Quick answer: In Sanskriti Exim Private Limited v. Directorate General of GST Intelligence, DZU and Ors., decided on 18 September 2026, a Division Bench of the Delhi High Court (Anil Kshetarpal and Shail Jain, JJ.) dismissed a writ petition challenging a ₹7,81,78,980 input tax credit demand — with penalties of ₹7,81,78,980 and ₹6,51,63,242 — confirmed by an Order-in-Original dated 31 January 2025 under Section 74(9) of the Central Goods and Services Tax Act, 2017. The petitioner, a garment exporter, argued that the Directorate General of GST Intelligence’s proceedings under Section 74 were barred by Section 6(2)(b) of the CGST Act because State GST authorities had already proceeded under Section 73 against the same input tax credit for an overlapping period. Applying the Supreme Court’s decision in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate, the Court held that “same subject matter” turns on whether the two proceedings concern an identical tax liability or alleged contravention on the same facts and seek an identical demand — and that a State assessment of generally ineligible input tax credit is not the same subject matter as a DGGI fraud investigation into credit traced to fictitious suppliers, even where both touch overlapping financial years. The Court also declined to strike down a show cause notice spanning three financial years as jurisdictionally void, and dismissed the petition primarily on the ground that the Order-in-Original was independently appealable under Section 107.
Key Takeaways
- The Section 6(2)(b) bar requires identity of subject matter, not merely identity of assessee, period or credit type. Applying Armour Security, the Court held the statutory prohibition is attracted only where two proceedings are, in substance, directed at the same or overlapping tax liability arising from the same contravention — not wherever both proceedings happen to concern input tax credit claimed by the same taxpayer in overlapping years.
- A two-fold test now governs the inquiry. First, has an authority already proceeded on an identical tax liability or alleged offence founded on the same facts; second, is the demand or relief sought identical. Both limbs must be satisfied before Section 6(2)(b) operates to oust a subsequent proceeding.
- General ineligible-ITC assessment and fictitious-supplier fraud investigation are treated as distinct contraventions. The Court found no identity of subject matter between a State Section 73 proceeding targeting ITC from cancelled or non-existent suppliers and a DGGI Section 74 proceeding targeting fraudulently availed ITC traced to twenty fictitious entities and its consequential use to fund IGST refunds on exports, even though both concerned overlapping financial years and the same category of credit.
- A consolidated show cause notice spanning multiple financial years is not, without more, without jurisdiction. Following the Court’s own earlier decision on the same question, the language of Sections 73(3)/74(3) and 73(10)/74(10) of the CGST Act does not prohibit a single notice covering several years; year-wise limitation and quantification remain matters for the adjudicating and appellate authorities.
- Once an Order-in-Original is passed, a pending Section 6(2)(b) challenge does not survive as a freestanding writ ground. The Court treated the existence of the statutory appeal under Section 107 as itself sufficient to decline writ jurisdiction, holding that the factual inquiry a “same subject matter” objection requires is better suited to the Appellate Authority than to Article 226 proceedings.
1. Introduction
Section 6(2)(b) of the Central Goods and Services Tax Act, 2017 bars a proper officer under the CGST Act from initiating proceedings “on a subject matter” already taken up by a State or Union Territory GST officer, and vice versa. The provision is meant to prevent the same taxpayer from being pursued twice, by two administrations, for the same tax default. In practice, GST enforcement rarely stays confined to a single administration: State authorities routinely conduct return-based scrutiny and desk assessments, while the Directorate General of GST Intelligence (DGGI), a Central intelligence arm, investigates larger, intelligence-led fraud networks that frequently touch the same taxpayers and the same broad category of claim — input tax credit. When both sets of proceedings concern the same assessee and overlapping tax periods, taxpayers increasingly invoke Section 6(2)(b) to resist the second proceeding, whichever it is.
Sanskriti Exim Private Limited v. Directorate General of GST Intelligence, DZU, decided by the Delhi High Court on 18 September 2026, addresses exactly this recurring fact pattern. An exporter facing a DGGI fraud investigation argued that the investigation was barred because the State GST department had already proceeded against its input tax credit, under a different provision, for an overlapping period. The Court applied the Supreme Court’s recent two-fold test from Armour Security to hold that overlap of assessee, period and credit type does not, by itself, establish “same subject matter,” and separately rejected a challenge to a show cause notice spanning three financial years. This article sets out the facts, unpacks the Court’s application of the Armour Security test, and considers what the decision means for taxpayers facing parallel Central and State GST proceedings.
