“Summons ≠ Proceedings” – The Supreme Court’s Definitive Clarification of Section 6(2)(b) CGST
M/S Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate (2025 INSC 982)
1. Introduction
The Goods and Services Tax (GST) architecture promises taxpayers a single interface while simultaneously empowering both Union and State tax administrations. Yet, in practice, businesses often receive parallel notices, searches and summons from multiple wings, causing uncertainty over jurisdiction and duplicative compliance burdens. Armour Security (India) Ltd. approached the Supreme Court after being pulled into simultaneous Central and State enquiries concerning the same Input-Tax-Credit (ITC) issues. The core question: Does the mere issuance of a summons under Section 70 CGST amount to “initiation of proceedings” so as to trigger the bar in Section 6(2)(b) against a second authority acting on the same subject-matter?
Answering this, the Court not only dismissed the taxpayer’s special-leave petition but—mindful of nationwide confusion—laid down an extensive doctrinal framework, a twin-test for “same subject-matter,” and operational guidelines binding on tax authorities. The pronouncement is poised to be the touchstone for inter-jurisdictional disputes in the GST era.
2. Summary of the Judgment
- Summons are not “proceedings” within Section 6(2)(b). Only upon issue of a show-cause notice (SCN) does an adjudicatory “proceeding” commence.
- “Subject-matter” refers to the tax liability / contravention set out in the SCN—not to every fact explored at the inquiry stage.
- The Court formulated a two-fold test for identity of subject-matter:
- Has an authority already proceeded on the same facts alleging the same tax liability/offence?
- Is the demand or relief sought identical or overlapping?
- Released a set of operational guidelines compelling Departments to communicate, verify overlap and avoid duplicate SCNs; taxpayers must still respond to every summons/notice.
- Clarified the meaning of the term “order” in Section 6(2)(a) to include every dispositive order passed by a proper officer, who must mirror it under the corresponding State/UT law.
3. Analysis
3.1 Precedents Cited & Their Influence
| Case | Ratio Relied Upon | How Court Treated It |
|---|---|---|
| G.K. Trading v. UOI (All HC) | Summons ≠ proceedings; “subject-matter” equals adjudicatory cause of action. | Approved; forms bedrock of present ratio. |
| K.T. Saidalavi v. State Tax Officer (Ker HC) | Enquiry/summons not “proceedings” for s.6(2)(b). | Expressly affirmed. |
| Rais Khan (Raj HC); Kuppan Gounder (Mad HC) | Similar holding on distinction between “inquiry” and “proceedings”. | Cited with approval. |
| Vivek Narsaria v. State of Jharkhand | DGGI must cede to State when latter started earlier. | Distinguished: there an SCN/assessment already existed. |
| Stalwart Alloys (P&H HC) & Kundlas Loh Udyog (HP HC) | Broad reading of “subject-matter”; transfer impermissible. | Partly concurred but refined through twin-test. |
3.2 Court’s Legal Reasoning
• Section 6 fosters cross-empowerment and single-interface.
• Sub-sec (1): mutual authorisation of officers.
• Sub-sec (2)(a): mandate of composite order.
• Sub-sec (2)(b): anti-duplication bar.
Step 2 – Meaning of “Proceedings”
• Dictionary & Aiyar definitions stress adversarial/decisional setting.
• Summons/search are evidentiary, lack decisional finality.
Step 3 – Meaning of “Subject-Matter”
• Anchored to the charge & demand crystallised in an SCN.
• Avoids absurdity where overlapping enquiries on different facets would be stifled.
Step 4 – Practical Harmonisation
• Audit/scrutiny matters are by assigned authority.
• Intelligence-based cases: either authority, but once an SCN issues, exclusivity applies.
3.3 Impact on Future Litigation & Administration
- Reduced Writ Petitions: Clear twin-test and operational protocol curtail “jurisdiction” challenges.
- DGGI Investigations: Can continue parallel intelligence work, but must cede once an SCN on same demand exists.
- Departmental Coordination: Mandated real-time IT sharing; probable new GSTN module.
- Taxpayer Strategy: They must cooperate with all summons but can now confidently invoke Section 6 once they receive overlapping SCNs.
- Litigation Standardisation: High Courts will gauge “same subject-matter” strictly through the announced twin-test.
4. Complex Concepts Simplified
- Single Interface
- Policy that a taxpayer deals with one administrative authority for routine compliance to avoid dual control.
- Cross-Empowerment
- Statutory empowerment allowing either Central or State officers to act under each other’s GST laws – essential for pan-India evasion cases.
- Summons (Section 70)
- Legal instrument compelling appearance/production of documents; it is inquisitorial, not adjudicatory.
- Show-Cause Notice (SCN)
- First adjudicatory step; details alleged contravention, quantifies demand, and seeks taxpayer’s defence.
- Subject-Matter (for Section 6)
- The particular tax deficiency/offence and the relief (tax, interest, penalty) stated in the SCN.
5. Conclusion
“Proceedings, by their nature, commence with a show-cause notice; a summons is but a path to that gate.” – Pardiwala J.
Armour Security provides the first Supreme Court exposition on the interface between Sections 6 and 70 of the CGST Act. By declaring unequivocally that the issuance of a summons does not trigger the bar on parallel jurisdiction, the Court preserves the vigour of intelligence-based enforcement while shielding taxpayers from duplicate adjudication. Its structured guidelines operationalise cooperative federalism in GST and will influence departmental SOPs, GSTN design, and judicial review for years to come. Ultimately, the ruling balances administrative efficiency with taxpayer certainty—cementing the maxim that summons inform, SCNs adjudicate.
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