Facts of the Case:

In this case, the petitioner challenged the Order-in-Original dated 03.12.2025, whereby the Central GST authorities confirmed a demand of ₹4,80,26,753/- along with penalty. The principal grievance of the petitioner was that, insofar as FY 2020-21 was concerned, the Central GST proceedings were barred by Section 6(2)(b) of the CGST Act, since proceedings on the same issue had already been initiated by the State GST authorities. The controversy originated with a summons dated 07.11.2023 issued by the Anti-Evasion Branch of the Central GST Department concerning a mismatch between ITC reported in GSTR-3B and GSTR-9, to which the petitioner responded on 22.11.2023. Subsequently, the State GST authorities issued an SCN dated 26.11.2024 for FY 2020-21 alleging excess availment of ITC of ₹2,44,97,609/-. The petitioner replied to the said SCN, and the State proceedings were ultimately dropped by order dated 22.02.2025.

Meanwhile, the Central GST investigation continued and culminated in an SCN dated 26.05.2025 under Section 74, covering the substantially wider period from FY 2018-19 to FY 2023-24, alleging fraudulent availment of excess ITC. The petitioner submitted its reply and was also granted personal hearings on 16.09.2025 and 19.11.2025. The proceedings resulted in the Impugned Order dated 03.12.2025 confirming the demand.

The petitioner thereafter approached the Delhi High Court contending that the Central proceedings, at least to the extent they covered FY 2020-21, constituted a second proceeding on the same subject matter and were consequently prohibited by Section 6(2)(b). The petitioner also challenged the invocation of the extended limitation under Section 74 and the consequential demand, interest and penalty.

Issue:

Whether the proceedings initiated by the Central GST authorities, insofar as they related to FY 2020-21, were barred under Section 6(2)(b) of the CGST Act because the State GST authorities had already initiated proceedings concerning ITC for the same financial year?

Held That:

The Court first observed that Section 6(2)(b) is procedural in nature and seeks to prevent parallel proceedings by Central and State authorities concerning the same subject matter, thereby avoiding multiplicity of proceedings and conflicting determinations. However, the Court held that merely because both proceedings concerned GST or ITC for the same financial year, it could not automatically be concluded that they concerned the “same subject matter.” The Court considered it necessary to examine, inter alia, the respective periods, allegations, transactions/ITC under scrutiny, computations, liability sought to be determined and material relied upon by the two authorities.

In the present case, the State proceedings concerned FY 2020-21 and alleged excess ITC of ₹2,44,97,609/-, whereas the Central proceedings covered FY 2018-19 to FY 2023-24 and involved an alleged ITC liability of ₹4,80,26,753/-. Therefore, the Court held that the question whether there was a substantive overlap could not be determined merely from the fact that both proceedings involved ITC for FY 2020-21.

The Court distinguished its earlier decision in Alliance Polychem Private Limited v. Deputy Commissioner, CGST, Mundka Division, Delhi West & Ors., where the identity of the demand in the two proceedings was apparent from the record. In the present case, such identity was not apparent and required a detailed comparison of the underlying proceedings.

An additional circumstance weighing against exercise of writ jurisdiction was that the petitioner did not raise the Section 6(2)(b) objection in its written reply to the Central SCN. Although the petitioner claimed that the objection was raised during personal hearing, no material was placed before the Court establishing that such objection was recorded or considered by the adjudicating authority.

However, the Court did not decide the Section 6(2)(b) issue against the petitioner on merits. It expressly left the question open for determination by the Appellate Authority after examination of the complete factual record. The Court accordingly held that the statutory appellate mechanism was the appropriate forum for determining whether the Central proceedings, insofar as they related to FY 2020-21, were actually on the same subject matter as the earlier State proceedings.

The Court similarly declined to examine at the writ stage the petitioner’s challenges concerning the extended limitation under Section 74, correctness of the ITC demand, allegations of fraud/wilful misstatement/suppression, interest and penalties, GST portal issues and rectification proceedings. All such grounds were expressly left open before the Appellate Authority.

Case name: Liberty General Insurance Limited v. The Additional Commissioner of CGST Delhi South Commissionerate & Anr. dated 07.08.2026

Citation No. 2026 Taxo.online 2445