Allowed

M/S. Tansam Engineering and Construction Company, Rourkela v. the Commissioner, Cgst and Central Excise, Rourkela Commissionerate,Rourkela

Orissa HC14 Oct 2025WP(C)/15935/2025

Case brief

AI extract

What is this about?

A taxpayer adjudicated by the State GST authority for fake-input-tax-credit allegations was also proceeded against by DGGI under Section 74 for identical periods and transactions. Holding parallel initiation impermissible under Section 6(2)(b), the Court quashed the DGGI show cause notice, set aside the resulting Order-in-Original and DRC-07 demands.

What did the court decide?

Show Cause Notice dated 13.08.2021 quashed; Order-in-Original dated 30.01.2025 set aside as non-est; Summary of Orders/DRC-07 dated 31.01.2025 (both) set aside.

M/S. Tansam Engineering and Construction Company… — GST and Indirect Tax | Orissa HC (2025)

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ORISSA HIGH COURT : CUTTACK

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W.P.(C) No.15935 of 2025

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In the matter of an Application under Articles 226 & 227 of the Constitution of India, 1950

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M/s. Tansam Engineering and Construction Company Plot No.EEE/6, Civil Township Rourkela – 769 004 represented through its partner Mr. Sanjay Bangal Aged about 47 years Son of Ajit Kumar Bangal. …

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Petitioner

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-VERSUS-

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1. The Commissioner, CGST and Central Excise Rourkela Commissionerate, Rourkela Civil Township, Rourkela – 769 004.

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2. Director General of Goods and Services Tax Intelligence Rourkela, Regional Unit Town Engineering Office Campus Project Building, Sector – 5 Rourkela.

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3. Assistant Commissioner, GST and Central Excise Rourkela–I Division, Rourkela.

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4. Additional State Tax Officer (Proper Officer) Rourkela–II Circle, Sundargarh.

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5. Joint Commissioner of State Tax (Appeal) Sundargarh Territorial Range Rourkela … Opposite Parties.

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Counsel appeared for the parties:

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For the Petitioner : Mr. Rudra Prasad Kar, Senior Advocate Assisted by Mr. Madhab Lal Agarwal, Ms. Zenish Mary Wallace, Mr. Pankaj Khandelwal, Advocates For the Opposite Parties : Mr. Sunil Mishra, Standing Counsel and Mr. Seshadeb Das (CT & GST Organisation) and Mr. Avinash Kedia, Junior Standing Counsel (CGST)

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P R E S E N T:

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HONOURABLE CHIEF JUSTICE

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MR. HARISH TANDON

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AND

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HONOURABLE JUSTICE MR. MURAHARI SRI RAMAN

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Date of Hearing : 02.09.2025 :: Date of Judgment : 14.10.2025

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JUDGMENT

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MURAHARI SRI RAMAN, J.—

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Craving to invoke extraordinary jurisdiction under the provisions of Articles 226 and 227 of the Constitution of India, the instant writ application has been filed

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questioning propriety, legality and tenability of Order-inOriginal dated 30.01.2025 passed by the Assistant Commissioner, Rourkela-I Division having jurisdiction of Rourkela-II Circle, Sundargarh exercising power under Section 74 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (Annexure-1) raising demands vide Summary of Order dated 31.01.2025 in Form GST DRC-07 pertaining to tax period from December, 2017 to March, 2018 (Annexure2) and Summary of Order dated 31.01.2025 relating to tax period August, 2018 (Annexure-3).

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Facts adumbrated in the writ petition:

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2. Relevant facts outlined by the petitioner leading to filing of the writ petition are culled out infra.

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2.1. Being assigned to the jurisdiction under the State Tax Authorities having Registration No. GSTIN: 21AAIFT7741F2Z8 under the Odisha Goods and Services Tax Act, 2017/the Central Goods and Services Tax Act, 2017 (collectively be called hereinafter, ―GST Act‖), the petitioner, a partnership firm carrying on business of supply of service by way of execution of works contract, was adjudicated with liability comprising tax, interest and penalty qua tax period(s) from July, 2017 to March, 2018 under Section 74 of the GST Act pursuant to Show Cause Notice in Form GST DRC-01A

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dated 02.07.2021 issued by Additional State Tax Officer, Rourkela-II Circle, Sundargarh (be called, ―State Proper Officer‖) vide Order dated 12.04.2023. Assailing said order of adjudication, an appeal bearing No.AD210723002736F under Section 107 ended with dismissal by the Joint Commissioner of State Tax (Appeal), Sundargarh Territorial Range, Rourkela by Order dated 30.01.2024.

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2.2. Since the Goods and Services Tax Appellate Tribunal has yet not been constituted, the petitioner approached this Court challenging said order of dismissal of appeal by way of writ petition, registered as W.P.(C) No.13235 of 2024, wherein the following order is passed on 19.06.2024:

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―2. It is agreed by learned counsel for the parties that the issue involved in this writ petition has already been decided by a Coordinate Bench of this Court vide Order dated 16.02.2024 passed in W.P.(C) No. 42015 of 2023 (M/s. Maa Tarini Traders v. State of Odisha and others) and batch of writ petitions.

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3. In view of the above, this writ petition stands disposed of in terms of the observation and directions issued in M/s. Maa Tarini Traders (supra).‖

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2.3. In Maa Tarini Traders Vrs. State of Odisha and Others, W.P.(C) No.42015 of 2023 and batch, this Court passed the following Order on 16.02.2024:

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―3. It is not at all in dispute that the orders impugned in these writ applications, which have been passed by the Authorities under the Central Goods and Services Tax Act, 2017 (CGST Act)/Odisha Goods and Services Tax Act, 2017 (OGST Act) are appellable under section 112 of the CGST/OGST Act, 2017. It is also not in dispute that because of nonconstitution of the Appellate Tribunal as required under Section 109 of the said Acts, the Petitioners are deprived of their statutory remedy of Appeal and the corresponding benefit of sub-sections-8 & 9 of Section 112 of the said Acts.