2. Case summary and background
Sanskriti Exim Private Limited, engaged in the business of exporting readymade garments, had been registered under the GST regime with effect from 1 July 2017. A joint intelligence exercise by the DGGI and the Directorate General of Revenue Intelligence uncovered what the Department alleged was a scheme of fraudulent availment of input tax credit on invoices issued by non-existent and fictitious entities, with the credit then utilised to discharge Integrated GST liability on exports and to claim consequential IGST refunds. Searches were conducted at premises connected with the petitioner on 11 September 2019 and 18 October 2019, and a statement of the company’s director, Parag Garg, was recorded under Section 70 of the CGST Act.
Before the DGGI issued any notice, the State GST authorities acted first. A show cause notice dated 23 September 2023 was issued under Section 73 of the Delhi Goods and Services Tax Act, 2017 for Financial Year 2017-18, alleging availment of ineligible input tax credit from cancelled or non-existent suppliers; this culminated in an order dated 22 December 2023 confirming the demand with interest and penalty. A further State notice dated 11 December 2023, again under Section 73 of the DGST Act, covered Financial Year 2018-19 on a similar allegation and resulted in an order dated 9 April 2024. The petitioner also referred to a subsequent State notice dated 10 September 2024, issued under Section 74 of the DGST Act for Financial Year 2017-18.
Separately, the DGGI issued its own show cause notice on 29 July 2024, under Section 74 of the CGST Act read with Section 20 of the Integrated Goods and Services Tax Act, covering the period from Financial Year 2017-18 (July onwards) through Financial Year 2019-20. This notice proposed recovery of input tax credit aggregating ₹7,81,78,980 — comprising IGST of ₹4,46,05,885, CGST of ₹1,67,86,547 and SGST of ₹1,67,86,547 — together with interest and penalties. A corrigendum followed on 23 December 2024. After the petitioner sought legible copies of relied-upon and non-relied-upon documents, and after an earlier writ petition referencing a different notice was withdrawn, the petitioner approached the Delhi High Court in January 2025 to challenge the 29 July 2024 notice. While that petition was pending, the adjudicating authority passed Order-in-Original No. 73/SPP/ADC/CGST/DSC/2024-25 on 31 January 2025 (the petitioner had referred to it as bearing a 3 February 2025 date, but the Court proceeded on the basis of the date the order itself bore), confirming the full demand of ₹7,81,78,980 under Section 74(9) of the CGST Act, along with interest, a penalty of ₹7,81,78,980 for the fraudulent availment and utilisation of credit, and a further penalty of ₹6,51,63,242 for the fraudulent availment of the IGST refund. The petitioner amended its writ petition to challenge this order as well.
The petitioner’s case rested on two grounds: first, that the DGGI’s Section 74 proceedings concerned the “same subject matter” as the State’s earlier Section 73 proceedings on input tax credit for an overlapping period, and were therefore barred by Section 6(2)(b) of the CGST Act; and second, that a single, consolidated show cause notice covering three financial years was impermissible because the statutory scheme requires tax liability to be determined year by year. The Department resisted both grounds on the merits and additionally raised a preliminary objection that the petition, now directed against a reasoned Order-in-Original, should not be entertained in writ jurisdiction given the availability of a statutory appeal under Section 107 of the CGST Act.
3. Legal analysis
3.1 The alternative-remedy threshold
The Court began, as it has in a line of recent decisions, by treating the availability of a statutory appeal as the primary consideration. Once the Order-in-Original was passed under Section 74(9), it became independently appealable under Section 107 of the CGST Act. The Court held that the existence of an efficacious alternative remedy is a material consideration in the exercise of discretionary jurisdiction under Article 226, and that a writ petition originally filed to challenge a pending show cause notice does not continue to be maintainable on its original footing once adjudication has concluded during its pendency. Applying its own earlier decision in PEI Industries v. Union of India & Ors., where a similar Section 6(2)(b) challenge to an Order-in-Original was declined on the same basis, the Court held that the factual and evidentiary matters underlying the petitioner’s challenge — the nature of the ITC allegedly availed, the suppliers involved, the allegations of fraud, the material relied upon, and the extent of overlap between the State and DGGI proceedings — were more appropriately examined by the Appellate Authority. The requirement of a statutory pre-deposit under Section 107(6) was not, by itself, accepted as a reason to bypass that remedy. On this ground alone, the Court held, the petition was liable to be dismissed.
