The Delhi High Court has declined to exercise its writ jurisdiction to interfere with a GST demand of ₹4.80 crore holding that the crucial question of whether Central GST authorities initiated parallel proceedings in violation of Section 6(2)(b) of the CGST Act, 2017 requires a detailed factual comparison of the State and Central GST proceedings.
The Bench of Justice Anil Khetarpal and Justice Shail Jain observed that the statutory provision is intended to prevent parallel proceedings by Central and State tax authorities on the same subject matter, but determining whether two proceedings actually concern the same subject matter cannot be decided merely because both involve GST or Input Tax Credit (ITC).
The bench observed that the respective show cause notices, periods involved, allegations, transactions, computations and supporting material would have to be examined.
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The controversy arose from proceedings concerning alleged excess availment of ITC. The company is a registered taxable person under the GST regime.
On November 7, 2023, the Anti-Evasion Branch of the Central GST Department issued summons to the petitioner seeking an explanation regarding a discrepancy between the ITC reflected in GSTR-3B and GSTR-9. The petitioner responded to the summons on November 22, 2023, following which proceedings before the Central GST authorities continued.
Thereafter, the State GST authorities issued a Show Cause Notice dated November 26, 2024, specifically concerning FY 2020-21. The notice alleged excess availment of ITC amounting to ₹2,44,97,609. The company submitted its reply on January 21, 2025.
Importantly, the State GST proceedings were subsequently dropped by an order dated February 22, 2025.
However, while the Central GST investigation was continuing, the Central authorities issued another Show Cause Notice dated May 26, 2025 under Section 74 of the CGST Act. This notice covered a considerably wider period—from FY 2018-19 to FY 2023-24—and alleged fraudulent availment of excess ITC.
The petitioner replied to the Central GST notice on July 25, 2025 and subsequently participated in personal hearings held on September 16 and November 19, 2025.
The adjudication ultimately culminated in an Order-in-Original dated December 3, 2025, passed by the Additional Commissioner, CGST, Delhi South Commissionerate, creating a demand of ₹4,80,26,753 along with penalty.
The insurance company approached the High Court contending that the Central GST proceedings, insofar as they related to FY 2020-21, were barred by Section 6(2)(b) of the CGST Act.
The provision states, in substance, that once a proper officer under the State GST or Union Territory GST law has initiated proceedings on a subject matter, proceedings cannot subsequently be initiated by a proper officer under the CGST Act on the same subject matter.
According to the petitioner, the State GST authorities had already initiated proceedings concerning the alleged excess ITC for FY 2020-21 and had subsequently dropped those proceedings. Therefore, the petitioner argued that the Central authorities could not initiate or continue another proceeding concerning the same dispute.
The company contended that allowing the Central proceedings to continue would result in an impermissible duplication of proceedings and defeat the statutory safeguard contained in Section 6(2)(b).
The department opposed the writ petition primarily on the ground that the petitioner had an efficacious statutory remedy of appeal against the Order-in-Original.
The department further argued that the State and Central proceedings did not necessarily concern the same subject matter. While the State proceedings were confined to FY 2020-21, the Central proceedings covered FY 2018-19 to FY 2023-24 and were allegedly based on different material and allegations.
The department also highlighted that the petitioner had not raised the Section 6(2)(b) objection in its written response to the Central GST show cause notice. The petitioner had participated in the adjudication proceedings and raised its substantive defence before the adjudicating authority.
The central legal issue before the High Court was whether the Central GST proceedings relating to FY 2020-21 were barred because State GST authorities had previously initiated proceedings concerning the same financial year.
The Court emphasised that Section 6(2)(b) is procedural in nature and seeks to prevent parallel proceedings and conflicting determinations by Central and State GST authorities concerning the same subject matter.
However, the Bench cautioned against treating every proceeding involving the same tax period or the same broad issue as automatically involving the same subject matter.
According to the Court, the phrase “same subject matter” is critical. The mere fact that both proceedings involve GST or ITC does not conclusively establish that they are identical.
Instead, the authorities would have to examine several factors, including: the period covered by each proceeding; the allegations contained in the respective show cause notices; the transactions and ITC under scrutiny; the basis of the alleged ITC discrepancy; the computation of the alleged liability; the material relied upon by the respective authorities; and the liability sought to be determined.
The Court specifically noted that the State proceedings involved FY 2020-21 and alleged excess ITC of ₹2.44 crore, whereas the Central proceedings covered FY 2018-19 to FY 2023-24 and quantified the alleged excess ITC at ₹4.80 crore.
A significant aspect of the judgment is the Court’s clarification that the fact that both proceedings concern FY 2020-21 is not by itself sufficient to establish a violation of Section 6(2)(b).
The Court held that the Central proceedings covering additional financial years also did not automatically answer the question. Likewise, the fact that the State proceedings were limited to FY 2020-21 did not establish, without further examination, that the Central proceedings concerned an identical subject matter.
The Court therefore considered a detailed comparison of the underlying records necessary before determining whether Section 6(2)(b) was attracted.
The petitioner had relied upon an earlier judgment of the Delhi High Court in Alliance Polychem Private Limited v. Deputy Commissioner, CGST, Mundka Division, Delhi West & Ors., decided on December 8, 2025.