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The Petitioners are desirous of availing the statutory remedy of Appeal under the said provisions. Apparently, acknowledging the absence of constitution of Appellate Tribunal, in exercise of the power conferred under Section 172 of the CGST Act, 2017, the Government of India based on the recommendation made by the G.S.T. Council, has issued Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 on 03.12.2019, Clause-2 of which reads as under:

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‗2. For the removal of difficulties, it is hereby clarified that for the purpose of calculating:

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(a) the ―three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal‖ in sub-section (1) of Section 112, the start of the three months period shall be considered to be the later of the following dates:

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(i) date of communication of order; or

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(ii) the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office;

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(b) the ―six months from the date on which the said order has been passed‖ in subsection (3) of Section 112, the start of the six months period shall be considered to be the later of the following dates:

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(i) date of communication of order; or

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(ii) the date on which the President or the State President, as the case may be, of the Appellate Tribunal after its constitution under Section 109, enters office.‖

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In tune with the said Removal of Difficulties Order dated 03.12.2019, the Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular No.132/2/2020-GST Dated 18th March, 2020 has come out with the clarification in respect of appeal having regard to non-constitution of the Appellate Tribunal. Paragraphs-4.2 & 4.3, which are relevant are being reproduced hereinbelow:

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‗4.2 The appellate tribunal has not been constituted in view of the order by Madras High Court in case of Revenue Bar Assn. v. Union of India and therefore the appeal cannot be filed within three months from the date on which the order sought to be appealed against is communicated. In order to remove difficulty

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arising in giving effect to the above provision of the Act, the Government, on the recommendations of the Council, has issued the Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019. It has been provided through the said Order that the appeal to tribunal can be made within three months (six months in case of appeals by the Government) from that date of communication of order or date on which the President or the State President, as the case may be, of the Appellate Tribunal enters office, whichever is later.

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4.3 Hence, as of now, the prescribed time limit to make application to appellate tribunal will be counted from the date on which President or the State President enters office. The appellate authority while passing order may mention in the preamble that appeal may be made to the appellate tribunal whenever it is constituted within three months from the President or the State President enters office. Accordingly, it is advised that the appellate authorities may dispose all pending appeals expeditiously without waiting for the constitution of the appellate tribunal.‘

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Taking into account the aforesaid Central Goods and Services Tax (Ninth Removal of Difficulties) Order, 2019 dated 03.12.2019 issued by the Government of India and subsequent clarification issued by the Central Board of Indirect Taxes and Customs (GST Policy Wing) vide Circular No.132/2/2020 dated 18th March, 2020, we deem it proper in the interest

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of justice to dispose of these writ applications in the following terms:

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(i) Subject to verification of the fact of deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, or deposit of the same, if not already deposited, in addition to the amount deposited earlier under SubSection (6) of Section 107 of the CGST/OGST Act, the Petitioners must be extended the statutory benefit of stay under Sub-Section (9) of Section 112 of the CGST/OGST Act, for the Petitioners cannot be deprived of the benefit, due to nonconstitution of the Tribunal by the respondents themselves. The recovery of balance amount, and any steps that may have been taken in this regard will thus be deemed to be stayed.

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(ii) The statutory relief of stay on deposit of the statutory amount, in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to nonconstitution of the Tribunal by the respondentAuthorities, the Petitioner would be required to present/file his appeal under Section 112 of the CGST/OGST Act, once the Tribunal is constituted and made functional and the President or the State President may enter office. The appeal would be required to be filed observing the statutory requirements after coming into existence of the Tribunal, for facilitating consideration of the appeal.

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(iii) In case the petitioner chooses not to avail the remedy of appeal by filing any appeal under

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Section 112 of the CGST/OGST Act before the Tribunal within the period which may be specified upon constitution of the Tribunal, the respondent-Authorities would be at liberty to proceed further in the matter, in accordance with law.

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With the above liberty, observation and directions, the writ applications stand disposed of.‖

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2.4. On yet another occasion, with the identical allegation as that was completed as stated above, for the tax period(s) from July, 2017 to March, 2018, invoking power under Section 74 of the GST Act, the State Proper Officer by Order dated 12.04.2023 proceeded to raise demand and issued Form GST DRC-07 under Rule 142 reflecting demand of Rs.79,75,522/- (comprising tax, interest and penalty). The appeal being AD2107230027696 assailed therein the said adjudication order got dismissed vide Order dated 07.02.2024 by the Additional Commissioner of State Tax (Appeal), Rourkela.

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2.5. A writ petition, being W.P.(C) No.13014 of 2024, was filed before this Court for the Goods and Services Tax Appellate Tribunal is not constituted as of date, wherein identical order as discussed earlier in foregoing paragraphs has been passed vide Order dated 21.05.2024.

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2.6. In similar fashion, the Additional State Tax Officer, Rourkela-II Circle, Sundargarh framed Order dated

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12.04.2023 under Section 74 for the tax period(s) from April, 2018 to March, 2019, whereby a demand of Rs.12,84,940/was raised. An appeal, bearing No.AD210723002775D, challenging above Order dated 12.04.2023 of the State Proper Officer under Section 107 of the GST Act stood allowed partly by reduction of demand to Rs.7,15,824/- vide Order dated 31.01.2024.

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2.7. A writ petition, being W.P.(C) No.13016 of 2024 challenging said order in appeal in absence of Goods and Services Tax Appellate Tribunal, stands disposed of in terms of the observation and directions issued vide Order dated 16.02.2024 in the case of Maa Tarini Traders Vrs. State of Odisha and others, W.P.(C) No.42015 of 2023.

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2.8. While the matter stood thus, invoking provisions of Section 74 of the GST Act, the Deputy Director, Directorate General of Goods and Services Tax Intelligence, Rourkela Regional Unit (for convenience be referred to as ―DGGI‖) issued a Show Cause Notice bearing No.34/2021-22, dated 13.08.2021 relating to tax period(s) December, 2017, March, 2018 and August, 2018 (covering Financial Years 2017-18 and 2018-19), which contained self-same allegations, which had already been dealt with by the State Proper Officer. Notwithstanding reply in Form GST DRC-06 was submitted on 30.07.2022 apprising the factual scenario

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along with relevant evidence before the DGGI, the Assistant Commissioner, Rourkela-I Division proceeded with the matter. In course of personal hearing on 11.09.2024, the petitioner stated to have reiterated its stand that based on Tax Evasion Report containing same sort of allegation of availing input tax credit on the strength of fake invoices issued by certain named suppliers relating to transactions effected during the tax periods from July, 2017 to March, 2018 and April, 2018 to March, 2019, the State Proper Officer had already completed proceedings under Section 74 of the GST Act, against which the appeals have also come to be concluded. Nonetheless, the Assistant Commissioner, GST and Central Excise, Rourkela-I Division, Rourkela (hereinafter be referred to as ―Central Proper Officer‖) passed Order-in-Original on 30.01.2025 under Section 74 raising demand of tax, interest and penalty under both the Central Goods and Services Tax Act as also the Odisha Goods and Services Tax Act vide Summary of Orders in Form GST DRC-07 dated 31.01.2025 (Annexures-2 and 3).

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2.9. Hence, this writ petition assailing the Order-in-Original dated 30.01.2025 under Section 74 and Summary of Orders reflecting demands raised by the Central Proper Officer including the Show Cause Notice dated 13.08.2021 on the grounds inter alia that such exercise

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of power is without jurisdiction and authority in law being contrary to what is spelt out in Section 6 of the GST Act.

