M/s Vertilink Media Solutions Private Limited, a company involved in script services, was subjected to search proceedings on March 3, 2021, resulting in the arrest of its director and a subsequent investigation by the Directorate General of GST Intelligence (DGGI). On March 31, 2023, the DGGI issued a show-cause notice to forty-five entities, including Vertilink, concerning fraudulent Input Tax Credit claims under Section 74. Meanwhile, on May 29, 2024, the Delhi State tax authorities issued a separate notice under Section 73 for a short-declared tax liability for the 2019-2020 period.
Read more: Himachal Pradesh High Court - When a matter is remanded for fresh adjudication, the appellate authority must decide the case on merits and cannot reject it again merely on limitation grounds [Order attached]
The issue at hand was whether the state tax proceedings under Section 73 were barred by Section 6(2)(b) due to the DGGI's prior proceedings. The court determined that the statutory bar requires an identical subject matter, which was not the case here. The DGGI's actions under Section 74 pertained to fraudulent ITC claims, while the state authorities' actions concerned short-declared taxes and compliance with Section 16(2)(c).
The court also noted the petitioner's delay in seeking judicial intervention without explaining why they bypassed the statutory appeal process. It concluded that resolving DGGI proceedings through the principal noticee's payment does not automatically nullify separate tax liabilities raised by state authorities under different provisions.
Order Date - 25 September 2026
Parties Involved: M/s Vertilink Media Solutions Private Limited Vs Anti Evasion Branch & Ors.
Facts -
- M/s Vertilink Media Solutions Private Limited, a private limited company providing script services, faced search proceedings on March 3, 2021, leading to the arrest of its director and transfer of the investigation to the DGGI.
- The DGGI issued a common show-cause notice on March 31, 2023, to forty-five noticees regarding fraudulent availment of Input Tax Credit under Section 74.
- While DGGI proceedings were pending, the Delhi State tax authorities issued a separate show-cause notice on May 29, 2024, under Section 73 for short-declared tax liability for the 2019-2020 period.
- Respondent No. 2 finalized the adjudication on August 29, 2024, confirming a tax and ITC demand of Rs. 10,57,75,250, against which the petitioner filed a belated writ petition after failing to file a statutory appeal.
Issue -
- Whether the initiation of proceedings by state tax authorities under Section 73 of the CGST Act is barred by Section 6(2)(b) due to prior intelligence-based proceedings initiated by the DGGI.
Order -
- The court observed that the statutory bar under Section 6(2)(b) requires identity of the subject matter. The mere fact that two proceedings arise from the general business affairs of the same assessee does not make the subject matter identical.
- The court noted that the DGGI proceedings were initiated under Section 74 regarding fraudulent ITC availment without actual supply, whereas the state authorities acted under Section 73 for short-declared tax and Section 16(2)(c) compliance.
- The court emphasized that the petitioner delayed approaching the writ court by nearly two years without explaining why the alternative remedy of a statutory appeal was bypassed.
- The court concluded that the settlement of DGGI proceedings via the principal noticee's payment does not automatically extinguish independent tax liabilities validly raised under separate provisions by state authorities.
