner
Through: Mr. Rakesh Kumar, Adv.
versus
COMMISSIONER OF CENTRAL GOODS AND SERVICES
TAX AND ORS. .....Respondents
Through: Ms. Monica Benjamin, SSC
with Ms. Laiba Arif, Ms.
Prerika Narang, Advs.
CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MS. JUSTICE SHAIL JAIN
JUDGMENT
ANIL KSHETARPAL, J.:
1. The issue which arises for consideration in the present Petition
is whether the proceedings initiated by the Central Goods and Services
Tax authorities under Section 74 of the Central Goods and Services
Tax Act, 2017 [“CGST Act”] are liable to be interdicted on the ground
that the State Goods and Services Tax authorities had earlier initiated
proceedings under Section 73 of the CGST Act in respect of the
Petitioner concerning Input Tax Credit [“ITC”] allegedly availed from
M.R. Enterprises.
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NARAYAN
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2. By way of the present Petition, the Petitioner seeks quashing of
the Show Cause Notices dated 02.08.2024 and 04.08.2024 issued
under Section 74 of the CGST Act, as well as the Orders dated
31.01.2025 and 10.01.2025 passed pursuant thereto.
3. The principal grievance of the Petitioner is that the aforesaid
proceedings constitute proceedings on the same subject matter which
had already been dealt with by the State GST authorities and are,
therefore, barred by Section 6(2)(b) of the CGST Act. The Petitioner
also assails the Impugned Orders on the grounds of violation of
principles of natural justice, non-consideration of its reply, non-supply
of relied upon documents and alleged non-application of mind.
FACTUAL MATRIX
4. In order to appreciate the controversy involved in the present
Petition, the relevant facts, in brief, are required to be noticed.
5. The Petitioner is a proprietorship concern of Mr. Mohan Lal
and is stated to be engaged in the manufacture of plastic products. The
Petitioner was registered under the CGST Act as well as the Delhi
Goods and Services Tax Act, 2017 [“DGST Act”] with GSTIN No.
07ACLPL9679D1Z2. Its principal place of business is stated to be
situated at Plot No. E-23, Pocket-E, Sector-5, DSIIDC, Bawana, North
West Delhi.
6. The dispute in the present Petition relates to ITC allegedly
availed by the Petitioner on the basis of invoices issued by M.R.
Enterprises. According to the Central GST authorities, the
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investigation conducted by the Directorate General of GST
Intelligence [“DGGI”] revealed that M.R. Enterprises had passed on
inadmissible ITC to various recipients without actual supply of goods.
The Petitioner figures amongst the recipients against whom
proceedings were consequently initiated.
7. Prior thereto, proceedings had been initiated by the State GST
authorities in respect of the Petitioner for Financial Year 2017-18. The
State authority issued a Show Cause Notice dated 23.09.2023
proposing, inter alia, a demand in relation to ITC claimed by the
Petitioner from M.R. Enterprises. The Petitioner submitted its reply
dated 10.10.2023 along with supporting documents.
8. An order dated 28.12.2023 came to be passed by the State GST
authority. The Petitioner thereafter approached this Court by way of a
writ petition. By order dated 05.03.2024, this Court directed the
proper officer to re-adjudicate the Show Cause Notice after affording
an opportunity of personal hearing and to pass a fresh speaking order
in accordance with law within the period prescribed under Section
75(3) of the CGST Act.
9. Pursuant to the aforesaid order, the State GST authority passed
a fresh order dated 29.07.2024. The controversy between the parties
principally concerns the effect of the said order on the subsequent
proceedings initiated by the Central GST authorities. According to the
Petitioner, the State proceedings had already dealt with the ITC
claimed from M.R. Enterprises and, consequently, the Central GST
authorities could not subsequently initiate proceedings in respect
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thereof. The Respondents, on the other hand, submit that the State
proceedings were under Section 73 of the CGST Act and concerned a
different allegation, whereas the subsequent proceedings under
Section 74 were founded upon intelligence gathered during
investigation regarding fraudulent availment of ITC through
transactions not accompanied by actual supply of goods.