3.2 The two-fold “same subject matter” test
The Court proceeded, “even otherwise,” to examine the merits of the Section 6(2)(b) objection, since the point had been argued at length. Section 6(2)(b) provides that where a proper officer under the State or Union Territory GST Act has initiated proceedings on a subject matter, no proceedings can be initiated by a proper officer under the CGST Act “on the same subject matter.” The Court held that the expression “same subject matter” is of central importance, and that the mere fact that two proceedings arise from the affairs of the same assessee, concern the same general period, or both involve input tax credit cannot, without more, establish identity of subject matter.
To give that expression content, the Court applied the Supreme Court’s construction in Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr., 2025 INSC 982. As recorded in the judgment, the Supreme Court there explained that “subject matter” refers to the particular tax liability, deficiency or obligation arising from a specific contravention that the department seeks to assess or recover — so that the statutory bar applies where two proceedings are, in substance, directed at the same or overlapping tax liability or obligation arising from the same contravention, but not merely because the proceedings might result in liabilities of a broadly similar character. From this, the Delhi High Court extracted a two-fold test for identity of subject matter: first, whether an authority has already proceeded on an identical tax liability, or an identical alleged offence by the assessee founded on the same facts; and second, whether the demand or relief sought in the two proceedings is identical.
3.3 Applying the test: ineligible credit versus fictitious-supplier fraud
Measured against that test, the Court found no identity of subject matter between the two sets of proceedings. The State’s Section 73 notices, dated 23 September 2023 and 11 December 2023, addressed allegedly ineligible input tax credit availed from suppliers whose registrations had been cancelled or who did not exist, for Financial Years 2017-18 and 2018-19 respectively. The DGGI’s Section 74 notice, by contrast, arose from an intelligence-led investigation into fraudulent availment of credit on invoices issued by twenty specifically identified non-existent and fictitious entities, and the further utilisation of that credit to discharge IGST on exports and to draw consequential IGST refunds — a scheme spanning Financial Year 2017-18 (from July) through Financial Year 2019-20.
The Court accepted that the two sets of proceedings shared some factual and transactional overlap, since both concerned input tax credit claimed in overlapping years by the same taxpayer. It held, however, that overlap of that kind is not the statutory test: the State proceedings were founded on discrepancies in the eligibility of credit from specific cancelled dealers, while the DGGI proceedings were founded on an independent finding of a fictitious-invoicing chain feeding into export refunds — a materially different contravention, even though both are, in a loose sense, “ITC cases.” The mere fact that some of the same underlying transactions might feature in both records could not, on the Court’s reasoning, elevate the two into an identical liability or an identical alleged offence founded on the same facts. Nor did the sequence in which the proceedings arose — the DGGI notice following the State proceedings — matter for this purpose; what governs Section 6(2)(b) is subject-matter identity, not chronology.
3.4 Guidelines do not substitute for the statutory test
The petitioner had relied on DGGI guidelines dated 8 February 2024 directing that, where State authorities are also examining a taxpayer, the investigating offices should coordinate and consider whether a single office should handle the entire matter, together with decisions of other High Courts — including Toyota Kirloskar Motors Pvt. Ltd. v. Union of India (Karnataka High Court) and Rajesh Mittal v. Union of India (Gauhati High Court) — and the Delhi High Court’s own order in Aastha Apparels Pvt. Ltd. v. Directorate General of GST Intelligence, for the proposition that parallel Central and State proceedings on the same subject matter are impermissible. The Court did not doubt that proposition as a matter of principle, but held that each of those decisions turned on its own facts and did not dispense with the statutory requirement of establishing identity of subject matter in the first place. Internal coordination guidelines, similarly, could not expand or substitute for the test Section 6(2)(b) itself lays down; they informed administrative practice but did not alter the legal inquiry into whether the two notices before the Court concerned the same subject matter.
