The Delhi High Court ruled on a case involving Shri Krishna Industries, which contested proceedings under the CGST Act initiated by Central GST authorities. The case centered on whether these proceedings were barred under Section 6(2)(b) of the CGST Act, given that similar issues had been addressed in previous State GST proceedings. Shri Krishna Industries, a manufacturer of plastic products, had faced State GST proceedings for the financial year 2017-18 concerning input tax credit (ITC) claimed from M.R. Enterprises. The State authority issued a fresh order following a High Court direction.
Read more: Meghalaya High Court - GST disputes on classification, exemption, and taxability should generally be resolved through the statutory appeal process, not through a writ petition [Order attached]
Subsequently, the Central GST authorities issued two Section 74 notices based on an investigation by the DGGI, alleging fraudulent ITC claims through invoices without actual goods supply. Shri Krishna Industries challenged these proceedings, arguing they were barred by Section 6(2)(b) since the same ITC had been previously examined by the State authorities. However, the Court clarified that proceedings are only barred when they address the same specific liability or contravention, not merely because they involve the same assessee, period, or tax liability.
The Court noted that the Central proceedings were based on new allegations of fraudulent ITC claims, which had not been adjudicated by the State authority. Although the cases involved ITC from M.R. Enterprises, the Central cases were distinct due to differing GSTINs. The Court dismissed the writ petition, allowing Shri Krishna Industries the liberty to appeal under Section 107, as other objections raised involved factual and adjudication issues.
Order Date - 18 September 2026
Parties: Shri Krishna Industries through its Proprietor Mohan Lal vs. Commissioner of Central Goods and Services Tax & Ors.
Facts -
- Shri Krishna Industries, a proprietorship concern of Mr. Mohan Lal engaged in manufacturing plastic products, was registered under the CGST and DGST Acts.
- Shri Krishna Industries had earlier faced State GST proceedings for FY 2017-18 concerning ITC claimed from M.R. Enterprises. After a direction from the High Court, the State authority passed a fresh order on 29.07.2024.
- Shri Krishna Industries subsequently received two Section 74 notices from the Central GST authorities based on DGGI investigation alleging fraudulent ITC availed through invoices not backed by actual supply of goods.
- Shri Krishna Industries challenged the proceedings, claiming that they were barred by Section 6(2)(b) because the same ITC had already been examined by the State authorities. The Central authorities confirmed demands of ₹6.12 lakh in each proceeding, along with applicable interest and penalty.
Issue -
- Whether the subsequent Section 74 proceedings initiated by the Central GST authorities were barred under Section 6(2)(b) of the CGST Act?
Order -
- The Court held that the expression “same subject matter” depends on the particular liability, deficiency or contravention being adjudicated. Proceedings are barred only when they concern the same liability or contravention, and not merely because they involve the same assessee, period or similar tax liability.
- Although both proceedings concerned ITC claimed from M.R. Enterprises, the Central proceedings were based on DGGI intelligence alleging fraudulent ITC through invoices without actual supply of goods. The Petitioner could not establish that this specific contravention had already been adjudicated by the State authority.
- The Court also noted that the two Central proceedings referred to M.R. Enterprises having different GSTINs. However, the difference in GSTINs was not treated as conclusive; the actual liability and alleged contravention in each proceeding had to be examined.
- The Court declined to examine the Petitioner’s other objections, including non-consideration of its reply, non-supply of relied-upon documents, genuineness of transactions and invocation of Section 74, as these involved factual and adjudication issues suitable for appeal under Section 107. The writ petition was accordingly dismissed, with liberty to appeal.
