Objection To Parallel State GST, DGGI Proceedings Can Be Raised In Statutory Appeal: Delhi High Court Refuses Writ

The Delhi High Court has held that a taxpayer challenging proceedings initiated by the Directorate General of GST Intelligence (DGGI) on the ground that the same subject matter had already been dealt with by State GST authorities can raise the objection under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act), before the statutory appellate authority.

The Division Bench of Justices Anil Kshetarpal and Shail Jain was dealing with a plea by challenging show cause notice issued by the DGGI under Section 74 of the CGST Act and a subsequent order confirming an ITC demand of approximately ₹5.71 crore, along with interest and penalty.

Petitioner contended that the DGGI proceedings were barred under Section 6(2)(b), which prevents initiation of proceedings by a Central GST authority where proceedings on the same subject matter have already been initiated by a State GST authority.

According to the Petitioner, State GST authorities had already initiated proceedings for financial years 2017-18, 2018-19 and 2019-20 concerning alleged wrongful availment of ITC from cancelled/non-existent suppliers. It argued that the subsequent DGGI proceedings, which covered the period July 2017 to March 2024, substantially overlapped with the earlier State GST proceedings.

DGGI however disputed the allegation of parallel proceedings and submitted that its investigation had commenced in December 2020 and involved searches at Petitioner's premises.

According to the Department, the investigation revealed alleged fraudulent availment and utilisation of ITC on the strength of bogus invoices without actual supply or movement of goods. The State GST proceedings, in contrast, were stated to have arisen from return-based discrepancies and other instances of ineligible ITC.

The Court noted that the writ petition was initially filed in January 2025 against the DGGI's show cause notice. During its pendency however, the competent adjudicating authority passed an order confirming the ITC demand of ₹5,71,00,237 under Section 74, along with applicable interest and penalty.

It observed that the position had consequently changed since the filing of the writ petition, as the challenge was no longer confined to a show cause notice and an adjudication order determining the petitioner's liability had been passed.

In these circumstances, the Court held that Petitioner had an efficacious statutory remedy of appeal under Section 107 of the CGST Act.

The Bench noted that determining whether the State GST proceedings and DGGI proceedings concerned the “same subject matter” would require examination of the nature, scope and factual foundation of both proceedings, including the transactions and ITC covered, the liabilities involved and the material relied upon by the respective authorities.

The Court declined to undertake this exercise in writ jurisdiction, and relegated the Petitioner to appellate remedy.

“The objection raised by the Petitioner under Section 6(2)(b) is undoubtedly one of the grounds which can be urged before the competent appellate authority,” it said and dismissed the plea.

For Petitioner: Advocates Chinmaya Seth, A.K. Seth, Palak Mathur, Karanveer Singh

For Respondents: Abhishek Khanna, Atul Tripathi, SSC for CBIC with Shubham Mishra, Gaurav Mani Tripathi & Akshay Sagar