the essay of 22 July 2026 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=utf-8"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>JEST GST - 444</strong></font></font></font></strong></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">JULY 22, 2026</font></strong></font></font></p> <p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong> One Nation, One Tax - Unlimited Taxmen</strong></font></p> <p align="center"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong><u>By Vijay Kumar</u></strong></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> utopian promise of GST was beautifully simple: <em>"One Nation, One Tax</em>". The lived and livid reality for taxpayers, however, is closer to "One Nation, One Tax, An Army of Overzealous Inquisitors". </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Today, a GST registrant has to answer to a sprawling, enthusiastic extended family of authorities: Range, Division, Commissionerate, Preventive, Audit, and the omnipresent DGGI on the Central side-plus their identical, equally ambitious lookalikes on the State side. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">They are all fiercely dedicated to protecting government revenue, primarily ensuring the taxpayer has absolutely no time left to actually run his business. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">This bureaucratic bout finally forced the Supreme Court to play referee in the case of <em>Armour Security India Ltd vs Commissioner, CGST, Delhi East Commissionerate</em> = <a href="https://taxindiaonline.com/searchcaselaw/details?id=188983&type=caselaw&keyword=null" target="_blank"><em><strong>2025-TIOL-57-SC-GST</strong></em></a>.</font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court noted that "cross - empowerment" was meant to protect taxpayers from parallel, overlapping nightmares - not serve as an open invitation for every department to launch its own independent fishing expedition. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Court held: </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><em>1. 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". </em></font></font></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">2. 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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">3. 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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">4. Parallel proceedings should not be initiated by other tax administration when one of the tax administrations has already initiated intelligence-based enforcement action. </font></font></em></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court issued the following guidelines. </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><em>(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. </em></font></font></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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 writing, the authority that has initiated the subsequent inquiry or investigation. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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 ensures to benefit of all. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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 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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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. </font></font></em></p><p align="justify"><em><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">(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. </font></font></em></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">And also made certain suggestions: </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">It is imperative that the 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 inter- Departmental communication. </font></font></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court suggested that DGGI may consider adopting necessary measures to develop a robust mechanism for seamless data and intelligence sharing between the Central and State authorities, including provision for real-time visibility to both authorities of any action taken pursuant to an intelligence input, thereby advancing the objectives of harmony and cooperative federalism. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Unfortunately, officers in the field often believe that Supreme Court judgments are optional reading material. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Take the recent comedy of administrative errors brought before the Himachal High Court in <em>Vardhman Ispat Udhyog Versus Deputy Commissioner, CGST (CWP No.4845 of 2025)</em>. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The case timeline reads like a chaotic bureaucratic race: </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>- November 24, 2023</strong> : DGGI Jaipur Zonal Unit sends a hot tip to the CGST Commissionerate in Shimla regarding the petitioner. </font></font></p></blockquote> <div><blockquote><p align="justify"><strong>- <font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">June 24, 2024</font></font></strong><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"> : The Assistant Commissioner (Anti-Evasion) Shimla pings the petitioner to verify their Input Tax Credit (ITC).</font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>- June 25, 2024</strong> : The petitioner dutifully replies the very next day. </font></font></p><p align="justify"><strong>- <font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">July 22, 2024</font></font></strong><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"> : Enter a new challenger! The Superintendent, CGST Range, Una, sends a fresh communication accusing the petitioner of dealing with fake cloud-server firms. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>- February 13, 2025</strong> : The Superintendent at Una sends another letter on the exact same issue. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>- February 24, 2025</strong> : The petitioner replies to Una, likely wondering how many offices they are dealing with. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>- March 11, 2025</strong> : The grand finale! The Deputy Commissioner, CGST Division, Dharamshala, issues a formal <strong>Show Cause Notice (SCN)</strong> on the exact same subject matter.</font></font></p></blockquote></div> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Exhausted by this five-headed hydra of tax departments, the petitioner ran to the High Court. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The Himachal High Court pointed firmly at the Armour Security judgment and effectively told the background noise to stop. Because Dharamshala was the first to issue an actual Show Cause Notice on March 11, 2025, they won the prize of completing the case. All other competing proceedings were frozen, and those authorities were ordered to forward their homework to Dharamshala. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The High Court held:</font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">In the present case, for the first time, a Show Cause Notice has been issued on 11.03.2025. Therefore, the petitioner is directed to file a detailed reply to the said Show Cause Notice, and all other proceedings initiated or proposed to be initiated on the same subject matter shall not be proceeded further. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">The petitioner shall submit its reply to the Show Cause Notice dated 11.03.2025 before the competent Authority, which shall proceed with the matter in accordance with law. All other Authorities dealing with the same subject matter shall act in conformity with the directions contained in the judgement in <em>Armour Security's</em> case and shall furnish all relevant material, if any, to the adjudicating Authority, with due intimation to the petitioner, so as to afford it an effective opportunity to respond. </font></font></p><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Thereafter, the competent Authority shall pass an appropriate order in accordance with law expeditiously.</font></font></p><p align="justify"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2026/Jest210726.PNG" style="height:320px; width:549px"/></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>GST Investigations - Dual Duel</strong></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Both Central and State GST authorities can investigate assessees under each other's jurisdiction. One Nation, One Tax, Innumerable Investigators. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">In July 2016, the then Member of the then CBEC (now CBIC) Mr. Ram Tirath declared that assessees under the GST will have to deal with only one single authority. </font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">A week later, in an article in the Hindu, Revenue Secretary Hasmukh Adhia and CEA Arvind Subramanian wrote: </font></font></p> <blockquote><p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><em>Critics and taxpayers have viewed the dual structure with some anxiety, fearing two sources of interface with the tax department and hence two potential sources of harassment. But dual monitoring should also be viewed as creating desirable tax competition and cooperation between State and Central authorities. Even if one set of tax authorities overlooks and/or fails to detect evasion, there is the possibility that the other overseeing authority may not.</em></font></font></p></blockquote> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">If the Central taxman doesn't catch you, don't worry-the State taxman is waiting. It's not harassment; it's <em>desirable competition</em> ! </font></font></p> <p align="justify"><br/><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">GST may be destination - based, but its investigations are omnipresent.</font></font></p> <p align="justify"><font color="#ff0000"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif"><strong>Until next week</strong></font></font></font></p> <p align="justify"><font size="2"><font face="Verdana, Arial, Helvetica, sans-serif">Comments/feedback welcome at <a href="mailto:vijaywrite@tiol.in">vijaywrite@tiol.in </a> or 9848111243 (WhatsApp)</font></font></p> </body> </html>