Very Important Judgement reported by Taxsutra
SC: Prohibition u/s 6(2)(b) inapplicable to parallel search and seizure proceedings
In a case concerning parallel proceedings, where summon is issued by Central GST authorities after search, and State GST authorities have already framed final orders u/s 73, SC disposing of Assessee’s SLP against Delhi HC judgment, put at rest long lasting debate on section 6(2)(b) of CGST Act; After sifting through multiple HC judgments on the issue, SC interprets the words ‘on a subject matter’, ‘on the same subject matter’ and ‘proceedings’ in section 6(2)(b); Issues the following guidelines, viz, (i) Section 6(2)(b) of the CGST Act and equivalent state enactments, bars the initiation of any proceedings on the same subject matter, (ii) any action arising from the audit of the accounts, or detailed scrutiny of returns must be initiated by the tax administration to which the taxpayer is assigned, (iii) Intelligence based enforcement action can be initiated by any one of the central or state tax administration, despite the taxpayer having been assigned to the other administration (iv) Parallel proceedings should be be initiated by other tax administration when one of the tax administration has already initiated intelligence based enforcement action , (v) all actions that are initiated as a measure for probing an enquiry or gathering of evidence, or information, do not constitute proceedings within the meaning of section 6(2)(b), (vi) the expression, ‘initiation of proceedings’ refers to the formal commencement of adjudicatory proceedings by way of issuance of SCN and does not encompass issuance of summons or the conduct of any search or seizure etc, (vii) the expression subject matter refers to any tax liability, deficiency, or obligations arising from any particular contravention, which the Department seeks to assess or recover, (viii) where any two proceedings initiated by the Department seek to assess or recover an identical or a partial tax liability, the obligation arising from any particular contravention, the bar of section 6(2)(b) would be immediately attracted, (ix) where the proceedings concerned distinct infractions, the same would not constitute the same subject matter even if the tax liability, deficiency, obligation is same or similar, and bar under section 6(2)(b) would not be attracted, (x) the two fold test for determining whether a subject matter is same entails -(a) determining if an authority has already proceeded on an identical liability of tax or alleged offence by assessee on the same facts, (b) the demand or relief sought is identical.
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