Corporate groups with operations across multiple states face a unique GST litigation challenge: the possibility of receiving multiple notices from different jurisdictional authorities on the same issue. This creates a risk of parallel proceedings, contradictory orders, and inconsistent outcomes.
This article explains the legal framework for multi-state notices and provides a strategic approach for corporate groups.
The Problem of Parallel Proceedings
One of the most troubling administrative challenges in GST is the lack of coordination between central and state authorities. As the TaxGuru analysis notes, audit officers, anti-evasion officers, and jurisdictional adjudicating officers may all proceed independently against the same taxpayer on the same issue. This leads to:
- Multiple notices on the same issue.
- Contradictory orders from different authorities.
- Duplicate penalties.
- Wasted resources and management time.
Section 6(2)(b): The Bar on Parallel Proceedings
Section 6(2)(b) of the CGST Act provides that where a proper officer under the Central GST Act has initiated proceedings on a subject matter, no proceedings shall be initiated by a proper officer under the State GST Act on the same subject matter, and vice versa.
The Himachal Pradesh High Court has applied this provision to resolve parallel proceedings, directing that only one authority should proceed.
The DGGI Centralized SCN Challenge
A key procedural issue is whether the DGGI can issue a single centralized show cause notice for multiple GST registrations across different states. The Bombay High Court has examined this issue, and the Allahabad High Court has declined to quash composite GST notices to multiple assessees.
Strategic Approach for Corporate Groups
- Centralized coordination: Appoint a single legal counsel to coordinate all notices across states.
- Invoke Section 6(2)(b): File applications before authorities where parallel proceedings are detected.
- Challenge jurisdiction: Challenge notices issued by authorities without proper jurisdiction.
- Seek clubbing of proceedings: Where possible, seek consolidation of proceedings before a single authority.
- Maintain consistent positions: Ensure that the group's legal position is consistent across all states.
Practical Steps
- Maintain a tracker of all GST notices received across all GSTINs.
- Identify common issues and potential parallel proceedings.
- File Section 6(2)(b) applications at the earliest opportunity.
- Escalate to the High Court if parallel proceedings continue.
- Consider writ petitions for jurisdictional challenges.
Conclusion
Multi-state GST notices require a coordinated, strategic response. Corporate groups must invoke Section 6(2)(b) to prevent parallel proceedings and challenge notices issued without jurisdiction. A unified legal strategy is essential.
At Anuj Desai & Associates, we provide expert advisory services for corporate groups facing multi-state GST notices. Our team can help you coordinate your defence and protect your interests.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.