[By Kushagra Jaiswal]
The author is a student of Nalsar University of Law.
Introduction
On 14 August 2025, in M/s Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr.,(“Armour Security”)the Supreme Court (“SC”) pronounced on the meaning and purpose of Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 (“CGST Act”). The crux of the matter was whether the issuance of summons under Section 70 could be characterized as “initiation of proceedings” when a related matter was currently under investigation by another GST authority. The petitioner contented that the authorities could not take these parallel approaches as dual action would contravene the bi-jurisdictional bar on them in Section 6(2)(b) and undermine cooperative federalism that is contemplated in the GST law.
Through Justice J.B. Pardiwala, the Court disagreed with this argument and noted that a summons is an investigatory tool rather than a process of adjudication. A summons is solely used by the Department to gather information to determine whether legal proceedings should be brought. A summons cannot be considered “commencement of proceedings” under Section 6(2)(b) as it does not render a finding of liability nor issue a show cause notice (“SCN”). The Court confirmed that concurrent proceedings are not allowed on the same subject matter and against the same person (Emphasis supplied), but it nevertheless upheld the validity of the CGST summons on this basis.
An Economic Times report reveals that parallel proceedings under GST are anything but rare. Official estimates suggest nearly 10,000 taxpayers have faced simultaneous action by both Central and State authorities. This figure underscores the systemic, not incidental, nature of the problem.
This article analyses the Supreme Court’s ruling in Armour Security, highlights the persistence of parallel proceedings despite safeguards, and proposes a VAT Information Exchange System (“VIES”) like framework within Goods and service Tax Network (“GSTN”) to prevent duplication.
What Did The Court Say?
The jurisprudence surrounding Section 6(2)(b) of the CGST Act has steadily delineated the contours of “proceedings” vis-à-vis “inquiry.” The High Courts (“HC”) in G.K. Trading v. Union of India & Kuppan Gounder case, have underscored that the power to summon under Section 70 is investigatory in character, whereas “proceedings” connote adjudicatory steps such as assessment, demand, or penalty.
Nevertheless, despite this doctrinal clarity, the persistence of duplicative actions remains unmistakable. The Orissa HC in the Anurag Suri case quashed a State GST SCN where the Central authority was already seized of the matter, observing that such overlap imposes needless hardship on taxpayers. Likewise, the Delhi HC in the Indo International Tobacco case drew attention to the practical complexities of concurrent jurisdiction, noting how fragmented enforcement fosters administrative inefficiency and conflicting outcomes.
The SC also took note of the petitioner’s reliance on Vivek Narsaria v. State of Jharkhand, where both the Central and State GST authorities commenced investigations at the same time, ultimately compelling the assessee to reverse his input tax credit. The petitioner relied on this case to highlight how overlapping jurisdiction creates hardship. However, the Court articulated that the factual matrix was materially different, noting that in that case the grievance stemmed from simultaneous investigations concerning the same matter, while in this instance, the search took place only after the prior assessments and pending proceedings had been completed. Based on those findings, the reasoning was determined to be inapplicable.
This issue pertains to the very design of the GST structure, which rests inter alia, on the concepts of ‘single interface’ and ‘cross empowerment.’ On their face, these two concepts might seem contradictory, but the Court explained they complement each other, not stand in conflict. The single interface principle aims to abolish the dual system of administrative oversight, which prevents a taxpayer from being supervised by various authorities regarding the same compliance. The principle embraces the idea that GST, even if it is a dual levy, is administered through a single interface whereby compliance with CGST, SGST and IGST is met simultaneously. Cross empowerment allows for Central and State authorities to undertake enforcement power, albeit not in parallel.
Therefore, maintaining the federal balance: both levels of the Government have the authority to enforce, but jurisdiction should not be exercised in parallel in order to avoid duplication of the exercise of jurisdiction. Together, these two principles embody the cooperative federalism that underlies the GST, promising simplicity and fairness for taxpayers.