10. In the meantime, the DGGI issued a Show Cause Notice dated
02.08.2024 to the Petitioner under Section 74 of the CGST Act in
respect of alleged inadmissible ITC availed from M.R. Enterprises
bearing GSTIN No. 07BDIPS1163G1ZI. The notice was founded
upon investigation and intelligence material gathered by the DGGI
regarding availment and passing on of inadmissible ITC through
invoices allegedly not accompanied by actual supply of goods.
11. A further Show Cause Notice dated 04.08.2024 was issued by
Respondent No.1, CGST Delhi North, under Section 74 of the CGST
Act in respect of alleged ineligible ITC availed by the Petitioner from
M.R. Enterprises bearing GSTIN No. 07EJVPS7789Q1ZC. The
Petitioner was included amongst the recipients against whom
inadmissible ITC was proposed to be recovered.
12. The Petitioner states that it submitted a reply dated 31.08.2024
to the Show Cause Notices along with supporting documents.
According to the Petitioner, the said reply specifically brought to the
notice of the adjudicating authorities the earlier proceedings
conducted by the State GST authority and the alleged bar contained in
Section 6(2)(b) of the CGST Act. The Petitioner further asserted that
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the transactions were genuine, that the goods had actually been
received at its premises and that there was no fraud, wilful
misstatement or suppression of facts so as to warrant invocation of
Section 74 of the CGST Act.
13. The proceedings initiated pursuant to the Show Cause Notice
dated 04.08.2024 culminated in the Order dated 10.01.2025. The said
order records the investigation concerning M.R. Enterprises and the
recipients falling within the jurisdiction of CGST Delhi North. The
adjudicating authority ultimately confirmed the demand of
Rs.6,12,000/- towards alleged ineligible ITC, along with applicable
interest and penalty.
14. The proceedings initiated pursuant to the Show Cause Notice
dated 02.08.2024 culminated in the Order dated 31.01.2025. In the
said order, the adjudicating authority considered the material gathered
during investigation and confirmed, inter alia, the demand of
Rs.6,12,000/- against the Petitioner towards inadmissible ITC,
together with applicable interest and penalty.
15. The Petitioner has, consequently, approached this Court
challenging both the Show Cause Notices as well as the Orders dated
10.01.2025 and 31.01.2025.
CONTENTIONS OF THE PARTIES
16. Contentions of the Petitioner
16.1. Learned counsel for the Petitioner submitted that the
proceedings initiated by the Central GST authorities are barred by
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Section 6(2)(b) of the CGST Act. According to learned counsel, the
State GST authority had already initiated proceedings concerning the
ITC claimed by the Petitioner from M.R. Enterprises and the said
proceedings had culminated in the fresh order dated 29.07.2024. Thus,
according to him, the subsequent proceedings initiated by the Central
authorities pertain to the same subject matter.
16.2. It was further submitted that the two Central proceedings have
resulted in duplication of proceedings and overlapping demands. It
was submitted that both proceedings concern the same assessee, the
same Financial Year and the same alleged ITC of Rs.6,12,000/-. Mere
change in the statutory provision invoked cannot enable the authorities
to initiate proceedings in respect of a subject matter which had already
been dealt with by the State GST authority.
16.3. Reliance was placed upon Section 6(2)(b) of the CGST Act and
the judgment of the Supreme Court in Armour Security (India) Ltd. v.
Commissioner, CGST, Delhi East Commissionerate & Anr.1, as well
as the judgment of this Court in Metalax Industries v. GST Officer,
Ward 66 & Ors., decided on 26.11.2024.
16.4. It was further submitted that the reply dated 31.08.2024
furnished by the Petitioner was not duly considered. Particular
emphasis was placed upon the observation contained in the Order
dated 10.01.2025 that the noticees had not submitted any reply,
despite the Petitioner having submitted its reply along with supporting
documents. It was submitted that such non-consideration constitutes
1
2025 SCC OnLine SC 1700
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violation of the principles of natural justice.
