M/S ARMOUR SECURITY (INDIA) LTD. versus COMMISSIONER, CGST, DELHI EAST COMMISSIONERATE & ANR. (14/08/2025) — Supreme Court headnote

AI-generated headnote. Verify against the judgment before relying on it. Paragraph numbers refer to the judgment.

Summary

A taxpayer already served a Section 73 show cause notice by the State GST authority challenged summons issued under Section 70 by the Central GST authority after a search, as barred by Section 6(2)(b) of the CGST Act, 2017. The Supreme Court held that issuance of summons, search or seizure is not 'initiation of proceedings'; that expression refers to the formal commencement of adjudicatory proceedings by issuance of a show cause notice, and the 'subject matter' is the tax liability or contravention sought to be assessed or recovered, ascertainable only from such a notice. The Court laid down a twofold test for 'same subject matter' and guidelines for Central and State authorities whose inquiries overlap, and upheld the High Court's refusal to interdict the summons.

Issues

Whether issuance of summons under Section 70 of the CGST Act amounts to 'initiation of any proceedings' within the meaning of Section 6(2)(b).
What 'subject matter' means in Section 6(2)(b) and whether it includes all matters dealt with in a summons.
What is the purport of an 'order' under Section 6(2)(a) of the CGST Act.
How the Central and State tax administrations should proceed where inquiries or investigations by both overlap.

Provisions considered

Section 6(2)(b), Central Goods and Services Tax Act, 2017Bars a proper officer under the CGST Act from initiating proceedings on a subject matter on which a proper officer under the SGST/UTGST Act has already initiated proceedings. 'Initiation of any proceedings' is tied to issuance of a show cause notice; inquiry, summons, search and seizure are not 'proceedings'. 'Subject matter' means the tax liability, deficiency or obligation arising from a particular contravention which the Department seeks to assess or recover, as articulated in the notice; the bar applies to identical or even partially overlapping liability but not to distinct infractions. (¶¶ 41, 43, 53, 54, 55, 58, 59, 72, 73, 74, 82, 86, 87, 88, 89, 90, 96)
Section 6(1), Central Goods and Services Tax Act, 2017Authorises officers appointed under the SGST/UTGST Acts to be proper officers for the CGST Act (and vice versa under the mirror provisions); read with the Circulars of 20.09.2017 and 05.10.2018 and the Clarification of 22.06.2020, it enshrines both the single-interface system and cross-empowerment for intelligence-based enforcement action across the entire value chain. (¶¶ 41, 42, 44, 45, 50, 53)
Section 6(2)(a), Central Goods and Services Tax Act, 2017Where a proper officer issues an order under the CGST Act he must also issue a corresponding order under the SGST/UTGST Act under intimation to the jurisdictional officer; the provision is both enabling and mandatory, and 'order' is broadly construed to include every form of order a proper officer is competent to issue, serving as a safeguard against parallel proceedings. (¶¶ 43, 91, 92, 93, 94, 95)
Section 70, Central Goods and Services Tax Act, 2017Empowers a proper officer to summon persons to give evidence or produce documents in an inquiry. A summons is merely a step in an investigation for gathering information, not its culmination, and so is not 'initiation of proceedings'; summons should not be issued in routine matters or for documents available on the GST portal, and the CBIC Guidelines of 17.08.2022 on issuance of summons are to be followed in letter and spirit. (¶¶ 56, 57, 58, 60, 74)
Sections 73 and 74, Central Goods and Services Tax Act, 2017A show cause notice under these provisions is the mandatory precondition for raising a demand and marks the commencement of quasi-judicial adjudication; the State authority's Section 73 notice of 18.11.2024 had initiated proceedings, whereas the Central authority's summons had not. Even after discovery in a search under Section 67 the Department must either issue a notice under Section 74 or drop the matter. (¶¶ 4, 61, 65, 66, 67, 68, 69, 72, 73, 74)
Section 59, Central Goods and Services Tax Act, 2017The GST regime operates on self-assessment, so all provisions are to be read in consonance with, not in derogation of, Section 59. (¶ 46)
Section 75(7), Central Goods and Services Tax Act, 2017Statutory recognition that the demand confirmed cannot exceed the amount or travel beyond the grounds specified in the show cause notice, showing that the notice delineates the subject matter of the proceedings. (¶ 85)
Article 226, Constitution of IndiaIf the tax authorities do not comply with the guidelines laid down, the taxable person may file a writ petition before the High Court. (¶ 97)