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Hearing:

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3. This matter has been listed under the heading ―Fresh Admission‖ for around six occasions, but at the request of either of the parties, adjournments have been granted. However, at the consent of the counsel for the respective parties, this matter is taken up for final hearing at the stage of ―Fresh Admission‖ as short point is involved whether Show Cause Notice dated 13.08.2021 issued by DGGI, pursuant to which Order-in-Original dated 30.01.2025 has been passed by the Central Proper Officer along with Summary of Orders dated 31.01.2025 depicting demands is competent on the premise that on the very same subject-matter based on intelligence received from the Additional Director General, CBIC, Bhubaneswar and the Assistant Commissioner (AntiEvasion), GST & Central Excise, Rourkela Commissionerate with respect to transactions effected during the self-same tax periods covering July, 2017 to March, 2019 (Financial Years 2017-18 and 2018-19) qua the same alleged non-existent suppliers, two orders and demands under Section 74— one by the State Proper Officer and the other by the Central Proper Officer— can operate at the one and the same time.

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3.1. Accordingly, heard Sri Rudra Prasad Kar, learned Senior Advocate assisted by Sri Madhab Lal Agarwal, learned Advocate for the petitioner; Sri Sunil Mishra, learned Standing Counsel for the CT and GST Organisation; and Sri Avinash Kedia, learned Junior Standing Counsel for the CGST and Central Excise.

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3.2. Upon conclusion of hearing, the matter is kept reserved for preparation and pronouncement of Judgment/Order.

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Submissions and arguments:

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4. Sri Rudra Prasad Kar, learned Senior Advocate would submit that based on intelligence received by communications dated 01.03.2021 and 02.06.2021 containing allegation of fake transactions with M/s. M.G. International, GSTIN: 21AVOPN5293M1ZZ and M/s. M.S. Traders, GSTIN: 21GJKPS2564G1Z1 and consequential wrongful availment of input tax credit, the State Proper Officer initiated proceeding under Section 74 of the GST Act on 02.07.2021 by issue of Show Cause Notice in Form GST DRC-01A for the tax period December, 2017 (Financial Year 2017-18) and later another two Show Cause Notices dated 30.07.2021 in Form GST DRC-01A for the tax periods March, 2018 (Financial Year 2017-18 and August, 2018 (Financial Year 2018-19). On 13.08.2021 Show Cause Notice has been issued by the Deputy Director, DGGI, Rourkela

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Regional Unit under Section 74 for the self-same tax periods relating to said Financial Years based on same allegations of wrongful claim of input tax credit by dint of fake invoices issued by named non-existent suppliers. He, therefore, arduously urged that same subject-matter could not be seized of by two authorities and independent demands on the very same allegations qua self-same transactions alleged to have been effected with the non-existent suppliers should have been raised. Thus, what is argued before this Court is essentially that both the demands under Section 74 of the GST Act by two different authorities— one by the State Proper Officer and the other by the Central Proper Officer— would tantamount to double taxation.

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4.1. Referring to Section 6(2) of the GST Act, Sri Rudra Prasad Kar, learned Senior Advocate advanced contention that the Legislature has provided safeguard to the taxable persons conducting business by preventing from being vexed twice simultaneously in the hands of the State Proper Officer and the Central Proper Officer. He submitted that by issue of summons under Section 70 of the GST Act on 24.05.2019 cannot be said that the Central Proper Officer has initiated ―proceeding‖; nevertheless, at the stage of issue of Show Cause Notices dated 02.07.2021 and 30.07.2021 contemplating determination of liability under Section

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74 by the State Proper Officer could be stated to be proceeding initiated. Notwithstanding specific plea was set up by way of reply to Show Cause Notice, throwing the purport of provisions contained in Section 6(2) to the winds, based on the Show Cause Notice issued by the Deputy Director, DGGI, the Assistant CommissionerCentral Proper Officer could not have proceeded to pass Order-in-Original on 30.01.2025 independently and raise Demands thereby, inasmuch as the State Proper Officer not only initiated proceeding under Section 74 much earlier to the proceeding initiated by the Central Proper Officer but also concluded the same, which culminated in appellate orders.

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4.2. Placing heavy reliance on Armour Security (India) Ltd. Vrs. Commissioner, CGST, Delhi East Commissionerate and Another, 2025 SCC OnLine SC 1700 = 2025 INSC 982 , the learned Senior Counsel proceeded to advance argument that the State Proper Officer having issued Show Cause Notices on 02.07.2021 and 30.07.2021 to proceed with adjudication under Section 74 of the GST Act much prior to initiation of proceeding by the Central Proper Officer by issue of Show Cause Notice dated 13.08.2021, the proceeding by the latter would be vulnerable and vitiated. Hence, he would submit that not only the Show Cause Notice dated 13.08.2021 is liable to be quashed but also the Order-in-Original dated

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30.01.2025 of the Central Proper Officer is to be treated as non est in the eye of law.

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5. Sri Sunil Mishra, learned Standing Counsel for the CT and GST Organisation supported the contention of Sri Rudra Prasad Kar, learned Senior Counsel by making suave submission that based on the Tax Evasion Report furnished by the Additional Director General, CBIC and Assistant Commissioner (Anti-Evasion), the State Proper Officer having initiated proceeding under Section 74, the Orders dated 12.04.2023 cannot be faulted with. He conceded that the Central Proper Officer has initiated proceeding under the said provisions with respect to same allegations at a later point of time.

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6. Sri Avinash Kedia, learned Junior Standing Counsel, on instructions submitted that the events of proceeding by different authorities are not disputed. But summons under Section 70 being issued by the Central Authority on 24.05.2019 the initiation of proceeding preceded initiation of proceeding under Section 74 of the GST Act by the State Proper Officer; hence, the Order-in-Original dated 30.01.2025 cannot be stated to be bad in law. However, he would submit that interpretation of Section 6(2) vide judgment dated 14.08.2025 in the case of Armour Security (India) Ltd. Vrs. Commissioner, CGST, Delhi, 2025 INSC 982 = 2025 SCC OnLine SC 1700 being delivered after passing of the Order-in-Original dated

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30.01.2025 under Section 74, the Central Proper Officer had no occasion to examine the effect of such exposition of law. Therefore, he submitted that the matter does require reconsideration by the Central Proper Officer to examine whether proceeding under Section 74 by the Central Proper Officer can be construed to have been initiated earlier to the proceeding so initiated by the State Proper Officer.

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6.1. Sri Avinash Kedia, learned Junior Standing Counsel, made valiant attempt to justify action of the Central Proper Officer by canvassing that the proceeding initiated under Section 74 of the GST Act by the State Proper Officer was in pursuance of the Tax Evasion Report(s)/intelligence furnished to the State Authorities. Such proceeding of the State Proper Officer is stated to have been undertaken at a later point of time than the step taken by the DGGI, one of the Central Authorities, which commenced with the visit to the business premises of M/s. M.G. International and M/s. M.S. Traders on 31.08.2018 and 15.03.2019 respectively. On the basis of materials detected, summons under Section 70 of the GST Act was issued to the petitioner-firm on 24.05.2019. Therefore, it is misconceived to contend on the part of the learned Senior Counsel for the petitioner that the Order-in-Original dated 30.01.2025 passed by the Central Proper Officer in connection with Show

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Cause Notice No.34/ 2021-22, dated 13.08.2021 of the DGGI is later to the proceeding under Section 74 initiated by the State Proper Officer so as to fall within the mischief of Section 6(2).