16.5. It was also contended that the relied-upon investigation material
was not supplied to the Petitioner and that the Impugned Orders are
non-speaking orders. It was submitted that the Petitioner had
specifically disputed the allegation of bogus transactions and asserted
that the goods had actually been received at its premises.
16.6. It was lastly submitted that there was no fraud, wilful
misstatement or suppression of facts so as to justify invocation of
Section 74 of the CGST Act. The demand and penalty imposed upon
the Petitioner are, therefore, stated to be unsustainable.
17. Contentions of the Respondents
17.1. Per contra, learned standing counsel for the Respondents
submitted that the challenge based upon Section 6(2)(b) of the CGST
Act proceeds on an erroneous understanding of the expression “same
subject matter”. According to learned counsel, the statutory bar is
attracted only when the subsequent proceedings concern the same
subject matter as the proceedings already initiated by the other tax
authority.
17.2. It was submitted that the State proceedings and the subsequent
Central proceedings are materially different. The State proceedings
were initiated under Section 73 of the CGST Act, whereas the
proceedings initiated by the Central authorities under Section 74 were
founded upon intelligence and investigation which allegedly revealed
fraudulent availment of ITC through transactions not accompanied by
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actual supply of goods.
17.3. It was further submitted that the State proceedings did not
adjudicate upon the allegation that the transactions were bogus or that
the invoices issued by the supplier were not accompanied by actual
supply of goods. The subsequent investigation, according to the
Respondents, brought to light material which formed the basis of the
proceedings under Section 74.
17.4. It was next submitted that the two Central proceedings
themselves concern M.R. Enterprises bearing different GSTINs and
arise from separate investigative proceedings. Thus, according to the
Respondents, the fact that the supplier is described by the same trade
name cannot, by itself, establish identity of the supplier, transactions
or subject matter.
17.5. Reliance was placed upon the judgment of the Supreme Court
in Armour Security (supra), particularly the conclusions recorded in
paragraph 96 thereof, to submit that Section 6(2)(b) bars proceedings
on the same subject matter, whereas proceedings concerning distinct
infractions are not barred merely because the tax liability or obligation
may be similar.
17.6. As regards the remaining objections, it was submitted that the
same relate to the merits of the adjudication, including the
genuineness of the transactions, receipt of goods, availability of ITC,
existence of fraud or suppression and consideration of the documents
furnished by the Petitioner. It was submitted that these issues can
appropriately be examined by the statutory appellate authority under
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Section 107 of the CGST Act.
ANALYSIS & FINDINGS
18. This Court has heard learned counsel for the parties at
considerable length and carefully perused the material on record.
19. At the outset, the principal contention raised by the Petitioner is
required to be examined in the context of Section 6(2)(b) of the CGST
Act. The said provision seeks to prevent initiation of proceedings by
one tax authority where proceedings on the same subject matter have
already been initiated by the other tax authority.
20. The expression “same subject matter” is, therefore, of central
significance. The Supreme Court in Armour Security (supra) has
explained that the expression has to be understood with reference to
the particular liability, deficiency or contravention which is sought to
be adjudicated. Where the proceedings concern the same liability or
the same contravention, the statutory bar would operate. Conversely,
distinct infractions would not become the same subject matter merely
because they relate to the same assessee, the same period or involve a
similar tax liability.
21. The question which consequently arises is whether the
proceedings initiated by the State GST authority and the subsequent
proceedings initiated by the Central GST authorities concern the same
liability or contravention.
22. The State proceedings in the present case were initiated under
Section 73 of the CGST Act in respect of Financial Year 2017-18 and
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included a demand concerning ITC claimed by the Petitioner from
M.R. Enterprises. The State proceedings culminated, after the order of
this Court dated 05.03.2024, in the fresh order dated 29.07.2024.
