Facts of the Case:

In this case, the petitioner GST registration stood cancelled with effect from 28.12.2019. A show cause notice dated 23.09.2024 was issued alleging wrongful availment of Input Tax Credit without actual supply of goods/services. Demand and penalty proceedings were initiated under Sections 122(1)(ii) and 122(1)(vii) of the CGST Act for the period January 2019 to November 2019. Pursuant thereto, an order-in-original dated 18.03.2025 was passed confirming the demand and DRC-07 was issued on 20.03.2025. The petitioner challenged the said order before the appellate authority by filing a statutory appeal on 28.06.2025, which remained pending.

Subsequently, another show cause notice dated 19.06.2025 was issued for the very same tax period i.e., January 2019 to November 2019 alleging identical contraventions under Sections 122(1)(ii) and 122(1)(vii) of the CGST Act. Based on the second notice, another order-in-original dated 10.12.2025 came to be passed against the petitioner.

Aggrieved by the second order, the petitioner approached the High Court contending that the second proceedings were barred by Section 6(2)(b) of the CGST Act as they involved overlapping proceedings on the same allegations and period. The petitioner further contended that mandatory procedure under Rule 142(1A) of the CGST Rules had not been followed and that the second proceedings amounted to duplication, abuse of process and violation of principles of natural justice.

The respondents argued that the petitioner had failed to participate in the second proceedings and did not bring the alleged overlap to the notice of the adjudicating authority. It was further contended that although the allegations may overlap, the demand or relief sought in the second proceedings was not identical and therefore the statutory bar under Section 6(2)(b) was not automatically attracted.

Issue:

Whether the second adjudication proceedings were barred under Section 6(2)(b) of the CGST Act on account of overlap with earlier proceedings.  Whether the petitioner could invoke writ jurisdiction without first participating in the second proceedings and informing the authority about the alleged duplication. Whether the petitioner should be relegated to alternate statutory remedies such as rectification under Section 161 and appeal.

Held That:

The Court referred to the Supreme Court judgment in Armour Security Case and observed that when an assessee becomes aware that another authority is conducting parallel inquiry or proceedings on the same subject matter, it is incumbent upon the assessee to immediately inform the subsequent authority in writing regarding such overlap.

The Court noted that the petitioner admittedly did not participate in the second proceedings and therefore failed to place the earlier adjudication proceedings before the assessing authority. While examining the “twofold test” laid down in Armour Security, the Court observed that the first condition, namely identity of allegations and contraventions, may possibly be satisfied. However, the second condition requiring identity of demand or relief sought did not appear to be fully established in the present case.

The Court further observed that Section 161 of the CGST Act provides a statutory mechanism for rectification of errors apparent on the face of the record within six months from the date of issuance of the order. Since the impugned order-in-original dated 10.12.2025 was still within the limitation period for rectification, the Court held that the petitioner should first avail such remedy.

Accordingly, the Court permitted the petitioner to file a rectification application within two weeks and directed the proper officer to consider and dispose of the same within three weeks thereafter after granting opportunity of hearing. Liberty was also reserved to the petitioner to pursue appellate remedies against the impugned order and any rectification order passed thereon.

Case Name: M/s DIVYASHAKTI CHEMICALS v. THE ADDITIONAL COMMISSIONER OF CENTRAL TAX dated 27.04.2026

To read the complete judgement 2026 Taxo.online 1157