Writ appeal dismissed as Section 6(2)(b) CGST Act held not to bar Central GST proceedings after State GST closure without adjudication

Case Details

• Court: High Court of Chhattisgarh, Bilaspur

• Case No.: WA No. 494 of 2023 (arising from W.P.(T) No. 85/2023)

• Appellant: South Eastern Coalfields Limited (SECL)

• Respondents: Principal Commissioner, CGST Raipur & others

• Date of Judgment: 22 July 2025

• Relevant Sections: Section 73, Section 67(1), Section 6(2)(b) of the CGST Act, 2017; Rule 142(1A) CGST Rules

• Category of Dispute: Jurisdiction – Bar on parallel proceedings under CGST/SGST

Facts (Paras 1–3)

South Eastern Coalfields Ltd. (SECL), a registered GST assessee engaged in mining, was subjected to inspection under Section 67(1) CGST Act by Central GST on 27 August 2021 for alleged non-payment of GST under Reverse Charge Mechanism on Development and Environment Cess (July 2017–August 2021). Subsequently, both State GST and Central GST issued multiple DRC-01 notices. SECL replied to these notices, and State GST authorities later closed proceedings without adjudication (orders dated 27-04-2022 and 13-06-2022). Thereafter, Central GST issued a pre-SCN in December 2022 and a formal SCN under Section 73 on 06/16-01-2023, which SECL challenged through a writ petition. The Single Judge dismissed the petition, holding SECL could respond to the SCN.

Questions before the Court (Paras 4–5)

• Whether the show cause notice dated 06/16-01-2023 issued by Central GST was barred under Section 6(2)(b) of the CGST Act, given that State GST had already issued and then closed similar notices.

• Whether closure of State GST notices without adjudication constituted initiation of proceedings so as to prevent Central GST from acting on the same subject matter.

Observations of the Court (Paras 6–13)

• Section 6(2)(b) CGST Act prohibits initiation of proceedings by one authority (Central/State) if the other has already initiated proceedings on the same subject matter. However, “any proceeding” requires adjudicatory steps like assessment, penalty, demand, or recovery. Mere issuance of DRC-01 without adjudication is insufficient (Para 8–11).

• Clarifications by CBIC (Circular dated 05-10-2018) authorize both State and Central GST to initiate intelligence-based enforcement, with the initiating authority completing the process of adjudication and recovery (Para 9).

• Citing G.K. Trading Company v. UOI (Allahabad HC, 2020) and Sonam Berlia v. State of Odisha (Orissa HC, 2021), the Court reaffirmed that only adjudicatory proceedings bar further action (Para 10–11).

• In this case, Central GST had initiated inspection first (27-08-2021), while State GST proceedings were later closed without adjudication. Thus, Central GST’s SCN dated 06/16-01/2023 was not barred under Section 6(2)(b) (Para 12–13).

Judgment (Paras 14–15)

The Division Bench upheld the Single Judge’s dismissal of the writ petition. Since Central GST had initiated proceedings first and State GST proceedings were dropped without adjudication, Section 6(2)(b) did not apply. The appeal was dismissed, leaving parties to bear their own costs.

Case Laws Referred

Between Fine Lines (Practical Takeaway)

For taxpayers, this ruling underscores that mere issuance of SCN or DRC-01 without adjudication by State GST does not prevent Central GST from initiating proceedings on the same issue. Businesses cannot rely on closure without adjudication as a defence against fresh action by another authority. The authority that initiates substantive proceedings first retains jurisdiction to complete them.

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