23. The subsequent proceedings initiated by the Central GST
authorities, on the other hand, were under Section 74 of the CGST Act
and were founded upon investigation and intelligence concerning
alleged fraudulent availment of ITC through invoices which,
according to the Department, were not accompanied by actual supply
of goods.
24. Thus, although there is a factual nexus between the two sets of
proceedings inasmuch as both relate to ITC claimed by the Petitioner
and refer to M.R. Enterprises, the nature of the allegation forming the
basis of the subsequent proceedings is materially different. The
Central proceedings proceed on the allegation that the ITC was
availed on invoices which were not accompanied by actual supply of
goods and that the availment was fraudulent in nature.
25. The mere fact that the State proceedings also concerned ITC
claimed from an entity described as M.R. Enterprises does not, by
itself, establish that the State authority had adjudicated the very same
contravention which forms the foundation of the subsequent
proceedings under Section 74.
26. The distinction is further borne out from the fact that the two
Central proceedings themselves refer to M.R. Enterprises bearing
different GSTINs, namely GSTIN No. 07BDIPS1163G1ZI and
GSTIN No. 07EJVPS7789Q1ZC. The difference in GSTINs is a
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relevant circumstance while determining whether the proceedings
relate to the same supplier and the same subject matter. At the same
time, such difference cannot, by itself, be treated as conclusive. The
nature of the liability and the contravention alleged in the respective
proceedings has to be examined.
27. The Petitioner has placed considerable emphasis on the fact that
the proceedings relate to the same Financial Year and involve ITC of
Rs.6,12,000/-. These circumstances, however, cannot by themselves
establish identity of subject matter. For the statutory bar under Section
6(2)(b) to operate, it is necessary to establish identity of the liability or
contravention which forms the subject matter of the two proceedings.
28. The contention that the Department cannot circumvent Section
6(2)(b) merely by changing the statutory provision invoked is
undoubtedly correct as a general proposition. However, the
applicability of Section 6(2)(b) cannot be determined merely by
comparing the provisions under which the proceedings have been
initiated. The underlying liability and contravention have to be
examined.
29. In the present case, the subsequent proceedings under Section
74 are founded upon intelligence and investigation concerning alleged
bogus transactions and fraudulent availment of ITC without actual
supply of goods. The Petitioner has not placed sufficient material
before this Court to establish that this very contravention had already
been adjudicated upon by the State GST authority in the proceedings
culminating in the order dated 29.07.2024.
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30. The reliance placed by the Petitioner upon the judgment of this
Court in Metalax Industries (supra) does not advance its case. The
applicability of Section 6(2)(b) necessarily depends upon the identity
of the subject matter of the two proceedings. The said provision
cannot be invoked merely because the two proceedings have some
common factual background or relate to the same assessee and period.
31. The judgment of the Supreme Court in Armour Security
(supra) furnishes the controlling principle. The statutory bar operates
where the proceedings concern the same subject matter. Where the
proceedings arise out of distinct infractions or liabilities, the mere
existence of some common factual or transactional background would
not attract the bar.
32. This Court is, therefore, unable to accept the contention of the
Petitioner that the proceedings initiated by the Central GST authorities
under Section 74 are, on the material placed before this Court, ex facie
barred by Section 6(2)(b) of the CGST Act.
33. The Petitioner has also raised objections concerning the filing
and consideration of its reply dated 31.08.2024, non-supply of relied-
upon documents and the alleged non-application of mind by the
adjudicating authorities.
34. These objections essentially require examination of the
adjudication record. The Petitioner would be entitled to place its reply
dated 31.08.2024 and the supporting documents before the appellate
authority and contend that the same were not considered. Likewise,
the question whether the relied-upon material was duly supplied and
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whether the adjudicating authorities correctly dealt with the defence
raised by the Petitioner can be examined in the statutory appellate
proceedings.
35. The same would apply to the Petitioner’s contention that the
transactions were genuine, that the goods had actually been received
at its premises and that there was no fraud, wilful misstatement or
suppression of facts. These are matters which go to the merits of the
adjudication and require examination of the factual and documentary
record.
