Supreme Court: GST Summons Not “Initiation of Proceedings”; Parallel Inquiries Allowed

The Supreme Court has clarified that summons issued under Section 70 of the Central Goods and Services Tax (CGST) Act, 2017, do not amount to “initiation of proceedings” under Section 6(2)(b). This means that both Central and State GST authorities can carry out parallel inquiries at the investigation stage.

A Bench of Justices JB Pardiwala and R Mahadevan resolved conflicting High Court views on whether “proceedings” include investigations and whether summons mark their start. The Court held that issuing a summons is only a step to gather evidence and does not mean formal adjudication has begun.

The case involved Armour Security, a public company providing security services, which had already received a show cause notice from the Delhi GST authorities for alleged under-reporting of turnover and wrongful ITC claims. Later, the CGST department also issued summons on similar issues. Armour Security argued that a second authority cannot act on the same matter once one has started proceedings.

However, the Court clarified that “proceedings” here mean adjudicatory actions like issuing a show cause notice under Sections 73 or 74—not searches, seizures, or summons. Overlapping facts at the investigation stage do not violate Section 6(2)(b), but adjudication on the same cause of action by two authorities is barred.

To avoid duplication, the Court issued a nine-point framework for authorities and taxpayers. This includes:

• Mandatory compliance with summons/notices
• Taxpayer’s duty to inform about overlapping inquiries
• Communication between Central and State GST authorities to confirm overlaps
• Continuing inquiries until an overlap is confirmed
• Deciding which authority will proceed in case of overlap
• Default rule that the first-acting authority continues if no agreement is reached
• Courts’ power to transfer cases if needed
• Right of taxpayer to approach the High Court if guidelines are breached
• Taxpayer’s continuing duty to cooperate

On the facts, the Court found the CGST inquiry independent from the State GST adjudication, and dismissed the appeal.