In that case, the Court was dealing with two proceedings involving the very same demand of ₹10.62 lakh towards ineligible ITC. Since the demand had already been confirmed in earlier proceedings and the assessee was pursuing an appeal against it, the Court had held that the same demand could not be raised again in subsequent proceedings and had quashed the subsequent demand.
The Bench, however, distinguished that decision from the present case.
According to the Court, in Alliance Polychem, the identity of the demand in the two proceedings was apparent from the record. In Liberty General Insurance’s case, however, the issue was whether the Central proceedings, insofar as they related to FY 2020-21, actually concerned the same subject matter as the earlier State proceedings.
The two proceedings differed in their period, quantum, allegations and underlying material, making a factual comparison necessary.
The High Court also took note of the fact that Liberty General Insurance did not raise the Section 6(2)(b) objection in its written reply to the Central GST show cause notice dated May 26, 2025.
The Court observed that the statutory bar under Section 6(2)(b) operates at the stage of initiation of proceedings. Therefore, where an assessee seeks to challenge continuation of parallel proceedings on this ground, the objection should ordinarily be raised at the earliest available opportunity, particularly upon receipt of the show cause notice.
The petitioner argued that the objection had nevertheless been raised during personal hearing. However, the Court noted that no material had been placed before it showing that such objection was recorded by the adjudicating authority or formed part of the adjudication record.
The petitioner had also participated in the adjudication process, submitted its substantive defence and availed personal hearings.
The Bench stressed that the question of whether Section 6(2)(b) applied could not appropriately be decided in the present writ proceedings without examining the underlying factual record.
The Court noted that the statutory appellate mechanism provides an appropriate forum for examining the respective show cause notices, allegations, calculations, supporting material, the State GST order dropping proceedings and the subsequent Central GST proceedings.
Consequently, the High Court held that it was neither necessary nor appropriate to express a final opinion on the petitioner’s Section 6(2)(b) contention at this stage.
The Court clarified that doing so without a complete examination of the factual record could unnecessarily foreclose issues that remain available to the petitioner in the statutory appeal.
Importantly, the judgment does not uphold the ₹4.80 crore demand on merits.
The High Court expressly declined to examine at this stage the petitioner’s challenges concerning: invocation of the extended limitation period under Section 74 of the CGST Act; correctness of the ITC demand; findings relating to fraud; wilful misstatement or suppression; interest; and penalties.
All these issues have been left open for consideration by the competent statutory Appellate Authority.
Similarly, the Court did not adjudicate the petitioner’s grievance regarding the manner in which the demand was reflected on the GST portal or the rectification application said to have been filed by the petitioner.
The Court expressly permitted the petitioner to place the relevant State and Central GST proceedings before the Appellate Authority.
This includes the State GST SCN dated November 26, 2024, the February 22, 2025 order dropping the State proceedings, the Central GST SCN dated May 26, 2025, and other relevant material.
The petitioner can specifically contend before the Appellate Authority that, to the extent the Central proceedings concern the same subject matter, they were prohibited by Section 6(2)(b) of the CGST Act.
The High Court further clarified that its observations regarding the absence of the objection in the written reply and the manner in which the objection was allegedly raised during adjudication were relevant only to the question of whether the Court should exercise writ jurisdiction at this stage. They should not be treated as findings on the merits of the Section 6(2)(b) objection before the Appellate Authority.
The petitioner had expressed concern that pursuing the writ petition before the High Court could create a limitation issue in filing the statutory appeal.
The Court noted that if the petitioner files an appropriate application before the competent Appellate Authority under Section 14 of the Limitation Act, 1963, seeking exclusion of the period during which the writ petition remained pending, the application would have to be considered by the Appellate Authority in accordance with law and on its own merits.
At the same time, the High Court made clear that it was expressing no opinion on whether the requirements of Section 14 were satisfied. That issue was left entirely to the competent authority.
The Delhi High Court ultimately disposed of the writ petition without deciding whether the Central GST proceedings were actually barred by Section 6(2)(b).
The Court held that the petitioner had an efficacious statutory appellate remedy and that determination of the alleged overlap between the State and Central proceedings required examination of the factual and statutory record.
The ruling is therefore significant not because the Court has conclusively held that Section 6(2)(b) does or does not bar the Central proceedings, but because it underscores the fact-specific nature of determining whether two GST proceedings concern the “same subject matter.”
For taxpayers facing parallel State and Central GST investigations, the judgment highlights the importance of carefully comparing the respective show cause notices, periods, demands, transactions, allegations and evidentiary material. It also underscores the practical importance of raising a Section 6(2)(b) objection at the earliest stage rather than waiting until after adjudication.
At the same time, the Court has preserved the taxpayer’s right to raise the objection in statutory appeal and has expressly directed that the Appellate Authority consider the contentions independently, without being influenced by the High Court’s observations.
The Delhi High Court has not ruled that the ₹4.80 crore GST demand is valid or that Section 6(2)(b) is inapplicable. Instead, it has held that deciding whether Central and State GST proceedings concern the same subject matter requires a detailed factual examination, which should be undertaken in the statutory appellate proceedings rather than in the present writ petition.
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