Himachal Pradesh High Court Resolves Parallel GST Proceedings on ITC Denial Citing Section 6(2)(b)
The dual administrative structure of the Goods and Services Tax (GST) framework often leads to jurisdictional overlaps, where both Central and State authorities initiate actions against the same assessee for identical issues. Addressing this critical procedural bottleneck, the Himachal Pradesh High Court recently delivered a significant ruling in the case of H.M. Steels Ltd. Vs Union of India & Ors.
The Court provided substantial relief to the assessee who was subjected to parallel adjudicatory proceedings concerning the denial of Input Tax Credit (ITC). By heavily relying on the recent landmark judgment of the Supreme Court in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East & Anr., the High Court reinforced the statutory embargo placed by Section 6(2)(b) of the CGST Act against simultaneous jurisdictional overreach.
Factual Matrix of the Dispute
The controversy arose when the assessee, H.M. Steels Ltd., became the recipient of multiple summary show cause notices issued under Form DRC-01 by different tax jurisdictions.
The State GST authorities issued a series of notices on the following dates:
- 28.09.2022
- 24.02.2023
- 18.09.2023
- 21.05.2024
- 31.05.2024
Simultaneously, the Central GST Authority initiated its own parallel action by issuing a separate Show Cause Notice on 23.02.2023. All these notices uniformly pertained to the disallowance of Input Tax Credit claimed by the assessee across multiple financial years (2017-18 to 2023-24).
Grievances Raised by the Assessee
Aggrieved by the multiplicity of proceedings, the assessee approached the High Court via a writ petition, raising several fundamental procedural and substantive objections:
- Bypass of ASMT-10: The authorities directly issued DRC-01 summary notices without first issuing the mandatory ASMT-10 (Scrutiny of Returns) notice, thereby violating the established procedural hierarchy.
- Genuineness of Transactions: The assessee vehemently argued that the underlying taxes had already been remitted to the respective suppliers.
- Possession of Valid Documents: The assessee maintained that they possessed all requisite statutory documentation necessary to legitimately claim the ITC.
- Impossibility of Performance: The assessee contended that the law cannot compel a recipient to perform an impossible act—specifically, ensuring that the supplier has ultimately deposited the collected tax into the government treasury, especially when the transactions occurred prior to any retrospective cancellation of the supplier's GST registration.
The assessee expressed willingness to cooperate, provided the competent authorities were directed to objectively evaluate the documentary evidence proving the actual payment of GST to suppliers, the genuineness of the purchases, and the fulfillment of statutory verification obligations.
Judicial Scrutiny and the Apex Court Precedent
During the hearings, both the Learned Advocate General and the Senior Counsel representing the revenue authorities conceded that if the assessee submitted a fresh, comprehensive response supported by relevant evidence, the designated competent authority would adjudicate the matter within a reasonable timeframe.