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Discussions:

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7. This Court having heard rival contentions of the respective parties, perused the record to find the following pertinent facts:

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i. It is transpired from impugned Order-in-Original dated 30.01.2025 of the Central Proper Officer that:

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―A show cause notice bearing No.34/2021-22 was issued vide C.No.10/DGGI/RRU/INV/ GST/2018-Part 41/896, dated 13.08.2021 to M/s. Tansam Engineering and Construction Company ***

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2.2. Acting upon the said intelligence and considering the enormity of the evasion, the officers of the DGGI, Rourkela Regional Unit (RRU) conducted verification at the declared business premises of the M/s. M.G. International and M/s. M.G. Traders on 31.08.2018 and 15.03.2019 respectively . ***

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2.3. In furtherance of investigation, summons were issued to Shri Sanjay Bangal, partner of M/s. TEACC vide F.No.10/DGGI/RRU/INV/Gr-A/ GST/2018/859, dated 24.05.2019 for recording of statement on 04.06.2019. Shri

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Sanjay Bangal appeared on the scheduled date of 04.06.2019 for making deposition and recording of statement. Further, his statement under Section 70 of the CGST Act, 2017 was recorded on the same day, i.e., on 04.06.2019 ***‖

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ii. Order-in-Original dated 12.04.2023 passed by the Additional State Tax Officer, Rourkela-II Circle, Sundargarh (Annexure-7) reveals that,

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―This is an order under Section 74 of the OGST/CGST Act in case of M/s. Tansam Engineering and Construction Company bearing GSTIN: 21AAIFT7741F2Z8 and its principal place of business is located at Plot No.1-4/9, 1st Floor, Civil Township, Area 7-8, Rourkela–769004 for tax period of March, 2018 in Financial Year 2017-18 . This Order is the outcome of proceeding initiated for the Input Tax Credit wrongly availed/utilised by reason of fraud by the taxpayer, i.e., M/s. Tansam Engineering and Construction Company on the basis of fake/bogus invoices supplied by the non-existent business entity named M/s. M.S. Traders, GSTIN: 21GJKPS2564G1Z1 and its legal name is Mohan Sethi. ***

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On receipt of information from Additional Director of General, CBIC, Bhubaneswar, vide Alert Notice No. 03/2020-21 dated 01.03.2021 , in which it is reported that the non-existent entity, i.e., M/s. M.S. Traders, GSTIN: 21GJKPS2564G1Z1 had passed on fake ITC without actual supply of goods to Tansam Engineering and Construction Company having GSTIN: 21AAIFT7741F2Z8, the undersigned verified

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the details of inward supply in GSTR-2A for the period 2017-18 ***

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Accordingly, intimation of tax ascertained as being payable under Section 74(5) of the OGST/CGST Act in Form GST DRC-01A was issued vide this Office Notices No.6014, dated 30.07.2021 for payment of tax along with the applicable interest and penalty by 29.08.2021 as per provision of law and response to the intimation the taxpayer has submitted the reply in Form part-B of GST DRC-01A.‖

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iii. The document furnished at the time of hearing by Sri Sunil Mishra, learned Standing Counsel reveals that the Assistant Commissioner (Anti-Evasion), GST and Central Excise, Office of the Commissioner, GST and Central Excise, Rourkela Commissionerate, by communicating the Deputy Commissioner of CT and GST, Rourkela-II Circle, Udit Nagar, Rourkela (State Authority) shared information by a Letter vide C. No.IV(06) 38/CPU/RKL/2020/6512-A., dated 02.06.2021 with subject: ―Forwarding of Tax Evasion Report in the case of M/s. Tansam Engineering and Construction Company, GSTIN: 21AAIFT7741F2Z8— Regarding‖. Said information does surface from Order-in-Original dated 12.04.2023 of the Additional State Tax Officer, Rourkela-II Circle, Sundargarh (Annexure-4), wherein it has been recorded as follows:

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―This is an order under Section 74 of the OGST/CGST Act in case of M/s. Tansam Engineering and Construction Company bearing GSTIN: 21AAIFT7741F2Z8 and its principal place of business is located at Plot No.1-4/9, 1st Floor, Civil Township, Area 7-8, Rourkela–769004 for tax period of December, 2017 in Financial Year 2017-18 . This Order is the outcome of proceeding initiated for the Input Tax Credit wrongly availed/utilised by reason of fraud by the taxpayer, i.e., M/s. Tansam Engineering and Construction Company on the basis of fake/bogus invoices supplied by the non-existent business entity named M/s. M.G. International, GSTIN: 21AVOPN5293M1ZZ and its legal name is Martin Edwin Nair. ***

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On receipt of information from Assistant Commissioner (Anti-Evasion) GST and Central Excise, Rourkela Commissionerate vide Letter No.C. No.IV (06) 38/CPU/RKL/2020/6521-A, dated 02.06.2021 , in which it is reported that the nonexistent entity, i.e., M/s. M.G. International, GSTIN: 21AVOPN5293M1ZZ had passed on fake ITC without actual supply of goods to Tansam Engineering and Construction Company having GSTIN: 21AVOPN5293M1ZZ had passed on fake ITC without actual supply of goods to M/s. Tansam Engineering and Construction Company having GSTIN: 21AAIFT7741F2Z8, the undersigned verified the details of inward supply in GSTR-2A for the period 2017-18 ***

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Accordingly, intimation of tax ascertained as being payable under Section 74(5) of the OGST/CGST Act in Form GST DRC-01A was issued vide this Office

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Notices No. 5251, dated 02.07.2021 for payment of tax along with the applicable interest and penalty by 01.08.2021 as per provision of law and response to the intimation the taxpayer has submitted the reply in Form part-B of GST DRC-01A.‖

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iv. Show Cause Notice No.34/2021-22 (File No.10/ DGGI/ RRU/ INV/ GST/ 2018/ Part-41/ 893-899, dated 13.08.2021 (Annexure-13) was issued by Deputy Director, DGGI, Rourkela Regional Unit, in connection whereof the petitioner-taxpayer filed reply dated 30.07.2022 (Annexure-14) disclosing the transactions with M/s. M.S. Traders and M/s. M.G. International during the relevant periods in question and it clarified the position as follows:

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―In view of the above explanations, the taxpayer humbly submits before your good office to drop the SCN proceeding as the same proceeding has already been initiated by the SGST official of Rourkela and the taxpayer has already complied to those notices, the acknowledgement copies of those replies are also attached herewith for your kind perusal and for your record. Since the proceeding has already been initiated on the same allegation, it would be a duplication of the said proceeding once again. Therefore, SCN issued against the taxpayer may either be dropped or withdrawn as on the same allegation the proceeding is on before the State GST Office, Rourkela.‖

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v. Despite such explanation, the Central Proper Officer has concluded the proceeding by passing

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independent Order-in-Original dated 30.01.2025 dealing with same allegation with respect to wrongful claim of input tax credit in connection with transactions of the petitioner with M/s. M.S. Traders and M/s. M.G. International for the Financial Years 2017-18 and 2018-19.

