The Supreme Court on Thursday ruled that summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 (CGST Act) will not amount to “initiation of proceedings” within the meaning of Section 6(2)(b) [Armour Security Vs Commissioner of CGST Delhi].
Hence, it allowed Central and State GST authorities to conduct parallel inquiries at the investigation stage.
The Court also laid down a set of guidelines to prevent duplication of adjudication by Central and State GST authorities, aimed at balancing the GST regime’s “single interface” and “cross-empowerment” principles.
A Bench of Justices JB Pardiwala and R Mahadevan examined conflicting High Court decisions on whether “proceedings” under Section 6(2)(b) include an inquiry or investigation, and whether summons amount to “initiation” for this purpose.
"Issuance of summons, by no stretch, can be considered as the initiation of proceedings, since at that stage, the Department still retains the discretion not to initiate any proceedings. A mere contemplation or possibility of initiating action cannot be equated with “proceedings”, as doing so would undermine the framework of cross-empowerment under the Act," the Court said.
By way of background, Armour Security, a public limited company providing security services, was issued a show cause notice in November 2024 by Delhi GST authorities (State jurisdiction) for the April 2020–March 2021 tax period.
The notice alleged under-declaration of turnover and wrongful ITC claims, including credits taken from cancelled dealers.
In January 2025, officers from the CGST Delhi East Commissionerate searched the company’s premises under Section 67(2), seized electronic devices and documents, and issued summons to company directors on January 16 and 23, directing them to produce relevant records.
The company argued that Section 6(2)(b) of the CGST Act bars a second authority from initiating proceedings on the same subject matter once another authority has already commenced action. It contended that the Central GST summons covered the same issues already under inquiry by the State GST department.
The Court concluded that “proceedings” in Section 6(2)(b) refer to adjudicatory processes such as assessment, demand and penalty under provisions like Sections 73 and 74, and not to preliminary investigative steps. Summons under Section 70 can be considered a tool for evidence gathering and will not amount to initiation of proceedings.
"The expression “initiation of any proceedings” occurring in Section 6(2)(b) refers to the formal commencement of adjudicatory proceedings by way of issuance of a show cause notice, and does not encompass the issuance of summons, or the conduct of any search, or seizure etc," the Court stated.
The Court further clarified that the “same subject matter” test is linked to the nature and scope of the proceedings, not merely overlapping facts or tax periods.
Adjudication on the same cause of action by two authorities is barred but investigative overlaps at the inquiry stage are not, it said.
"Where the proceedings concern distinct infractions, the same would not constitute a “same subject matter” even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted," the Bench ruled.
In doing so, the Court reaffirmed that the GST framework is built on two parallel pillars — the “single interface” model, which ensures that only one authority undertakes adjudication on a given matter, and “cross-empowerment”, which permits both Central and State authorities to act on intelligence-based enforcement across the taxpayer base.
To address the practical issues that arise when both Central and State authorities commence inquiries touching on similar matters, the Court issued a nine-point framework. These guidelines, while not altering the statutory scheme, set out a procedural roadmap for authorities and taxpayers:
Mandatory initial compliance – Taxpayers served with a summons or show cause notice must comply by appearing or furnishing the requested information. Compliance is required even before determining whether another authority is already inquiring into the same matter.
Disclosure of overlap by taxpayer – If the taxpayer is aware that another authority is already investigating the same subject matter, it must promptly inform the later-acting authority in writing.
Verification between authorities – Once informed, the two authorities must communicate to confirm whether there is indeed an overlap thereby, avoiding unnecessary duplication and optimising resources.
Communication when claims are untenable – If it is determined that the matters are different, the taxpayer must be informed in writing with reasons and a clear statement of the distinct subject matters under investigation.
Right to proceed until overlap confirmed – Authorities may continue inquiries until it is confirmed that they are examining the same liability, contravention or show cause notice. If duplication is confirmed, any subsequent show cause notice for the same liability must be quashed.
Deciding the lead authority – If an overlap exists, the authorities must agree on which will continue the investigation. The other must transfer all relevant materials to the chosen authority. The taxpayer has no right to decide which authority proceeds.
Default rule if no agreement – If the authorities cannot agree, the one that initiated the inquiry first will continue. Courts can order transfer to the first-acting authority if necessary.
Remedy for breach of guidelines – If these procedural safeguards are not followed, the taxpayer may approach the relevant High Court under Article 226 of the Constitution.
Continuing duty of cooperation – Taxpayers must fully cooperate with any authority that issues summons or notices, including attending hearings and providing responses.
On the facts, the Court found that the CGST Delhi East summons formed part of an independent investigative process and did not amount to “initiation of proceedings” barred by Section 6(2)(b).
Thus, the appeal was dismissed with the Court affirming that the statutory bar applies only when adjudication has begun on the same subject matter by one authority.
The petitioners were represented by Senior Advocate Sridhar Potaraju with advocates Srinivas Kotni, Rishabh Dev Dixit, Rohit Dutta, Gaichangpou Gangmei , Akshay Kumar, Aayush, Lalit Mohan, Niharika Singh, Sai Swaroop and Gurdeep Singh.
CGST was represented by Advocate Gurmeet Singh Makker.
[Read Judgment]