Tripura High Court Holds CGST Authorities Cannot Reopen Issues Already Taken Up By SGST, Quashes Order

The Tripura High Court on 30 June held that Central Goods and Services Tax (CGST) authorities cannot initiate adjudication proceedings on issues that have already been taken up by State Goods and Services Tax (SGST) authorities on the same subject matter.

A Division Bench of Chief Justice M.S. Ramachandra Rao and Justice Biswajit Palit quashed a challenge to a demand cum show cause notice dated 22 July 2024 and an Order in Original dated 3 February 2025 issued under Section 74 of the Central Goods and Services Tax Act, 2017. The provision deals with recovery of tax not paid or short paid due to fraud, wilful misstatement or suppression of facts.

Relying on the Supreme Court's decision in Armour Security (India) Ltd. judgment, the Court observed that “parallel proceedings should not be initiated by other tax administration when one of the tax administrations has already initiated intelligence-based enforcement action.”

The dispute arose from proceedings initiated by the CGST authorities against the petitioner for alleged excess availment of input tax credit for the financial years 2018-19 and 2019-20, along with allegations of short payment of GST for those years and issues relating to the financial year 2020-21.

The Court held that the CGST authorities lacked jurisdiction to examine the issue of excess availment of input tax credit for the financial years 2018-19 and 2019-20, as the same issue had already been made the subject matter of proceedings initiated by the SGST authorities.

However, the Bench clarified that proceedings relating to alleged short payment of GST for the financial years 2018-19 and 2019-20, as well as issues concerning the financial year 2020-21 that were not covered by the SGST proceedings, could continue.

Accordingly, the High Court quashed the impugned adjudication order and directed the adjudicating authority to pass a fresh order within three months after providing an opportunity of hearing to the petitioner.