The Conundrum Of Parallel Proceeding
While the ruling definitively resolves the narrow legal issue, it makes equally clear what it foreshadows as a deeper execution problem, i.e. taxpayers still remain subject to processes by multiple agents with overlapping statutory jurisdiction. Actions taken by statutory authorities with overlapping jurisdiction may be lawful, and they do violate the overall spirit of GST i.e “One nation, One tax.” While the Court prohibits parallel proceedings on the same subject with respect to the same assessee, the absence of institutional coordination between the Centre and the States only permits it to continue. Bridging the coordination gap will require structural change in procedure, sharing of data, jurisdictional allocation of authority, and cross-empowerment among the actors involved, not simply an interpretation of judicial meaning.
The government sought to curb duplication through a circular dated 5 October 2018, which authorised both Central and State tax authorities to initiate intelligence-based enforcement across the taxpayer base. The authority that first acts was mandated to carry the matter to its conclusion, including investigation, SCN, adjudication, recovery and appeal.Yet, despite these safeguards, judicial precedents reveal that parallel proceedings persist. Courts across jurisdictions have repeatedly quashed duplicative SCNs and inquiries, for instance, in M/S Toyota Kirloskar Motor Pvt. Ltd. v. Union of India, Baazar Style Retail Ltd. & Anr. v. Deputy Commissioner of State Tax, et al., underscoring the continuing breach of Section 6(2)(b).
In fact, the Supreme Court itself in Armour Security (¶ 98–99) emphasised the pressing need for better coordination. The Court observed that since both Central and State authorities rely on a common IT infrastructure, it is imperative that they act in harmony and exercise heightened vigilance over intelligence inputs to give full effect to the legislative intent of the GST regime.
Learning from International Models: The EU VIES System
The VIES developed by the European Union provides a useful model for India. VIES is an online mechanism that allows tax authorities and businesses to verify VAT registration numbers of enterprises engaged in cross-border trade within the EU. When a business in one member state sells goods or services to another, the system forwards the details to national VAT databases, confirms whether the buyer’s VAT ID is valid, and flags inconsistencies in real time. This prevents duplication of inquiries, reduces fraud, and ensures that while enforcement powers remain with individual states, information is centralised and transparent. By adapting a similar enforcement layer within the GST Network, India can strengthen coordination between Centre and State authorities and curb the problem of parallel proceedings
Applying VIES Principles to India
The experience of the European Union’s VIES architecture demonstrates that real-time, interoperable data exchange can function as a safeguard against jurisdictional duplication. For India, which continues to grapple with parallel proceedings under the GST regime, such a template holds immense normative value. Every enforcement act, whether the issuance of a summons, the initiation of an inquiry, or the service of an SCN, would be instantaneously logged into a unified system, ensuring simultaneous visibility to both Central and State authorities.
Further, each enforcement measure could be algorithmically tagged to a discrete issue, such as the wrongful claim or utilisation of input tax credit,deployment of fictitious invoices, or other stratagems of tax evasion. Such semantic tagging would obviate the peril of dual pursuit of an identical transgression against the same taxpayer. Once one authority (Central or State) has crystallised jurisdiction by issuing an SCN, the matter would thenceforth remain seised of that authority, with the counterpart relegated to a supporting intelligence-sharing role.
Oversight by a centralised supervisory entity, whether the GST Council or the Directorate General of GST Intelligence, would then impart a harmonising discipline. These institutions would adjudicate conflicts of competence, ensure parity of treatment across jurisdictions, and thereby safeguard the integrity of the “One Nation, One Tax” ethos. In this manner, the GST framework would preserve the delicate balance between the fiscal sovereignty of States and the enforcement prerogatives of the Union, while extinguishing the inefficiencies of overlap and discordance.
Moreover, GSTN already provides the IT backbone for GST, integrating Centre and State tax systems to enable uniform return filing, payments, and compliance. Including a real-time enforcement coordination layer within it would be a natural extension of its role as the nationwide infrastructure for indirect taxation.
Conclusion
Eight years after the implementation of the GST framework, execution-level flaws are still present, undermining its fundamental objectives. There are still inconsistent enforcement and overlapping processes, threatening a regime that was designed to produce smooth administration, eliminate duplications, and provide a single compliance structure. Structural flaws run the risk of undoing the central premise of the GST and leaving taxpayers vulnerable to double jeopardy, and violations of Article 265 and the other protections afforded by the Constitution, if not corrected.