The Delhi High Court has held that the bar under Section 6(2)(b) of the CGST Act applies only where two proceedings concern the same subject matter, meaning the same specific tax liability arising from the same set of facts, the same contravention, and the same assessment period. Where the proceedings relate to different financial years and distinct infractions, one under Section 73 and the other under Section 74, they are not barred as parallel proceedings.
The Court further held that where the impugned order demonstrates consideration of the taxpayer’s reply, a challenge based on Section 75(4) and alleged breach of natural justice cannot succeed, particularly when an efficacious statutory appellate remedy is available. Accordingly, the Court confirmed the order against Ramada Engineering Industry
The Division Bench comprising Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul observed that Section 6(2)(b) of the CGST Act is intended to prohibit parallel or duplicative proceedings only in respect of the same subject matter, namely where the proceedings pertain to the same specific tax liability, arise from the same set of facts, and relate to the same contravention for the same time period. The Bench observed that, to determine whether the bar applies, the two show cause notices and the tax deficiencies claimed thereunder must be examined to ascertain whether the specific tax liability and infraction sought to be assessed are identical.
On facts, the Bench found no overlap in the assessment periods, since the earlier proceedings under Section 73 related to FY 2019–2020, while the later proceedings under Section 74 related to FY 2018–2019. The Bench also clarified that although the Section 74 notice referred to “2018–2019 onwards”, the operative portion of the impugned order confined the demand to FY 2018–2019.
The Bench further observed that the nature of the infractions in both proceedings was distinct. Proceedings under Section 73 concern short payment of tax or wrongful availment of ITC absent fraud, wilful misstatement or suppression, whereas proceedings under Section 74 are attracted where the tax liability arises by reason of fraud, suppression or deliberate misstatement. The statutory scheme therefore contemplates two separate and qualitatively distinct species of infraction.
Applying this distinction, the Bench noted that the Section 73 proceedings stemmed from discrepancies in declaration of tax liability in annual returns, whereas the Section 74 proceedings were founded on alleged wrongful availment of ITC on the basis of goods-less invoices issued by a non-existent entity. Accordingly, the subject matter, contravention, assessment period, and specific tax liability in the two proceedings were clearly distinguishable.
The Bench also rejected the plea of violation of Section 75(4), finding from the impugned order that the petitioner’s reply dated August 01, 2025 had been duly adverted to and considered. It therefore held that no infraction of principles of natural justice was made out. The Bench additionally noted that the petitioner had an efficacious alternative remedy by way of appeal under Section 107 of the CGST Act read with Rule 109 of the CGST Rules.
Briefly, the petitioner, a partnership firm registered under the GST regime and engaged in the supply of scientific products, challenged the Order-in-Original passed by the Principal Commissioner, CGST, whereby a demand of Rs. 12.11 lakhs were confirmed pursuant to a show cause notice issued under Section 74 of the CGST Act for FY 2018–2019.
Prior to this, respondent no. 2 had issued a show cause notice under Section 73 of the SGST Act for FY 2019–2020, proposing a demand of Rs. 15.72 lakhs on account of incorrect declaration of tax liabilities in Form GSTR-9, particularly relating to excess availment of input tax credit on inward supplies, which demand was confirmed by Order-in-Original.
Thereafter, another show cause notice was issued under Section 74 of the CGST Act for FY 2018–2019, proposing a demand of Rs. 12.11 lakhs on the allegation of wrongful availment of input tax credit from goods-less invoices received from a non-existent firm, namely M/s Sawariya Traders. The petitioner replied on August 01, 2025 contending that the subsequent proceedings were barred under Section 6(2)(b) of the CGST Act.
The petitioner argued before the High Court that the Section 74 proceedings arose from the same subject matter as the earlier Section 73 proceedings and were therefore hit by the bar against parallel proceedings under Section 6(2)(b). The petitioner also contended that no notice for personal hearing was received and that the impugned order did not consider its reply, thereby violating Section 75(4) of the CGST Act.
Appearances:
Advocates Akhil Krishan Maggu, Vikas Sareen, Oshin Maggu, Aryan Nagpal, and Mehak Sharma, for the Petitioner
Advocates Atul Tripathi, Shubham Mishra, Gaurav Mani Tripathi, Akshay Sagar, Madhav Anand, Sumit K. Batra, and Priyanka Jindal, for the Respondent
