Delhi High Court resolution of parallel CGST and State GST actions in overlapping SCNs

Background of the dispute

The Delhi High Court, in Maa Jagdambe Engineering Works Vs Commissioner of Trade & Taxes, examined a conflict arising from parallel proceedings initiated by the CGST Authority and the State GST Authority in respect of the same assessee and overlapping entities.

Two different Show Cause Notices (SCNs) were at the centre of the controversy:

  • An SCN dated 28 June 2025 issued by respondent no. 4 – CGST Authority, covering 17 entities.
  • A subsequent Demand-cum-Show Cause Notice dated 2 July 2025 issued by respondent no. 2 – State GST Authority, which dealt with 9 entities that were already part of the earlier CGST SCN.

The assessee challenged the order dated 18 December 2025 passed by the State GST Authority, contending that once the CGST Authority had already initiated proceedings in respect of overlapping entities, the subsequent State GST proceedings were barred by the statutory scheme under Section 6 of the Central Goods and Services Tax Act, 2017.

Chronology of key events

Initiation of CGST proceedings

  1. On 28 June 2025, respondent no. 4 – CGST Authority issued a Show Cause Notice to the assessee covering 17 entities.
  2. This SCN was issued under the provisions of the CGST Act, and formed the basis of proceedings under Section 74 for the financial years:
    • 2020-2021
    • 2021-2022
    • **2022-2023`

State GST action and overlapping entities

  1. On 2 July 2025, respondent no. 2 – State GST Authority issued a Demand-cum-Show Cause Notice under Section 73 of the CGST Act.
  2. Out of the 17 entities that were the subject of the CGST SCN, the State GST Authority proceeded to assess the assessee’s tax liability in relation to 9 entities that overlapped with those already covered by the CGST SCN.

Objection by the assessee

  1. Upon receiving the State SCN, the assessee raised a specific objection by way of a communication dated 22 July 2025 (Annexure P-4), addressed to respondent no. 2 – State GST Authority.
  2. In that communication, the assessee:
    • Brought on record the prior SCN dated 28 June 2025 issued by the CGST Authority.
    • Asserted that, by virtue of Section 6 of the CGST Act, the State GST Authority was barred from proceeding further in respect of the overlapping entities.
  3. Despite this written objection, respondent no. 2 went ahead and passed the impugned order dated 18 December 2025, without dealing with the assessee’s contention regarding the prior CGST proceedings.

Statutory mandate under Section 6

The central question before the Court was whether, in the presence of prior proceedings initiated by the CGST Authority in respect of specified entities, the State GST Authority could validly continue or conclude parallel proceedings regarding the same overlapping entities.

Section 6 of the CGST Act contemplates a regulatory framework for cross-empowerment and coordination between the Central and State tax authorities. One of the key outcomes of this framework is that once a particular matter is already seized by one authority, the other authority is expected to refrain from duplicative action for the very same subject matter.

The assessee, therefore, argued that:

  • Since the CGST Authority had already issued the earlier SCN dated 28 June 2025, and
  • Since the State GST SCN dated 2 July 2025 concerned overlapping entities,

the State Authority was barred by the scheme of Section 6 from proceeding further.

Proceedings under Section 74 and Section 73

The assessee also highlighted that:

  • Proceedings under Section 74 of the CGST Act had already been commenced by the CGST Authority for FY 2020-2021, 2021-2022 and 2022-2023.
  • The State Authority’s SCN under Section 73 partially dealt with the same set of entities and issues.