36. It is also relevant to notice that the Impugned Orders dated
10.01.2025 and 31.01.2025 are appealable under Section 107 of the
CGST Act. The existence of an efficacious statutory remedy does not
render a writ petition per se non-maintainable. However, where the
issues raised require examination of the adjudication record and
disputed questions of fact, the High Court ordinarily does not exercise
its extraordinary jurisdiction under Article 226 in substitution of the
statutory appellate mechanism.
37. In the present case, the Petitioner has not established any
exceptional circumstance warranting interference by this Court at this
stage. The principal jurisdictional objection based upon Section
6(2)(b) is not sustainable on the material placed before this Court. The
remaining objections essentially concern the correctness of the
adjudication and are capable of being examined by the appellate
authority.
38. The contention of the Petitioner regarding the alleged
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duplication between the two Central proceedings also cannot, in the
present proceedings, furnish a basis for interference with the
impugned orders. The two proceedings refer to M.R. Enterprises
bearing different GSTINs and the Respondents assert that they arise
from separate investigative material. Whether any liability has, in fact,
been duplicated or whether the two proceedings concern identical
transactions is a matter which would require examination of the
respective Show Cause Notices and adjudication records.
39. The Petitioner is, therefore, not precluded from raising the
aforesaid contention before the appellate authority. The statutory
appellate authority, while examining the appeals, would be competent
to consider the complete record and determine whether there is any
duplication or overlapping liability in accordance with law.
40. This Court has also considered the Petitioner’s submission that
Section 74 could not have been invoked in the absence of material
establishing fraud, wilful misstatement or suppression of facts. Such a
contention directly concerns the basis and sustainability of the
adjudication under Section 74. The same can appropriately be urged
before the appellate authority, which is competent to examine the
material relied upon by the Department as well as the defence raised
by the Petitioner.
41. The extraordinary jurisdiction under Article 226 is
discretionary. The availability of a statutory appeal is a material
consideration where the challenge involves examination of factual
material and the correctness of findings recorded by the adjudicating
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authority. In the facts of the present case, the Petitioner has not made
out a case warranting interference with the impugned orders in
exercise of such jurisdiction.
42. It is, therefore, held that the Petitioner has failed to establish
that the proceedings initiated by the Central GST authorities are
proceedings on the “same subject matter” as the earlier proceedings
initiated by the State GST authority so as to attract the bar contained
in Section 6(2)(b) of the CGST Act.
43. Before concluding, it is clarified that the observations made
herein are confined to the question whether interference is warranted
in exercise of the extraordinary writ jurisdiction of this Court. This
Court has not expressed any final opinion on the merits of the
demand, the genuineness of the transactions, actual receipt of goods,
applicability of Section 16 of the CGST Act, existence of fraud, wilful
misstatement or suppression, the consideration of the reply dated
31.08.2024, supply of relied-upon documents, or the correctness of the
quantum of tax, interest or penalty.
CONCLUSION
44. In view of the aforesaid discussion, the present Writ Petition is
devoid of merit and is, accordingly, dismissed.
45. The Petitioner shall, however, be at liberty to avail the statutory
remedy of appeal under Section 107 of the CGST Act against the
Orders dated 10.01.2025 and 31.01.2025, in accordance with law.
46. Needless to state, in the event the Petitioner avails the statutory
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remedy, all contentions available to it in law shall remain open,
including the contentions relating to Section 6(2)(b) of the CGST Act,
the alleged overlapping proceedings, the filing and consideration of
the reply dated 31.08.2024, non-supply of relied-upon documents,
invocation of Section 74 and the merits of the demand, interest and
penalty.
47. The appellate authority shall consider the aforesaid contentions
independently and in accordance with law, without being influenced
by any observation contained in the present judgment except to the
extent expressly decided herein.
48. The present Petition, along with the pending application, stands
disposed of in the aforesaid terms.
ANIL KSHETARPAL, J.
SHAIL JAIN, J.
SEPTEMBER 18, 2026
jai/pal
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