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vi. It is placed on record that appeals against the Orders-in-Original passed by the State Proper Officer being challenged before the appellate authority under Section 107 have also been disposed of vide Orders dated 30.01.2024 (Annexure-5) and dated 07.02.2024 (Annexure-8); and the petitioner is contemplating to file further appeals before the Central Goods and Services Tax Appellate Tribunal, which is yet to be established.

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7.1. The essence of arguments of respective parties stemming upon the provisions contained in Section 6(2)(b) of the Central Goods and Services Tax Act/the Odisha Goods and Services Tax Act is that once the State Proper Officer initiated ―proceeding‖ under Section 74, the Central Proper Officer on the same subject-matter could not initiate ―proceeding‖ under said provisions at later point of time.

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7.2. It is worthy of reference to Section 6 of the Central Goods and Services Tax Act, 2017:

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Section 6 of Section 6 of the Central Goods and Services Tax Act, the Odisha Goods and Services Tax 2017 Act, 2017

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Authorisation of Officers of State Tax or Union Territory Tax as Proper Officer¹ in certain circumstances.—

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Authorisation of Officers of Central Tax as Proper Officer² in certain circumstances.—

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(1) Without prejudice to the provisions of this Act, the Officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the Proper Officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify.

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(1) Without prejudice to the provisions of this Act, the Officers appointed under the Central Goods and Services Tax Act are authorised to be the Proper Officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify.

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(2) Subject to the conditions specified in the notification issued under sub-section (1),—

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(2) Subject to the conditions specified in the notification issued under subsection (1),—

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(a) where any Proper Officer issues an order under this Act, he shall also issue an order under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as authorised by the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, under intimation to the jurisdictional officer of State tax or Union territory tax;

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State Goods and Services Tax Act (a) where any Proper Officer or the Union Territory Goods and issues an order under this Services Tax Act, as authorised by Act, he shall also issue an the State Goods and Services Tax order under the Central Act or the Union Territory Goods Goods and Services Tax and Services Tax Act, as the case Act, as authorised by the may be, under intimation to the said Act under intimation to jurisdictional officer of State tax the jurisdictional officer of or Union territory tax; central tax;

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(b) where a Proper Officer under (b) where a Proper Officer the State Goods and Services under the Central Goods

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1 The Central Goods and Services Tax Act, 2017 in Section 2(91) defines the term ―Proper Officer‖ as:

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―PROPER OFFICER in relation to any function to be performed under this Act, means the Commissioner or the Officer of the Central Tax who is assigned that function by the Commissioner in the Board;‖

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2 The Odisha Goods and Services Tax Act, 2017 in Section 2(91) defines the term ―Proper Officer‖ as:

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―PROPER OFFICER in relation to any function to be performed under this Act, means the Commissioner or the Officer of the State tax who is assigned that function by the Commissioner ; ‖

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Tax Act or the Union Territory Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the Proper Officer under this Act on the same subject matter.

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and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the Proper Officer under this Act on the same subject matter.

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(3) Any proceedings for rectification, (3) Any proceedings for appeal and revision, wherever rectification, appeal and applicable, of any order passed by an revision, wherever applicable, of Officer appointed under this Act shall any order passed by an Officer not lie before an Officer appointed appointed under this Act, shall under the State Goods and Services not lie before an Officer Tax Act or the Union Territory Goods appointed under the Central and Services Tax Act. Goods and Services Tax Act.

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7.3. Minute scrutiny of orders of different authorities would reveal that Order dated 12.04.2023 passed by the State Proper Officer pertaining to tax period December, 2017 (Financial Year 2017-18) relates to allegation of availing input tax credit by dint of fake invoices issued in connection with transactions effected with M/s. M.G. International and Order dated 12.04.2023 pertaining to tax period March, 2018 (Financial Year 2017-18) passed by the State Proper Officer invoking provisions of Section 74 relates to input tax credit being availed wrongfully in connection with transactions with M/s. M.S. Traders. Further, Order dated 12.04.2023 passed by the State Proper Officer under Section 74 pertains to transactions with M/s. M.S. Traders during August, 2018 (Financial Year 2018-19). All these Orders of the State Proper Officer are outcome of intelligence received or supplied to the State CT and GST Organisation. However, reading of

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reply submitted to the Central Proper Officer by the petitioner in connection with the Show Cause Notice dated 13.08.2021 purported to have been issued for initiating proceeding under Section 74 juxtaposed with Order dated 30.01.2025 would demonstrably manifest that the proceeding under said provision of the GST Act was initiated by the Central Proper Officer based on the very same intelligence alleging input tax credit being wrongfully availed and utilised by the petitioner with respect to transactions with M/s. M.G. International and M/s. M.S. Traders during December, 2017, March, 2018 and August, 2018.

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7.4. This Court, thus, finds force in the submission of Sri Rudra Prasad Kar, learned Senior Advocate along with Sri Madhab Lal Agarwal, learned Advocate that the petitioner ought not to have been subjected to tax again with respect to very same subject-matter by the Central Proper Officer despite the fact of determination of tax liability being made by the State Proper Officer by initiating proceeding under Section 74 at the earlier point of time was apprised by way of reply in Form GST DRC-06.

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7.5. A Letter bearing D.O.F. No.CBEC/20/43/01/2017GST(Pt.), dated 05.10.2018 has been issued by the Government of India, Ministry of Finance/Department of Revenue, Central Board of Excise and Customs

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addressed to all Principal Chief Commissioners/Chief Commissioners of Central Tax/Principal Directors General/Directors General, with the following instructions:

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―It has been brought to the notice of the Board that there is ambiguity regarding initiation of enforcement action by the Central Tax Officers in case of taxpayer assigned to the State Tax Authority and vice versa.

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2. In this regard GST Council in its 9th Meeting held on 16.01.2017 had discussed and made recommendations regarding administrative division of taxpayers and concomitant issues. The recommendation in relation to cross-empowerment of both tax authorities for enforcement of intelligence based action is recorded at para 28 of Agenda Note No.3 in the minutes of the Meeting which reads as follows:

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‗viii. Both the Central and State tax administrations shall have the power to take intelligence- based enforcement action in respect of the entire value chain.‘

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3. It is accordingly clarified that the Officers of both Central tax and State tax are authorized to initiate intelligence based enforcement action on the entire taxpayer‘s base irrespective of the administrative assignment of the taxpayer to any authority. The authority which initiates such action is empowered to complete the entire process of investigation, issuance of SCN, adjudication, recovery, filing of appeal etc. arising out of such action.

