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Upholds DGGI's and Rejects Bar on
In a series of three related rulings, the has reaffirmed the broad investigative powers of the under the (), even when State GST authorities have already initiated proceedings against the same assessee. The Division Bench of Justices Anil Kshetarpal and Shail Jain delivered comprehensive judgments clarifying the scope of , which bars proceedings on the "," and confirmed that of taxpayers to State authorities does not curtail DGGI's .
The rulings come at a time when taxpayers frequently challenge parallel investigations by central and state GST formations, alleging harassment and jurisdictional overreach. The High Court’s decisions provide much-needed clarity on when such challenges can succeed and when they must be pursued through statutory appeals.
The "" Test Clarified
In the first judgment, the Court dealt with a writ petition challenging DGGI proceedings that raised a demand of approximately ₹7.81 crore. The petitioner argued that State GST authorities had already issued notices for alleged wrongful avalment of for , which culminated in confirmed demands. The subsequent DGGI notice covered and alleged fraudulent ITC from non-existent suppliers, utilisation of such credit to pay IGST on exports, and consequent refund claims.
The High Court held that the mere fact that proceedings involve the same assessee, overlapping financial periods, or ITC does not automatically attract the bar under Section 6(2)(b). The statutory prohibition applies only when the subsequent proceeding concerns the "" — a determination that requires a careful examination of the particular tax liability, alleged contravention, and demand involved.
Relying on the 's in
, the Court noted that one must assess whether an authority has already proceeded on an
or alleged offence on the same facts, and whether the demand or relief sought is identical. Applying this test, the High Court found material differences between the State proceedings under
(ineligible ITC) and the DGGI proceedings under
(fraudulent ITC based on bogus invoices and export refund abuse).
"Although the proceedings may concern ITC and may have some factual or transactional overlap,"
the Court observed,
"the material on record indicated a distinction in the nature of the allegations."
The Court further clarified that chronological sequence is not determinative; the fact that DGGI proceedings were initiated after State proceedings had commenced does not by itself trigger the statutory bar. The petition was dismissed.
Does Not Limit DGGI's Jurisdiction
In the second ruling, the Court addressed a batch of petitions by an unnamed real estate company holding GST registrations in Karnataka, Tamil Nadu, and Telangana. The DGGI () had confirmed separate demands totalling over ₹5.66 crore (including interest and penalty) against the company's three registrations, based on an alleged chain of invoices without corresponding supplies.
The petitioners contended that the lacked jurisdiction because their registrations were administratively assigned to the respective State tax authorities. The High Court firmly rejected this argument, noting that appoints specified DGGI officers as Central Tax officers with powers extending throughout India. Moreover, the in
Armour Security
had already explained that
"administrative allocation of taxpayers does not exclude
by the other tax administration."
The Court highlighted that the investigation arose from intelligence concerning a chain of transactions across several States, making essential. Additionally, confers on specified Additional/Joint Commissioners for adjudication of DGGI notices. The Court also examined , which provides that a common involving noticees under different Commissionerates is to be adjudicated by reference to the noticee with the highest tax demand. In this case, the highest demand (₹20.65 crore) was against , whose principal place of business was in Delhi, making the competent to adjudicate.
The Court therefore dismissed the jurisdictional challenge and relegated the petitioners to the under .
Objections to Must Be Raised in
The third ruling involved a petitioner who challenged a DGGI under Section 74 and the subsequent adjudication order confirming an ITC demand of ₹5.71 crore, along with interest and penalty. The petitioner argued that State GST authorities had already initiated proceedings for regarding alleged wrongful ITC from cancelled/non-existent suppliers, and that the DGGI proceedings covering substantially overlapped.
The DGGI disputed the allegation, stating that its investigation began in and involved searches at the petitioner's premises, revealing fraudulent ITC on bogus invoices without actual supply. The State proceedings, in contrast, arose from return-based discrepancies and other instances of ineligible ITC.
The High Court noted that the writ petition was initially filed against a , but during its pendency, the passed a final order confirming the demand. Consequently, the challenge was no longer confined to a , and an efficacious of appeal under Section 107 existed. Determining whether the proceedings concerned the "" would require a detailed examination of the nature, scope, and factual foundation of both proceedings, which the Court declined to undertake in .
"The objection raised by the Petitioner under Section 6(2)(b) is undoubtedly one of the grounds which can be urged before the competent
,"
the Court held, dismissing the plea.
Legal Implications for Tax Practitioners and Litigants
These three rulings collectively underscore the 's reluctance to interfere with DGGI investigations at the writ stage, especially when the statutory appellate framework remains available. The "" test, as clarified, is narrow and fact-intensive, requiring more than mere overlap of assessee, periods, or general ITC claims. Taxpayers seeking to invoke Section 6(2)(b) must demonstrate that the and have already been adjudicated by another authority.
Furthermore, the decisions reaffirm that DGGI's jurisdiction is pan-India and not confined by administrative assignments. This is significant for businesses operating across multiple states, as they may face simultaneous scrutiny from both central and state formations without being able to challenge jurisdiction merely on the basis of registration allocation.
The High Court's guidance that objections under Section 6(2)(b) can be raised in statutory appeals provides a clear procedural pathway. However, it also means that taxpayers must be prepared to present detailed evidence of the identical subject matter before appellate authorities, which may involve complex factual comparisons.
Conclusion
The has delivered a comprehensive set of rulings that strengthen the DGGI's enforcement powers while providing a measured check against arbitrary . By insisting on a rigorous "" analysis and directing parties to the appellate forum, the Court has balanced the need for effective tax enforcement with procedural fairness. Legal professionals advising clients on GST disputes should take note of these principles when strategising challenges to DGGI actions.
