Section 6(2)(b) restricts initiation of proceedings under the CGST Act on a subject matter if a proper officer under the SGST/ UTGST Act has already initiated proceedings on the same subject matter.
However, whether an “inquiry” made u/s 70 of CGST Act amounts to proceedings for the purpose of Section 6 has been subject to debate.
As per Section 70 (1) of the CGST Act, the proper officer shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure,1908.
In the case of M/s G.K. Trading Company V. UOI and Others dated 2.12.2020, it has been held by the Allahabad High Court that “Inquiry” u/s 70 is not synonymous with “proceedings” since the process of inquiry is specific and cannot be intermixed with some statutory steps which may precede or may be carried out upon making the inquiry or after its conclusion.
After the inquiry is completed and the relevant materials are found, thereby evidencing tax evasion, it may lead to demands and recovery u/s 73 or 74 of the CGST Act. When the action under either of these two sections is undertaken, proceedings are said to be initiated in terms of Section 6(2)(b) of CGST Act.
Further, the words “any proceeding” on the same “subject-matter” used in Section 6(2)(b) of the Act mean any proceeding on the same cause of action and for the same dispute involving some adjudication proceedings which may include assessment proceedings, proceedings for penalties, etc., proceedings for demands and recovery under Sections 73 and 74, etc.
Hence, Inquiry under Section 70 has a specific purpose for which this power has been conferred upon the proper officer and the same doesn’t amount to proceedings for the purpose of Section 6(2)(b).
