"PARALLEL PROCEEDINGS"

"PARALLEL PROCEEDINGS"

Parallel proceedings refer to the simultaneous conduct of adjudication, investigations or audits by different authorities or agencies under the GST regime. These proceedings can involve various entities, including the taxpayer, tax authorities at different levels (Centre, State, or local), and other agencies with enforcement powers.

This situation arises due to the dual GST model adopted in India, where both the Centre and the States have the authority to levy and collect GST on a common base, i.e., the supply of goods or services.

Parallel proceedings can lead to a multiplicity of notices and duplication of efforts by taxpayers in responding to authorities.

Courts have addressed the issue of parallel proceedings, emphasizing that multiple proceedings for the same period or subject matter should not be conducted simultaneously.

Let's go through few judicial pronouncements:

1. Kundlas Loh Udyog - Himachal Pradesh High Court

(2024) 22 CENTAX 455

CGST authorities cannot initiate proceedings when same subject matter is already under investigation by SGST authorities; Blocked credit ledger and summons issued by CGST authorities were to be set aside as proceedings had already been initiated by SGST authorities on same subject matter.

2. Fazil Traders @ Farook - Madras High Court

(2024) 21 CENTAX 13

Where tax proposal relating to a mismatch between assessee's GSTR-3B returns and auto-populated GSTR-2A was confirmed solely on the ground that assessee did not reply to show cause notice while assessee had challenged the order in original on the ground that two parallel proceedings were initiated in respect of same assessment period and in view of confusion entailed by initiation of such proceedings, assessee could not participate in proceedings, matter was to be re-adjudicated.

3. Subhash Agarwalla - Gauhati High Court

(2024) 59 Taxmann com 723

Where for same period orders were issued under section 73 by authorities under CGST Act and SGST Act for same allegation, two parallelproceedings in respect of same period would not be permissible, order passed by authority under CGST Act was to remain suspended till returnable date.

4. Vivek Narsaria - Jharkhand High Court

(2024) 158 Taxmann com 523

Proceedings on basis of search and seizure by State authorities, being prior in point of time and all proceedings being inter-related, State authorities should continue with proceedings; therefore, Preventive Wing of CGST and DGGI Wing of CGST should forward all their investigation carried out as against petitioner and inter-related transaction to State authorities, who should continue with proceedings from same stage.

5. Tvl. Vardhan Infrastructure - Madras High Court

(2024) 160 Taxmann com 771

Assessees who are assigned to either Central Tax authorities or State Tax authorities under respective Central Goods and Services Tax Act, 2017 and/or State Goods and Services Tax Act, 2017 cannot be subjected to investigation and further proceeding by counterparts under respective GST enactments.

In conclusion, courts have consistently ruled that parallel proceedings by both CGST and SGST authorities on the same subject matter are impermissible, as they violate principles of natural justice and create undue burden on taxpayers. The judicial stance emphasizes that one authority’s proceedings should prevail to avoid duplicative litigation, ensuring a fair and streamlined process under the GST regime.

Hope you will find this useful.

Raja Abhishek

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