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4. In other words, if an Officer of the Central tax authority initiates intelligence based enforcement action against a taxpayer administratively assigned to State tax authority, the officers of Central tax authority would not transfer the said case to its State tax counterpart and would themselves take the case to its logical conclusions.

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5. Similar position would remain in case of intelligence based enforcement action initiated by officers of State tax authorities a against taxpayer

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administratively assigned to the Central tax authority.

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6. It is also informed that GSTN is already making changes in the IT system in this regard.‖

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7.6. Subsequently further clarification has been issued in the following:

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―Clarifications / Instructions / Orders – GST F. No. CBEC-20/10/07/2019-GST

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Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes Customs GST Policy Wing

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***

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Dated: 22nd June, 2020

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The Principal Director General, Directorate General of GST Intelligence, 2nd Floor. Wing- VI, West Block- VIII R.K. Puram, New Delhi- 110066

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Sir,

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Subject: Reference form DGGI on Cross empowerment under GST.— reg.

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I am directed to refer to DGGI letter F.No.574/CE/66/2020/Inv./15308 dated 26.05.2020 on the issues related to cross empowerment of officers in terms of provisions of Section 6 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ―the CGST Act‖).

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2. Issue raised in the reference is whether intelligence based enforcement actions initiated by the Central Tax Officers against those taxpayers which are assigned to the State Tax administration gets covered under Section 6(1) of the CGST Act and the corresponding provisions of the SGST/UTGST Acts or whether a specific notification is required to be issued for cross empowerment on the same lines as Notification No.39/2017-CT dated 13.10.2017 authorizing the State Officers for the purpose or refunds under Section 54 and 55 of the CGST Act.

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3.1. The issue has been examined in the light of relevant legal provisions under the CGST Act, 2017. It is observed that Section 6 of the CGST Act provides for cross empowerment of State Tax Officers and Central Tax Officers and reads as:

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‗6. (1) Without prejudice to the provisions of this Act, the officers appointed under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such

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conditions as the Government shall, on the recommendations of the Council, by Notification specify.‘

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3.2. Thus in terms of sub-section (1) of Section 6 of the CGST Act and sub-section (1) of Section 6 of the respective State GST Acts respective State Tax Officers and the Central Tax Officers respectively are authorised to be the Proper Officers for the purposes of respective Acts and no separate notification is required for exercising the said powers in this case by the Central Tax Officers under the provisions of the State GST Act. It is noteworthy in this context that the registered persons in GST are registered under both the CGST Act and the respective SGST/UTGST Act.

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3.3. The confusion seems to be arising from the fact that, the said sub-section provides for notification by the Government if such cross empowerment is to be subjected to conditions. It means that notification would be required only if any conditions are to be imposed. For example, Notification No. 39/2017CT dated 13.10.2017 restricts powers of the State Tax officers for the purposes of refund and they have been specified as the proper officers only under Section 54 and 55 of the CGST Act and not under Rule 96 of the CGST Rules, 2017 (IGST Refund on exports). If no notification is issued to impose any condition, it means that the officers of State and Centre have been appointed as proper officer for all the purpose of the CGST Act and SGST Acts.

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4. Further, it may kindly be noted that a notification under Section 6(1) of the CGST Act would be part of subordinate legislation which instead of empowering the officer under the Act, can only be used to impose conditions on the powers given to the officers by the section. In the absence of any such conditions, the power of cross-empowerment under Section 6(1) of the CGST Act is absolute and not conditional.

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Yours faithfully, (Sumit Bhatia) 22.06.2020 Deputy Commissioner (GST)‖

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7.7. Conspectus of the above makes it abundantly clear that by virtue of cross-empowerment under Section 6(1) of the GST Act the State Proper Officer and the Central Proper Officer are appointed for all the purpose of the CGST Act and the OGST Act. Taking into consideration the events enumerated above, it is apparent that the exercise of power under Section 74 by the State Proper Officer based on the intelligence received is before the initiation of proceeding by the Central Proper Officer under said provisions on the very same subject-matter. Letter bearing D.O.F. No. CBEC/20/43/01/2017GST(Pt.), dated 05.10.2018, referred to supra, clarifying the position as to the purport of Section 6(2) of the GST Act, unequivocally indicates that if an Officer of the State Tax Authority initiates intelligence based enforcement action against a taxpayer administratively assigned to

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Central Tax Authority, the Officers of State Tax Authority would not transfer the said case to its Central Tax counterpart and would themselves take the case to its logical conclusions. In other words, on the undisputed factual matrix that while the State Proper Officer was seized of the subject-matter by issue of Show Cause Notices dated 01.03.2021 and 02.06.2021 invoking provisions of Section 74 of the GST Act based on the intelligence received from the Additional Director General, CBIC, Bhubaneswar vide Alert Notice No.03/2020-21, and Assistant Commissioner (AntiEvasion), GST and Central Excise, Rourkela Commissionerate vide Letter No.C.IV (06) 38/CPU/RKL/ 2020/6512-A, dated 02.06.2021 respectively, subsequent Show Cause Notice vide No.34/2021-22, dated 13.08.2021 issued by the Deputy Director, DGGI, Rourkela Regional Unit on the same subject-matter pursuant to which Order-in-Original dated 30.01.2025 passed by the Assistant Commissioner, GST and Central Excise, Rourkela-I Division, Rourkela is invalid, inoperative and bad in law in view of the express bar under Section 6(2)(b). Accordingly, this Court accepts the argument advanced by the learned Senior Counsel for the petitioner that the subject-matter in both the proceedings under Section 74 of the GST Act being in respect of the alleged wrongful availment of input tax credit by dint of fake invoices, the latter proceeding

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initiated by the Central Proper Officer deserves to be quashed.

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7.8. Thus, on the facts and in the circumstances of the instant case as discussed above, the Central Proper Officer made ineffective and inchoate approach by concluding the proceeding at latter point of time which is hit by provisions of Section 6(2). Even though the reply of the petitioner to the Show Cause Notice dated 13.08.2021 contained such objection, the learned Junior Standing Counsel could not throw light with respect to such aspect being considered by the Central Proper Officer in the Order-in-Original dated 30.01.2025. Hence, the Order dated 30.01.2025 passed by the Assistant Commissioner, Rourkela-I Division having jurisdiction over Rourkela-II Circle, Sundargarh is vitiated and treated as non-est in the eye of law.

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8. In the instant case, the petitioner flagged issue whether summons issued vide F. No.10/DGGI/RRU/INV/GrA/GST/2018/859, dated 24.05.2019, as found mentioned in the Show Cause Notice dated 13.08.2021, for recording of statement under Section 70 of the CGST Act would suffice to construe that the initiation of proceeding was at earlier point of time by the Central Proper Officer than the Show Cause Notices dated 02.07.2021 and 30.07.2021 issued by the State Proper Officer for the purpose of determination of liability under

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Section 74 of the said Act, notwithstanding the fact that the Central Proper Officer has issued Show Cause Notice dated 13.08.2021 under Section 74 at a later date.

