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Same Financial Year and ITC Dispute Do Not Establish '': Delhi HC
The has ruled that Central and State GST proceedings cannot automatically be considered as concerning the "" under merely because both involve Input Tax Credit (ITC) for the same financial year. The Division Bench of Justice Anil Kshetarpal and Justice Shail Jain declined to entertain a writ petition from , directing the insurer to first pursue the .
The Dispute: Parallel GST Proceedings
The controversy began in when the issued summons to Liberty General Insurance regarding ITC mismatches between GSTR-3B and GSTR-9. While the Central investigation proceeded, the State GST authorities issued a Show Cause Notice (SCN) in for FY 2020-21, alleging excess ITC of ₹2.44 crore. The State proceedings were dropped in .
However, the Central GST authorities continued their investigation and issued a broader SCN in under , covering FY 2018-19 to FY 2023-24 and alleging fraudulent excess ITC of ₹4.80 crore. The adjudicating authority confirmed the demand on , along with penalty.
The Legal Question: What Constitutes ''?
The petitioner argued that the Central proceedings, at least for FY 2020-21, were barred by , which prohibits a proper officer under the Central Act from initiating proceedings on a subject matter already taken up by a State officer. The company contended that the State and Central proceedings concerned the identical ITC dispute for FY 2020-21, leading to impermissible multiplicity.
The Revenue countered that the two proceedings were distinct in scope, period, and material, and that the petitioner had failed to raise the Section 6(2)(b) objection in its written reply to the Central SCN, only mentioning it orally during personal hearings.
Court's Reasoning: Not a Simple Overlap
The High Court held that determining whether proceedings are on the "" requires a detailed factual comparison, not a mere glance at the financial year. The court noted that the State proceedings covered only FY 2020-21 with an alleged excess ITC of ₹2.44 crore, while the Central proceedings spanned six financial years and alleged ₹4.80 crore in excess ITC based on different material.
The court distinguished its earlier decision in Alliance Polychem Private Limited v. Deputy Commissioner, CGST (2025), where the identity of the demand was apparent. In the present case, such identity was not evident without examining the underlying show cause notices, allegations, computations, and the order passed by the State authorities.
The court also observed that the petitioner did not raise the Section 6(2)(b) objection in its written reply to the SCN, and no material was placed to show that the oral objection was recorded by the adjudicating authority. The fact that the petitioner participated in the adjudication without raising the bar at the earliest opportunity weighed against the exercise of .
Key Observations
The court made several pivotal observations:
"The mere fact that both proceedings relate to GST, or that both proceedings involve examination of ITC, would not, by itself, conclude the enquiry. It would be necessary to examine the nature and scope of the respective proceedings, the period involved, the allegations forming the basis of the proceedings, the transactions or ITC under scrutiny, the liability sought to be determined and the material relied upon by the respective authorities."
"Whether the portion of the Central proceedings relating to FY 2020-21 was, in substance and in law, concerned with the as the proceedings previously initiated by the State GST authorities cannot be determined merely from the fact that both proceedings relate to ITC for the same financial year."
"The statutory appellate mechanism provides an for such examination, including consideration of the respective SCNs, the allegations and computations contained therein, the material relied upon, the order passed by the State GST authorities and the subsequent proceedings before the Central GST authorities."
The Verdict: Appeal is the Way Forward
The High Court dismissed the writ petition, holding that the petitioner has an efficacious . The court expressly left all questions open for the Appellate Authority, including the applicability of Section 6(2)(b), the invocation of under Section 74, the correctness of the ITC demand, the finding of fraud, and the levy of interest and penalties.
The court also directed that if the petitioner files an application for exclusion of time under , the Appellate Authority shall consider it on its merits.
The decision underscores that the bar under Section 6(2)(b) is not a formalistic or automatic shield—it requires a substantive comparison of the proceedings to determine if they truly overlap. Taxpayers seeking to invoke this provision must raise the objection at the earliest opportunity and be prepared to demonstrate actual identity of subject matter, not merely a shared financial year or ITC headline.
