Section 6(2)(b) CGST Act | Statutory Bar Against Concurrent Proceedings Applies Only To Identical Subject Matter, Not Just Same Assessee Or Period: Delhi High Court

"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." Delhi High Court, in a ruling dated September 18, 2026, clarified the threshold for invoking the bar under Section 6(2)(b) of the CGST Act, holding that proceedings initiated by Central GST authorities are not automatically invalidated by prior proceedings initiated by State GST authorities unless the "same subject matter" is identical.

A bench of Justice Anil Kshetarpal and Justice Shail Jain observed that identity of subject matter must be determined by the specific liability or contravention being adjudicated, rather than the mere commonality of the assessee or the financial year.

The petitioner, a proprietorship firm, challenged two Show Cause Notices and subsequent adjudication orders issued by the Central GST authorities under Section 74 of the CGST Act. The petitioner contended that since the State GST authorities had previously initiated proceedings under Section 73 concerning Input Tax Credit (ITC) from the same supplier, 'M.R. Enterprises', the subsequent Central proceedings were barred by Section 6(2)(b). The Central authorities, however, maintained that their proceedings were based on distinct intelligence regarding fraudulent availment of ITC without actual supply of goods, which had not been adjudicated by the State authorities.

The primary question before the court was whether the initiation of proceedings by Central GST authorities under Section 74 was barred by the existence of prior State proceedings under Section 73, pursuant to Section 6(2)(b) of the CGST Act. The court was also tasked with determining whether issues of procedural fairness—such as the non-consideration of replies and non-supply of documents—warranted interference under Article 226 of the Constitution of India despite the availability of an appellate remedy.

Court's Observations and Judgment

The court underscored that the expression "same subject matter" in Section 6(2)(b) is of central significance. It rejected the petitioner's argument that a mere overlap in the financial year or the tax entity involved triggers the statutory bar. Instead, the bench emphasized that the bar is attracted only when the proceedings involve the same contravention or liability.

Clarifying Scope Of Section 6(2)(b) CGST Act

The bench noted that the State proceedings were initiated under Section 73, whereas the Central proceedings were initiated under Section 74 based on specific intelligence of "fraudulent availment of ITC through invoices which were not accompanied by actual supply of goods." The court held that the petitioner failed to demonstrate that the specific allegation of "bogus transactions" had been adjudicated in the earlier State proceedings.

"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."

Distinguishing Between Procedural Bar And Merits

Addressing the petitioner’s grievances regarding the non-consideration of its reply dated August 31, 2024, and the alleged failure to supply relied-upon investigation documents, the court held that these are matters pertaining to the merits of the adjudication. The court maintained that these issues are best examined by the appellate authority under Section 107 of the CGST Act rather than through a writ petition.

Appellate Remedy Must Be Exhausted

The court explicitly stated that it would not exercise its extraordinary jurisdiction under Article 226 in substitution of the statutory appellate mechanism when the issues require a detailed examination of the adjudication record and disputed questions of fact. It clarified that while a writ petition is not per se non-maintainable due to the existence of an alternative remedy, it is inappropriate in cases where the factual foundation of the challenge remains unsubstantiated.

"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."

The court concluded that the petitioner failed to establish the identity of the subject matter between the two sets of proceedings. Consequently, the writ petition was dismissed, granting the petitioner liberty to approach the appellate authority. The court further directed that all contentions, including those regarding the applicability of Section 6(2)(b) and the alleged non-consideration of the petitioner’s reply, shall remain open for the appellate authority to decide independently.

Date of Decision: 18 September 2026