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8.1. Regard may be had to a decision of the Hon‘ble Supreme Court of India rendered in the case of Armour Security (India) Ltd. Vrs. Commissioner, CGST, Delhi East Commissionerate and Another, 2025 INSC 982, wherein the purport of use and meaning attached to ―proceedings‖ and ―subject-matter‖ as employed in Section 6 have been discussed threadbare to answer the questions:

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i. whether issuance of summons can be regarded as ‗initiation of proceedings‘ within the meaning of Section 6(2)(b) of the CGST Act; and

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ii. whether ‗subject-matter‘ within the meaning of Section 6(2)(b) of the CGST Act includes all matters dealt with in summons under the Act.

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8.2. The Hon‘ble Supreme Court in the afore-mentioned case came to lay down the following propositions with respect to interpretation of Section 6 of the GST Act:

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―96. We summarize our final conclusion as under:

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i. Clause (b) of sub-section (2) of Section 6 of the CGST Act and the equivalent State enactments bars the ―initiation of any proceedings‖ on the ―same subject matter‖.

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ii. Any action arising from the audit of accounts or detailed scrutiny of returns must be initiated by the tax administration to which the taxpayer is assigned.

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iii. Intelligence based enforcement action can be initiated by any one of the Central or the State tax administrations despite the taxpayer having been assigned to the other administration.

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iv. Parallel proceedings should not be initiated by other tax administration when one of the tax administrations has already initiated intelligencebased enforcement action.

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v. All actions that are initiated as a measure for probing an inquiry or gathering of evidence or information do not constitute ―proceedings‖ within the meaning of Section 6(2)(b) of the CGST Act.

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vi. The expression ―initiation of any proceedings‖ occurring in Section 6(2)(b) refers to the formal commencement of adjudicatory proceedings by way of issuance of a show cause notice, and does not encompass the issuance of summons, or the conduct of any search, or seizure etc.

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vii. The expression ―subject matter‖ refers to any tax liability, deficiency, or obligation arising from any particular contravention which the Department seeks to assess or recover.

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viii. Where any two proceedings initiated by the Department seek to assess or recover an identical or a partial overlap in the tax liability, deficiency or obligation arising from any particular contravention,

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the bar of Section 6(2)(b) would be immediately attracted.

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ix. Where the proceedings concern distinct infractions, the same would not constitute a ―same subjectmatter‖ even if the tax liability, deficiency, or obligation is same or similar, and the bar under Section 6(2)(b) would not be attracted.

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x. The two-fold test for determining whether a subject matter is ―same‖ entails, first, determining if an authority has already proceeded on an identical liability of tax or alleged offence by the assessee on the same facts, and secondly, if the demand or relief sought is identical.

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97. We issue the following guidelines to be followed in cases where, after the commencement of an inquiry or investigation by one authority, another inquiry or investigation on the same subject-matter is initiated by a different authority.

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a. Where a summons or a show cause notice is issued by either the Central or the State tax authority to an assessee, the assessee is, in the first instance, obliged to comply by appearing and furnishing the requisite response, as the case may be. We say, so because, mere issuance of a summons does not enable either the issuing authority or the recipient to ascertain that proceedings have been initiated.

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b. Where an assessee becomes aware that the matter being inquired into or investigated is already the subject of an inquiry or investigation by another authority, the assessee shall forthwith inform, in

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writing, the authority that has initiated the subsequent inquiry or investigation.

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c. Upon receipt of such intimation from the assessee, the respective tax authorities shall communicate with each other to verify the veracity of the assessee‘s claim. We say, so as this course of action would obviate needless duplication of proceedings and ensure optimal utilization of the Department's time, effort, and resources, bearing in mind that action initiated by one authority enures to benefit of all.

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d. If the claim of the taxable person regarding the overlap of inquiries is found untenable, and the investigations of the two authorities pertain to different ―subject-matters‖, an intimation to this effect, along with the reasons and a specification of the distinct subject matters, shall be immediately conveyed in writing to the taxable person.

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e. The taxing authorities are well within their rights to conduct an inquiry or investigation until it is ascertained that both authorities are examining the identical liability to be discharged, the same contravention alleged, or the issuance of a show cause notice. Any show cause notice issued in respect of a liability already covered by an existing show cause notice shall be quashed.

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f. However, if the Central or the State tax authority, as the case may be finds that the matter being inquired into or investigated by it is already the subject of inquiry or investigation by another authority, both authorities shall decide inter-se which of them shall continue with the inquiry or investigation. In such a

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scenario the other authority shall duly forward all material and information relating to its inquiry or investigation into the matter to the authority designated to carry the inquiry or investigation to its logical conclusion. We say, so because, the taxable person except for being afforded the statutory protection from duplication of proceedings, otherwise has no locus to claim which authority should proceed with the inquiry or investigation in a particular matter.

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g. However, where the authorities are unable to reach a decision as to which of them shall continue with the inquiry or investigation, then in such circumstances, the authority that first initiated the inquiry or investigation shall be empowered to carry it to its logical conclusion, and the courts in such a case would be competent to pass an order for transferring the inquiry or investigation to that authority.

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h. If it is found that the authorities are not complying with these aforementioned guidelines, it shall be open to the taxable person to file a writ petition before the concerned High Court under Article 226 of the Constitution of India.

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i. At the same time, taxable persons shall ensure complete cooperation with the authorities. It is incumbent upon them to appear in response to a summons and/or reply to a notice.

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98. Before parting with this matter, we deem it appropriate to make certain suggestions concerning the common IT infrastructure shared by the Central and State tax authorities. It is imperative that the

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Departments act in harmony and maintain heightened vigilance with respect to intelligence inputs received by them, so as to give full effect to the legislative intent underlying the GST regime. Such coordination would also serve to mitigate the unnecessary hardship caused to taxpayers by overlapping proceedings and lack of interDepartmental communication.