3.5 The multi-year consolidated notice
The petitioner separately challenged the DGGI’s decision to issue a single show cause notice spanning Financial Year 2017-18 (from July) through Financial Year 2019-20, arguing that the statutory scheme requires tax liability to be determined, and therefore proceedings to be initiated, on a financial-year basis. The Court rejected this, relying on its own earlier examination of the same question in Ambika Traders through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North. Considering the language of Sections 73(3) and 74(3), and Sections 73(10) and 74(10), of the CGST Act, the Court held that the statutory scheme does not prohibit a consolidated notice under Section 74 covering more than one financial year, so the notice was not without jurisdiction merely because it spanned three years. The Court was careful to leave open, for examination in the statutory proceedings, whether the demand for any particular financial year within that span was within the applicable limitation period, whether the ingredients of Section 74 were otherwise satisfied for each year, and whether the quantification for each period was sustainable — treating jurisdiction to issue a composite notice and the correctness of what it ultimately demands as separate questions.
3.6 What the decision leaves open, and a reasoned critique
The Court expressly clarified that its observations on both the Section 6(2)(b) objection and the consolidated-notice objection were made only for the purpose of disposing of the writ petition, and would not preclude the petitioner from raising every available ground before the Appellate Authority, which was directed to decide the appeal on its own merits, uninfluenced by the judgment. That caveat matters, because the two-fold test the Court articulated — identical liability or identical alleged offence on the same facts, and identical demand or relief — is more easily stated than applied at the margins. Where, as here, a State Section 73 notice and a DGGI Section 74 notice both concern input tax credit traced to entities of doubtful existence for overlapping years, the line between “the same broad category of credit examined twice” and “a distinct contravention examined once” will often depend on how precisely the department’s own show cause notices particularise the suppliers, invoices and periods in issue — a comparison the Court was, on its own reasoning, better placed to leave to the Appellate Authority with the full adjudicatory record before it than to undertake definitively in writ proceedings. The decision therefore operates less as a bright-line rule protecting taxpayers from duplicative proceedings than as a demanding evidentiary threshold a taxpayer must clear before Section 6(2)(b) will be applied to bar a second proceeding — and, procedurally, one that becomes harder to clear the moment adjudication concludes and the statutory appellate route opens.
4. Practical significance
For exporters and other taxpayers facing both a State-level ITC assessment and a subsequent DGGI investigation, this decision confirms that a Section 6(2)(b) objection cannot rest on the general observation that both proceedings concern input tax credit for overlapping years. Taxpayers wishing to invoke the bar should be prepared to demonstrate, with reference to the specific suppliers, invoices and contraventions alleged in each notice, that the two proceedings target an identical tax liability arising from the same facts and seek an identical demand — a considerably higher bar than pointing to a shared assessee and period. Where a State notice targets credit from cancelled dealers generally and a DGGI notice targets a specifically identified fictitious-invoicing chain, taxpayers should expect courts to treat the two as distinct contraventions even where some underlying transactions coincide.
The decision also has a significant procedural lesson: a Section 6(2)(b) challenge is best pressed while a show cause notice remains pending, since once an Order-in-Original is passed, courts are likely to treat the statutory appeal under Section 107 as the appropriate forum for what is, in substance, a fact-intensive comparison of two departments’ records — including the pre-deposit obligation that comes with it. Taxpayers who intend to preserve a cross-empowerment objection through to a final hearing on the merits should therefore raise it, and press for interim protection if necessary, before adjudication concludes rather than waiting to fold it into a subsequent challenge to the adjudication order.
On the consolidated-notice point, taxpayers should not expect a composite show cause notice spanning multiple financial years to be struck down for that reason alone; challenges are better directed at whether the specific demand for each year within the notice is within limitation and adequately particularised, since the Court has now twice held that the year-wise inquiry, not the composite form of the notice, is where a taxpayer’s real objections should be tested. Finally, taxpayers relying on DGGI’s own coordination guidelines to resist parallel proceedings should treat those guidelines as informing administrative practice rather than as an independent legal bar; a Section 6(2)(b) argument must still be made out on the statutory test, with the guidelines serving, at most, as supporting context.
5. Conclusion
Sanskriti Exim applies the Supreme Court’s Armour Security framework to a fact pattern that will recur across GST litigation for as long as State return-based scrutiny and Central intelligence investigations continue to run on separate, asynchronous tracks against the same taxpayers: a general State assessment of ineligible input tax credit and a targeted Central fraud investigation into a fictitious-supplier chain are not the same subject matter merely because both concern the same category of credit for overlapping years. The decision leaves the practical burden of proving identity of subject matter squarely on the taxpayer, and it confirms, alongside the Court’s separate holding on multi-year notices, that both objections are more likely to be tested — and are perhaps better tested — before the statutory Appellate Authority than resolved definitively in writ jurisdiction once an adjudication order is in place.