Held

The GST framework rests on two complementary concepts: 'single interface', under which a taxpayer is administratively assigned to one tax administration (per the division of the taxpayer base in Circular No. 01/2017), and 'cross-empowerment', under which both Central and State administrations may take intelligence-based enforcement action across the entire value chain. Actions arising from audit of accounts or detailed scrutiny of returns must be initiated by the administration to which the taxpayer is assigned, while intelligence-based action may be initiated by either; once one administration has initiated such action the other should not start parallel proceedings. (¶¶ 34, 35, 36, 40, 47, 49, 50, 51, 96)
A summons under Section 70 is an instrument for obtaining information in an inquiry and is not the culmination of an investigation; at that stage the Department has not decided whether to proceed against the assessee. Evidence-gathering, inquiry, search and seizure therefore do not constitute 'proceedings' within Section 6(2)(b), and the subject matter cannot be ascertained from a summons (G.K. Trading (Allahabad) and K.T. Saidalavi (Kerala) affirmed). (¶¶ 56, 57, 58, 59, 62, 96)
The phrase 'initiation of any proceedings' in Section 6(2)(b) refers to the formal commencement of adjudicatory proceedings by issuance of a show cause notice. An action qualifies as 'proceedings' only when undertaken to attain a determinate outcome, and the certainty about the subject matter needed to prevent parallel proceedings and conflicting orders arises only at the show cause notice stage; a mere contemplation or possibility of action cannot be equated with proceedings without undermining cross-empowerment. (¶¶ 65, 66, 67, 72, 73, 74, 96)
Summons should not be issued in routine matters or for documents readily available on the GST portal; issuance of multiple cyclostyled summons may indicate a roving inquiry. The Departments are directed to adhere, in letter and spirit, to the CBIC Guidelines dated 17.08.2022 on issuance of summons under Section 70. (¶¶ 58, 60)
The Circular dated 05.10.2018 is premised on the administrative division of the taxpayer base, which does not bar enforcement action by Central tax officers against a taxpayer assigned to the State and vice versa; the authority initiating intelligence-based action carries it to its logical conclusion, which does not invariably mean an order of assessment. (¶¶ 75, 76, 77)
'Subject matter' in Section 6(2)(b) is the tax liability, deficiency or obligation arising from a particular contravention which the Department seeks to assess or recover, as articulated in the show cause notice through its charges, grounds and quantification; the bar is attracted where two proceedings seek to assess or recover an identical or even partially overlapping liability, but not where they concern distinct infractions even if the liability is similar. Twofold test: whether an authority has already proceeded on an identical liability or alleged offence on the same facts, and whether the demand or relief sought is identical. Once the subject matter is crystallised by a show cause notice issued on intelligence, no other authority may assume jurisdiction over it. (¶¶ 79, 82, 84, 85, 86, 87, 88, 90, 96)
Section 6(2)(a) is both enabling and mandatory: a proper officer issuing an order under the CGST Act must issue a corresponding order under the SGST/UTGST Act under intimation to the jurisdictional officer. 'Order' is to be broadly construed to cover every form of order the officer is competent to issue, so that the jurisdictional counterpart is apprised of action against a taxpayer in its administrative domain, guarding against parallel or overlapping proceedings and conflicting determinations. (¶¶ 91, 92, 93, 94, 95)
Guidelines for overlapping inquiries: the assessee must first comply with any summons or notice; on learning that the matter is already under inquiry by another authority it must inform the subsequent authority in writing; the authorities must then communicate and verify the claim and, if the overlap is untenable, convey reasons and the distinct subject matters in writing; inquiries may continue until identical liability or contravention is established, but a show cause notice on a liability already covered by an existing notice shall be quashed; where the overlap is confirmed the authorities decide inter se which continues and the other forwards its material, the taxable person having no locus to choose; failing agreement, the authority that first initiated the inquiry continues and courts may order transfer to it; non-compliance may be challenged by writ under Article 226, and taxable persons must fully cooperate. (¶ 97)
On the facts, the State authority's show cause notice under Section 73 dated 18.11.2024 had initiated proceedings, but the Central authority's summons of 16.01.2025 and 23.01.2025 after its search did not; at the summons stage it cannot be predicated that the subject matter will be identical, and an overlapping facet under investigation does not by itself make the subject matter the same. The High Court rightly declined to interdict the summons. (¶¶ 61, 62, 89)
The Departments must act in harmony and with heightened vigilance over intelligence inputs; the DGGI may develop a mechanism for seamless data and intelligence sharing between Central and State authorities with real-time visibility of action taken on an intelligence input, advancing cooperative federalism. (¶¶ 98, 99)

Result

Special leave petition disposed of in terms of the judgment; High Court order dated 07.02.2025 declining to interdict the summons dated 16.01.2025 and 23.01.2025 upheld; conclusions and guidelines in paras 96 and 97 laid down for Central and State tax authorities; pending applications disposed of.