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99. The DGGI consider may adopting necessary

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measures to develop a robust mechanism for seamless data and intelligence sharing between the Central and State authorities, including provision for realtime visibility to both authorities of any action taken pursuant to an intelligence input, thereby advancing the objectives of harmony and cooperative federalism.‖

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8.3. It is asserted by Sri Madhab Lal Agarwal, learned Advocate supplementing the argument of Sri Rudra Prasad Kar, learned Senior Advocate that the petitioner having received the Show Cause Notice dated 13.08.2021, by way of furnishing reply in Form GST DRC-06, dated 30.07.2022 explained before the Central Proper Officer/DGGI lucidly regarding the subjectmatter of proceeding under Section 74 as initiated by the State Proper Officer pertaining to Financial Years 201718 and 2018-19. Despite such information, the Assistant Commissioner, GST and Central Excise, Rourkela-I Division proceeded with the matter. The counsel for the petitioner emphasised the following fact, as reflected in

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the Order-in-Original dated 30.01.2025, which clinches that the Central Proper Officer was conscious about exercise of power under Section 74 by the State Proper Officer:

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―During personal hearing, he stated that they have already submitted their reply online and submitted a copy of the same. He further stated that the amount of tax has already been paid and the remaining interest and penalty will be paid shortly after receipt of final as the said case stands remanded to the State GST by the Hon‘ble High Court of Orissa with direction to file appeal before the Tribunal after it is constituted. ***‖

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8.4. Taking aid of clause (h) of Paragraph 97 of the judgment in Armour Security (India) Ltd. (supra) the learned Senior Counsel would submit that this writ petition is liable to be entertained. He, referring to clause (v) of Paragraph 97 of said judgment, urged that all actions undertaken by the Central Officers by issue of summons under Section 70 to gather information cannot be construed to be ―proceedings‖ initiated. Neither the learned Standing Counsel for the CT and GST Organisation nor the learned Junior Standing Counsel (CGST) placed any other material to indicate that prior to issue of Show Cause Notice dated 13.08.2021 by the Central Proper Officer initiating proceeding under Section 74, any other notice contemplating ―proceedings‖ on the same ―subject-matter‖ had been initiated.

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8.5. Under the aforesaid premise, it is perceived that whereas based on intelligence received the State Proper Officer has initiated proceeding under Section 74 by issue of Show Cause Notices dated 02.07.2021 and 30.07.2021; the Central Proper Officer on the self-same allegation based on intelligence initiated proceeding under Section 74 of the GST Act by issue of Show Cause Notice dated 13.08.2021. In view of purport and application of provisions of Section 6(2) of the GST Act as expounded by the Hon‘ble Supreme Court of India in the case of Armour Security (India) Ltd. (supra), the Deputy Director, DGGI, Rourkela Regional Unit (Annexure-13) purporting to determine the liability of the petitioner under Section 74 lacks jurisdiction to issue the Show Cause Notice dated 13.08.2021.

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8.6. Since the Show Cause Notice dated 13.08.2021 is held to be not in consonance with the statutory requirement and contrary to what has been explicitly mandated in Section 6 read with interpretation put forth by the Hon‘ble Supreme Court of India in Armour Security (India) Ltd. (supra), the Order-in-Original dated 30.01.2025 passed as a resultant effect of such Show Cause Notice cannot be countenanced on the principle ―Sublato fundamento cedit opus‖ .

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8.7. Meaning of said maxim can be found in Badrinath Vrs. State of Tamil Nadu, (2000) 8 SCC 395, wherein it has been stated succinctly as follows:

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―This flows from the general principle applicable to ―consequential orders‖. Once the basis of a proceeding is gone, may be at a later point of time by order of a superior authority, any intermediate action taken in the meantime— like the recommendation of the State and by the UPSC and the action taken thereon— would fall to the ground. This principle of consequential orders which is applicable to judicial and quasi-judicial proceedings is equally applicable to administrative orders. In other words, where an order is passed by an authority and its validity is being reconsidered by a superior authority (like the Governor in this case) and if before the superior authority has given its decision, some further action has been taken on the basis of the initial order of the primary authority, then such further action will fall to the ground the moment the superior authority has set aside the primary order.‖

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8.8. In Devendra Kumar Vrs. State of Uttaranchal, (2013) 9 SCC 363 aforesaid maxim has been discussed as follows:

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―25. More so, if the initial action is not in consonance with law, the subsequent conduct of a party cannot sanctify the same. Sublato fundamento cedit opus— a foundation being removed, the superstructure falls. A person having done wrong cannot take advantage of his own wrong and plead bar of any law to frustrate the lawful trial by a competent court. In such a case the legal maxim nullus commodum capere potest de

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injuria sua propria applies. The persons violating the law cannot be permitted to urge that their offence cannot be subjected to inquiry, trial or investigation. (Vide Union of India Vrs. Major General Madan Lal Yadav, (1996) 4 SCC 127 = AIR 1996 SC 1340 and Lily Thomas Vrs. Union of India, (2000) 6 SCC 224). Nor can a person claim any right arising out of his own wrong doing (jus ex injuria non oritur).‖

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8.9. In the wake of the above, this Court entertaining the writ petition questioning the propriety of Central Proper Officer to proceed with the matter under Section 74, this Court is inclined to intervene.

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Conclusion:

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9. As a consequence of above discussions, as is apparent that the initiation of proceedings on the same subjectmatter under Section 74 of the GST Act by the Deputy Director, DGGI, Rourkela Regional Unit (Annexure-13) in pursuance of which the Assistant Commissioner, GST and Central Excise, Rourkela-I Division, Rourkela proceeded to pass Order-in-Original on 30.01.2025, Show Cause Notice dated 13.08.2021, being at a later point of time than the Show Cause Notices dated 02.07.2021 and 30.07.3021 issued by the Additional State Tax Officer, Rourkela-II Circle, Sundargarh, the initiation of proceeding by the Central Proper Officer cannot be sustained in view of provisions contained in

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¶288

Section 6(2)(b) of the GST Act and is liable to be quashed. This Court, therefore, does so.

¶289

9.1. Since Show Cause Notice dated 13.08.2021 is quashed, the Order-in-Original dated 30.01.2025 passed by the Assistant Commissioner, GST and Central Excise, Rourkela-I Division (Annexure-1) cannot be protected and the same is also hereby set aside.

¶290

9.2. Consequently, the Summary of Orders in Form DRC-07 dated 31.01.2025 (Annexure-2) and 31.01.2025 (Annexure-3) reflecting demands pertaining to December, 2017–March, 2018 (Financial Year 2017-18) and August, 2018–August, 2018 (Financial Year 201819) are set aside.

¶291

Signature Not Verified

¶292

Digitally Signed Signed by: ASWINI KUMAR SETHY Designation: Personal Assistant (Secretary-inCharge) Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 14-Oct-2025 15:27:40

¶293

9.3. Ergo , the writ petition is allowed and pending interlocutory applications, if any, shall stand disposed of, but in the circumstances there shall be no order as to costs.

¶294

I agree.

¶295

(HARISH TANDON) (MURAHARI SRI RAMAN) CHIEF JUSTICE JUDGE

¶296

High Court of Orissa, Cuttack The 14^th October, 2025//Bichi/Aswini

¶297

W.P.(C) No.15935 of 2025

¶298

Page 44 of 44

M/S. Tansam Engineering and Construction Company, Rourkela v. the Commissioner, Cgst and Central Excise, Rourkela Commissionerate,Rourkela

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M/S. Tansam Engineering and Construction Company, Rourkela v. the Commissioner, Cgst and Central Excise, Rourkela Commissionerate,Rourkela

Case brief

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