For practitioners, the case underscores that raising a cross-empowerment objection early, and with precise reference to how the two notices particularise the alleged contravention, matters more than the broad fact of overlapping proceedings. As Central and State GST authorities continue to pursue parallel enforcement against exporters and other high-risk taxpayer categories, the Armour Security two-fold test is likely to become the standard vocabulary in which such objections are argued and decided across the High Courts.
Authorities
Applied by the Court
- Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate & Anr., 2025 INSC 982 — applied for the two-fold test governing “same subject matter” under Section 6(2)(b): identity of tax liability or alleged offence on the same facts, and identity of the demand or relief sought.
- PEI Industries v. Union of India & Ors., W.P.(C.) 7725/2026, Delhi High Court, decided 29 May 2026 — applied for declining writ jurisdiction over a Section 6(2)(b) challenge once the underlying show cause notice has culminated in an Order-in-Original appealable under Section 107.
- Ambika Traders through Proprietor Gaurav Gupta v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North, 2025 SCC OnLine Del 6913 — applied for the holding that Sections 73(3)/74(3) and 73(10)/74(10) of the CGST Act do not prohibit a consolidated show cause notice under Section 74 covering more than one financial year.
Cited by the petitioner, distinguished on facts
- Toyota Kirloskar Motors Pvt. Ltd. v. Union of India, (2024) 24 Centax 48 (Karnataka High Court).
- Rajesh Mittal v. Union of India, (2024) 16 Centax 28 (Gauhati High Court).
- M/s Aastha Apparels Pvt. Ltd. v. Directorate General of GST Intelligence & Ors., W.P.(C) 16293/2024, Delhi High Court.
Legislation and instruments considered
| Instrument | Provisions / reference | Source |
|---|---|---|
| Central Goods and Services Tax Act, 2017 | Sections 6(2)(b), 70, 73, 73(3), 73(10), 74, 74(3), 74(9), 74(10), 107 | https://www.indiacode.nic.in/ |
| Delhi Goods and Services Tax Act, 2017 | Section 73, Section 74 | https://www.indiacode.nic.in/ |
| Integrated Goods and Services Tax Act, 2017 | Section 20 | https://www.indiacode.nic.in/ |
| DGGI coordination guidelines dated 08.02.2024 | Coordination between Central and State investigating offices | Referenced in judgment |
| Constitution of India | Article 226 | https://www.indiacode.nic.in/ |
Judgment
Sanskriti Exim Private Limited v. Directorate General of GST Intelligence, DZU and Ors., W.P.(C) 929/2025 and CM APPL. 4550/2025, High Court of Delhi at New Delhi (Anil Kshetarpal and Shail Jain, JJ.), reserved 7 August 2026, pronounced 18 September 2026 — https://indiankanoon.org/doc/30876479/
FAQ
Does Section 6(2)(b) of the CGST Act bar a DGGI investigation whenever State GST authorities have already examined the same taxpayer’s input tax credit for the same period? No. The Delhi High Court held that overlap of assessee, period and credit type is not enough; Section 6(2)(b) is attracted only where the two proceedings concern an identical tax liability or alleged offence founded on the same facts and seek an identical demand, applying the Supreme Court’s two-fold test in Armour Security.
Can a taxpayer challenge a composite show cause notice spanning several financial years as invalid for that reason alone? Not on the authority of this decision. The Court held that Sections 73(3)/74(3) and 73(10)/74(10) of the CGST Act do not prohibit a consolidated notice covering more than one financial year, though limitation, the ingredients of Section 74, and quantification remain to be tested year by year in the adjudicatory and appellate process.
Is it still worth raising a Section 6(2)(b) objection after an Order-in-Original has already been passed? The Court’s approach suggests writ courts are increasingly reluctant to resolve such objections once adjudication has concluded, treating the statutory appeal under Section 107 as the appropriate forum for the fact-intensive comparison the objection requires. Taxpayers are better served raising the objection while the show cause notice is still pending.
This article is not legal advice and does not create an attorney–client relationship. Readers should verify the certified copy of the judgment and any subsequent clarificatory orders before relying on it, and consult a qualified advocate on the facts of their matter.