Facts of the Case:

In this case, the petitioner challenged the Order-in-Original dated 27.01.2025 issued by the Additional Commissioner, CGST Delhi North, raising a demand of ₹56,50,646 along with equivalent penalty for FY 2017-18. The central grievance was that this demand was identical to a demand earlier raised by the Delhi GST (DGST) authorities on the same set of transactions.

The DGST Department issued a Show Cause Notice (SCN) dated 28.09.2023 under Section 73 of the DGST Act, alleging ineligible ITC availed from cancelled suppliers, including M/s RCI Industries & Technologies Ltd. The SCN proposed a demand of ₹56,78,280 (involving the same supplier). The DGST order dated 04.12.2023 confirmed a total demand of ₹1,19,24,387, including interest and penalty. The petitioner filed an appeal and made a 10% pre-deposit on the disputed amount relating to RCI Industries.

A second SCN dated 04.08.2024 was issued under Section 74 of the CGST Act, alleging fraudulent ITC from the same supplier and raising the same disputed tax amount of ₹56,50,646. The CGST authorities passed the impugned OIO on 27.01.2025, followed by DRC-07 dated 03.02.2025, confirming the same demand.

The petitioner argued that issuing two parallel demands on the same ITC from the same supplier violated Section 6(2)(b) of the CGST Act, which bars fresh proceedings where one authority has already initiated action on the same “subject matter”. Reliance placed upon  Supreme Court decision in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East (2025), which clarified how overlapping CGST-SGST proceedings must be evaluated. The revenue argued that the “subject matter” differed because DGST invoked Section 73 (non-fraud) and CGST invoked Section 74 (fraud).

Issue:

Whether a second demand issued by CGST for the same ITC transactions—already subjected to a DGST demand and pre-deposit—can require a fresh pre-deposit, or whether such dual proceedings are barred under Section 6(2)(b) of the CGST Act?

Held that:

The Court observed that although the DGST and CGST demands arise under different provisions (Section 73 vs Section 74), the disputed ITC amount and underlying transactions are the same. The petitioner has already made a 10% pre-deposit while filing the DGST appeal. Accordingly, the petitioner is not required to make a second pre-deposit under Section 107(6) for the CGST appeal. The CGST appellate authority must entertain the appeal without insisting on pre-deposit. The Court held that where both CGST and SGST authorities raise demands on the same ITC transactions, the assessee cannot be compelled to make two separate 10% pre-deposits merely because proceedings arise under different sections (Section 73 vs Section 74).

Even though the two departments invoked different provisions, the Court emphasized that the ITC entries and supplier involved were identical. Thus, the subject matter was effectively the same.

The petitioner may file the appeal on or before 31.01.2026, and it shall not be rejected on the ground of limitation if filed by that date. A personal hearing must be afforded to the petitioner.

The Court did not conclusively hold that the CGST proceedings were barred under Section 6(2)(b). Instead, the Court focused on the equitable relief, preventing double pre-deposit for the same disputed amount. The assessee can now contest the CGST order on merits without any additional pre-deposit, as the earlier DGST pre-deposit is considered sufficient for the same dispute.

Case Name: Vaneeta Impex Private Limited Versus Union Of India And Ors. dated 17.11.2025

To read the complete judgement 2025 Taxo.online 3002