In a significant development for indirect tax jurisprudence, the Supreme Court of India has agreed to examine a critical question: whether administrative circulars can override the statutory bar on initiating parallel GST proceedings under Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (“CGST Act”). The matter arises in the Special Leave Petition filed in Sree UGCL Projects Ltd. v. Additional Director (DGGI) & Anr. [SLP (C) No. 30756/2025], in which the apex court stayed the operative order of the Bombay High Court and issued notice to the Revenue on this issue.

The direction from the Supreme Court signals judicial discomfort with the widespread reliance on departmental circulars that appear to dilute clear statutory prohibitions against duplicate or overlapping adjudications by Central and State GST authorities. The outcome of this adjudication will have profound implications for tax administration, taxpayer rights, and the enforcement architecture of GST in India.

Context: The Statutory Bar Against Parallel Proceedings

Section 6(2)(b) — The Legislative Text

Section 6(2)(b) of the CGST Act expressly provides that:
“…the initiation of any proceedings by one authority shall bar another authority from initiating proceedings on the same subject matter.”

This statutory bar is rooted in the principle of single interface and cooperative federalism under the GST regime, which was designed to avoid conflicting actions and multiplicity of proceedings by different tax administrators in respect of the same issue.

Twin Concepts: Single Interface and Cross-Empowerment

The GST framework rests on two intertwined principles:

Single Interface: Taxpayers should not be subject to dual administrative control over the same transaction; instead, there should be a single adjudicatory process.

Cross-Empowerment: Both Central and State authorities can undertake enforcement actions (including audits and intelligence-based inquiries) across jurisdictions, but this cross-empowerment must not morph into duplicative proceedings.

The Armour Security Precedent (2025 INSC 982)

The Supreme Court’s earlier ruling in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Ors. (2025 INSC 982) — an authoritative interpretation of Section 6(2)(b) — established a pivotal legal benchmark last August. In that case, the Court held that:

Summons, searches, and seizures under Sections 70/67 of the CGST Act are steps in an inquiry or investigation, but do not constitute “initiation of proceedings” under Section 6(2)(b).

The statutory bar is triggered only upon issuance of a Show Cause Notice (SCN), which formally marks the commencement of adjudicatory proceedings, such as assessment, demand, or penalty.

“Subject matter” refers to the specific tax liability, deficiency, or contravention articulated in the show cause notice; the bar applies only where two proceedings seek to address identical or overlapping liabilities on the same facts.

A two-pronged test was articulated to determine whether two proceedings involve the “same subject matter”:

1. Whether identical liability/offence with the same factual matrix is involved; and

2. Whether the demand or relief sought is identical.

In effect, the Court balanced the need to prevent mechanical duplication of proceedings with the practical necessity for authorities to gather information and evidence without automatically triggering the statutory bar. However, this precise holding has now become the subject of renewed scrutiny in the context of conflicting administrative instructions.

The Current Dispute: Circulars vs. Statutory Bar

Facts of the UGCL Projects Case

In Sree UGCL Projects Ltd., the petitioner was subject to GST proceedings by Central authorities even though State authorities had already initiated proceedings — for overlapping periods — on similar issues. The petitioner contended that:

Section 6(2)(b) prohibits any parallel proceedings on the same subject matter once one authority has duly commenced them.

The tax department, however, relied on circulars and internal instructions that purportedly allow different authorities to proceed concurrently so long as the scope of scrutiny is characterised as distinct or broader.

Those circulars were cited to justify the initiation of proceedings by the Central authority despite existing state proceedings.

The Bombay High Court, in its order, dismissed the petition on the ground that the factual matrix required detailed examination, which was more appropriately addressed by the Appellate Authority. The High Court also referred to settled practice principles (like the exhaustion of alternative remedies) and declined to quash the proceedings outright.

Supreme Court’s Interim Order

The Supreme Court has stayed the High Court’s order and issued notice to the Revenue, expressly agreeing to probe whether reliance on circulars can effectively dilute the statutory bar in Section 6(2)(b). This matter now squarely places administrative instructions and statutory mandates on a collision course before the highest judicial forum.

Other Judicial Bearings on Parallel Proceedings

Prior High Court decisions have been varied on the precise contours of Section 6(2)(b). Some courts have distinguished inquiries from formal proceedings, while others have emphasised the breadth of the statutory bar against any “action” that undermines the cooperative framework.

At the same time, the Supreme Court’s guiding principles in Armour Security reflect judicial caution against literal application of “any proceedings” to preliminary evidence-gathering steps that could otherwise paralyse enforcement — a risk that strict interpretation might create. This makes the present examination particularly significant: the Court must now decide whether administrative circulars can override or interpret the statutory text, or whether the statute itself should control without dilution.

Implications for Businesses and Tax Administration

For Businesses

If the Supreme Court holds that circulars cannot override the clear statutory bar:

Taxpayers will have stronger protection against dual proceedings for the same subject matter, reinforcing certainty and predictability.

Litigation and compliance costs arising from parallel notices, repeated hearings, and duplicative document production will reduce significantly.

The statutory promise of a single adjudicatory interface under GST will gain practical enforceability.

Tax planning and risk management functions within corporates can be better aligned with statutory timelines and dispute resolution pathways.

Conversely, if the Court validates the administrative approach that permits some degrees of parallel action informed by circulars:

Companies could face concurrent actions from both Central and State authorities under broader interpretations of “distinct scope.”

The compliance burden may increase, with greater risk of contradictory directions and demands.

Tax governance and internal control practices will need to factor in multi-front engagements with the GST machinery.

For Tax Administration

The Revenue’s reliance on circulars to navigate around statutory prohibitions reflects operational challenges in intelligence-driven GST enforcement. However, reliance on administrative instructions in lieu of legislative clarity can create uncertainty and risk judicial pushback — as this case illustrates. A ruling that reinforces statutory primacy may require the Revenue to recalibrate enforcement protocols and inter-authority coordination.

Conclusion: A Turning Point in GST Jurisprudence

The Supreme Court’s decision to entertain this question represents a pivotal moment in GST jurisprudence. The core issue — whether circulars can override a clear statutory prohibition — goes to the very heart of legislative intent, administrative authority, and taxpayer protection.

We hope the Supreme Court takes a view that fortifies the statutory bar against parallel proceedings — not only in letter but in spirit — protecting businesses from multiplicity of litigation and ensuring the GST regime remains fair, efficient, and aligned with the foundational promise of a single interface.