Madras High Court Quashes State GST Assessment: Section 6(2)(b) Bar on Parallel Proceedings — V.M. & Co. Vs State Tax Officer
Overview of the Judgment
The Madras High Court, in V.M. & Co. Vs State Tax Officer, set aside assessment orders issued by the State GST authorities under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act) for the financial year 2018-19. The Court remanded the matter for fresh consideration, holding that the State authorities had failed to adequately examine whether their proceedings overlapped with an earlier adjudication carried out by the Central GST authorities. The judgment reinforces the bar contained in Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act) against the initiation of parallel or duplicate proceedings on the same subject matter.
Background and Facts of the Case
The assessee, V.M. & Co., had previously been subjected to an inspection and inquiry by the Directorate General of GST Intelligence (DGGI), Coimbatore Zonal Unit, a Central authority, for the same financial year 2018-19. That inquiry was directed at differences in turnover figures as reflected in the income tax returns of the assessee vis-à-vis the figures declared in Form GSTR-3B. Following the completion of that inquiry, the Central authorities passed an order dated 08.12.2022, which adjudicated the resultant tax liability. The assessee accepted the demand raised therein and duly discharged the liability.
Subsequent to this, the State tax authorities issued a show cause notice to the assessee on what they characterised as a fresh issue — namely, suppression of sales transactions detected through Form GSTR-9 (annual return), as opposed to GSTR-3B. The assessee responded to the notice by contending that since the Central authorities had already dealt with the issue pertaining to the same financial year, any further proceedings by the State authorities were statutorily barred under Section 6(2)(b) of the CGST Act / TNGST Act.
The State authorities, however, rejected the assessee's contention and passed an assessment order under Section 74 of the TNGST Act, imposing the full tax demand along with interest and penalty. A subsequent rectification application filed by the assessee was also dismissed. Aggrieved, the assessee approached the Madras High Court by way of a writ petition seeking a writ of certiorari to quash the impugned orders dated 08.09.2025 and 08.12.2025.
Rival Contentions
Assessee's Position
The assessee's counsel argued that the subject matter of the State proceedings was identical to what had already been examined and adjudicated by the Central GST authorities. Since the assessee had already discharged the tax liability determined by the Central order dated 08.12.2022, re-agitating the same issue by the State authorities amounted to double jeopardy and was explicitly prohibited under Section 6(2)(b) of the CGST Act.
State Authorities' Position
The learned Additional Government Pleader appearing for the State countered that the Central authority's proceedings were confined exclusively to discrepancies arising from a comparison of Form GSTR-3B with the income tax returns, whereas the current State proceedings were based on an analysis of Form GSTR-9 (annual return) which disclosed a separate and distinct suppression of sales. The State therefore argued that the two sets of proceedings did not concern the same subject matter and that the bar under Section 6(2)(b) was not attracted.
The State also relied upon the Supreme Court's decision in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate and another, reported in (2025) 145 GSTR 385, to support its position on the meaning of "subject matter" under the CGST Act.