Delhi High Court on Section 6(2)(b) CGST Act & parallel GST proceedings: Liberty General Insurance case explained

1. Background of the dispute

The Delhi High Court in M S Liberty General Insurance Limited Vs Additional Commissioner of CGST Delhi South Commissionerate & Anr. examined whether it should entertain a writ petition under Article 226 challenging an Order-in-Original dated 03.12.2025, when a statutory appellate remedy was available under the GST law.

The assessee approached the Court seeking primarily:

  • Quashing of Order-in-Original No. 46/AKC/ADC/CGST/DSC/2025-26 dated 03.12.2025 as allegedly contrary to Section 6(2)(b) of the CGST Act, on the footing that it led to a multiplicity of proceedings for FY 2020-21;
  • Quashing of the Central proceedings initiated by invoking the extended limitation under Section 74 of the CGST Act;
  • In the alternative, directions to:
    • Properly upload DRC-07 for each financial year on the GST portal; and
    • Decide rectification applications on merits, keeping in view that the State GST authorities had already dropped demand for the relevant period on the same alleged issue.

The High Court, however, declined to exercise its extraordinary writ jurisdiction at this stage, holding that the assessee must first pursue the statutory appeal.

2. Chronology of relevant events

2.1 Central Anti-Evasion summons

  • On 07.11.2023, the Anti-Evasion Branch of the Central Goods and Services Tax Department issued summons to the assessee.
  • The summons were based on an alleged ITC mismatch between Form GSTR-3B and Form GSTR-9.
  • The assessee filed a reply on 22.11.2023, and the Central investigation continued thereafter.

2.2 State GST proceedings for FY 2020-21

  • The State GST authorities issued a Show Cause Notice (SCN) dated 26.11.2024 for FY 2020-21.
  • The SCN alleged excess availment of ITC amounting to Rs.2,44,97,609/-.
  • The assessee responded on 21.01.2025.
  • These State proceedings were dropped by an order dated 22.02.2025.

2.3 Central SCN under Section 74

  • Independently, the Central investigation culminated in a SCN dated 26.05.2025 issued under Section 74 of the CGST Act.
  • This SCN covered a wider period, from FY 2018-19 to FY 2023-24, alleging fraudulent availment of excess ITC.
  • The assessee responded on 25.07.2025.
  • No plea based on Section 6(2)(b) was raised in this written reply.
  • The assessee then attended personal hearings on 16.09.2025 and 19.11.2025.

2.4 Order-in-Original and demand

  • An Order-in-Original dated 03.12.2025 was passed by the Additional Commissioner, CGST, Delhi South Commissionerate.
  • The order created a demand of Rs.4,80,26,753/-, along with penalty.
  • This became the subject of the writ petition before the High Court.

3.1 Statutory text

The Court extracted and relied upon Section 6(2)(b) of the CGST Act:

“(2) Subject to the conditions specified in the notification issued under sub-section (1),-
(b) where a proper officer under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter…”

The Court characterised this as a procedural safeguard designed to avoid:

  • Parallel proceedings by Central and State authorities on the same subject matter, and
  • Potentially conflicting outcomes on the same dispute.

3.2 Assessee’s contention

The assessee argued: