Case Summary
M/s J.B. Rolling Mills Limited vs. State of H.P. & Ors., High Court of Himachal Pradesh, CWP No. 11075 of 2024, decided on 30.09.2024
Category: Input Tax Credit – Parallel Proceedings
Relevant Section: Section 6(2)(b) of CGST Act, 2017; Circular D.O.F.No.CBEC/20043/01/2017-GST(Pt.) dated 05.10.2018
Facts (Paras 1–6)
The petitioner, M/s J.B. Rolling Mills Limited, challenged a Show Cause-cum-Demand Notice dated 07.08.2024 issued by respondent no. 4 (Central GST authority). The petitioner argued that this notice pertained to the same subject matter—alleged fake Input Tax Credit (ITC) claimed on fake invoices—for overlapping tax periods (2019–20 and 2020–21), which was already under investigation by the State Excise Authorities through summons issued on 29.06.2022 covering 2018–19 to 2020–21. Thus, the grievance was that parallel proceedings were being initiated for the same alleged transactions.
Questions before Court (Paras 2, 6, 7, 12)
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Whether the Central GST authorities could initiate a fresh proceeding on alleged fake ITC when the State Excise Department had already initiated proceedings on the same subject matter?
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Whether Section 6(2)(b) of the CGST Act, 2017, which prohibits duplication of proceedings, and the CBEC Circular dated 05.10.2018 would bar the impugned proceedings?
Observations (Paras 7–13)
The Court noted that:
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The CBEC Circular of 05.10.2018 emphasized avoidance of multiplicity of proceedings between State and Central tax authorities.
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Although the Central authority argued that the seller firms under investigation were different, the Court observed that the Show Cause Notice was suggestive of parallel enquiries based on similar facts (fake invoices).
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Section 6(2)(b) of the CGST Act clearly states that where a proceeding is already initiated by one authority (State GST), the other (CGST) cannot start fresh proceedings on the same subject matter.
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Hence, there was prima facie merit in the petitioner’s contention, and the matter required deeper examination.
Judgement (Paras 13–17)
The High Court issued notice to the respondents and directed that further proceedings pursuant to the impugned Show Cause-cum-Demand Notice dated 07.08.2024 shall remain stayed until the next hearing on 14.10.2024. The Court also sought clarification from respondent no. 4 on whether the proceedings could be transferred to the State Excise authorities.
Case Law Reference Table
| Case / Circular | Citation | Key Holding |
|---|---|---|
| CBEC Circular | D.O.F.No.CBEC/20043/01/2017-GST(Pt.), dated 05.10.2018 | Directed avoidance of parallel investigations by State and Central GST authorities |
| Section 6(2)(b), CGST Act, 2017 | Statute | Bars initiation of proceedings by CGST where SGST has already initiated on the same subject matter |
Between Fine Lines
For businesses, this judgment signals that duplicate GST proceedings cannot be pursued by both Central and State authorities on the same issue of alleged fake ITC. If one authority has already initiated proceedings, the other must step back. This offers relief against harassment due to overlapping investigations and supports consistency in adjudication.
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