Facts of the Case:

In this case, the petitioner had availed ITC from M.R. Enterprises during FY 2017-18. The State GST authorities had earlier issued a SCN dated 23.09.2023 under Section 73 proposing demand relating to such ITC. After an earlier round of litigation, the State authority passed a fresh order dated 29.07.2024.

Subsequently, the DGGI/CGST authorities issued two SCNs dated 02.08.2024 and 04.08.2024 under Section 74, alleging that the ITC of ₹6,12,000/- had been fraudulently availed on invoices issued by M.R. Enterprises without actual supply of goods. The demands were subsequently confirmed along with interest and penalty.

The petitioner challenged the subsequent proceedings contending that the State GST authorities had already dealt with the same ITC and, therefore, the proceedings were barred by Section 6(2)(b) of the CGST Act. It also alleged non-consideration of its reply, non-supply of relied-upon documents and violation of natural justice.

Issue:

Whether subsequent proceedings initiated by the Central GST authorities under Section 74 are barred by Section 6(2)(b) of the CGST Act merely because earlier State GST proceedings under Section 73 had also dealt with ITC availed from the same supplier?

Held That:

The High Court dismissed the writ petition, holding that the petitioner had not established that the Central GST proceedings concerned the “same subject matter” as the earlier State GST proceedings.

The Court relied upon the Supreme Court’s ruling in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate, which explains that Section 6(2)(b) is attracted where the two proceedings concern the same liability or contravention. The mere fact that the proceedings relate to the same assessee, financial year or similar tax liability does not, by itself, establish identity of subject matter.

In the present case, the earlier State proceedings were under Section 73, whereas the subsequent Central proceedings under Section 74 were founded on DGGI investigation and intelligence alleging fraudulent availment of ITC through invoices not accompanied by actual supply of goods. The petitioner could not demonstrate that this specific allegation of bogus transactions had already been adjudicated upon in the State proceedings. Hence, the bar under Section 6(2)(b) was held not to be ex facie attracted.

The Court further observed that the petitioner’s objections regarding genuineness of transactions, actual receipt of goods, fraud/suppression, non-supply of relied-upon documents and non-consideration of the reply involved examination of the adjudication record and disputed factual issues. These matters could appropriately be raised before the statutory appellate authority under Section 107.

Importantly, the Court clarified that it had not expressed any final opinion on the merits of the ITC demand, genuineness of transactions, actual receipt of goods, applicability of Section 16, existence of fraud/suppression, or correctness of tax, interest and penalty. All such contentions remained open before the appellate authority.

Case Name: Krishna Industries v. Commissioner of Central Goods and Services Tax dated 18.09.2026

Citation No. 2026 Taxo.online 2910