Delhi High Court Upholds ₹10.58 Crore GST Demand, Says DGGI Notice on Overlapping Transactions Did Not Bar State Officer

The Delhi High Court has refused to set aside a GST demand of ₹10,57,75,250 raised by a Delhi State GST officer against Vertilink Media Solutions Private Limited, even though the Directorate General of GST Intelligence (DGGI) had earlier named the company in a separate fraud notice covering overlapping transactions.

In its judgment of 25 September 2026 in Vertilink Media Solutions v. Anti Evasion Branch (W.P.(C) 13077/2026), a Division Bench of Justice Anil Kshetarpal and Justice Rajneesh Kumar Gupta dealt with Section 6(2)(b) of the Central Goods and Services Tax Act, 2017. It held that the bar on parallel proceedings in that provision applies only where the two proceedings concern the same subject matter. A shared factual background or an overlapping period does not meet that test.

The petition also failed for two procedural reasons: the company had not filed the statutory appeal against the August 2024 order, and it came to the court almost two years later.

Two notices from two authorities on the same company

The company provided script services to Zee Entertainment Enterprises Ltd. According to the judgment, officers searched its office and the residence of its director on 3 March 2021, and the investigation later moved to DGGI's Mumbai Zonal Unit. On 31 March 2023, DGGI issued a common show cause notice to 45 noticees, including the petitioner, under Section 74 of the CGST Act and the corresponding State and IGST provisions. It alleged fraudulent availment of input tax credit (ITC), with Zee Entertainment as the main noticee.

Separately, the Sales Tax Officer, Ward 64, Zone IV of the Delhi GST department issued a notice under Section 73 on 29 May 2024 for April 2019 to March 2020. It proposed that the company had not declared its correct tax liability and had availed ITC from suppliers who had not paid tax on their outward supplies, so the credit was not admissible under Section 16(2)(c). A reply was filed on 28 June 2024. The order of 29 August 2024 confirmed a demand of ₹10.58 crore.

The DGGI case then ended for the co-noticees. The judgment records that Zee Entertainment paid the entire ITC demanded in that notice with interest and a 25% penalty. The proceedings against the co-noticees, including the petitioner, were then treated as concluded under clause (ii) of Explanation 1 to Section 74. The company filed a rectification application on 7 April 2025 against the Delhi order and approached the High Court in August 2026.

Why the court found no "same subject matter"

Section 6(2)(b) deals with cross-empowered Central and State officers. Once a proper officer under one law has initiated proceedings on a subject matter, the proper officer under the other law cannot initiate proceedings on the same subject matter. Its counsel argued that the two notices covered the same transactions and the same period, and relied on the Delhi High Court's earlier ruling in Amit Gupta v. Union of India (2023).

The Bench did not accept this. In its words, the mere fact that two proceedings concern the same assessee, overlap in period or share a factual background "does not, by itself, establish that the two proceedings concern the same subject matter". What counts is the statutory provision invoked, the nature of the allegation and the liability being determined. Here the DGGI notice alleged fraudulent credit without actual supply under Section 74. The Delhi officer, by contrast, was determining the company's own tax liability and ITC eligibility under Section 73, a provision that applies where fraud or suppression is not alleged.

On Amit Gupta, the court said that ruling recognises the scheme against multiple proceedings but does not remove the requirement that the proceedings actually concern the same subject matter. It also rejected the argument that DGGI's taking over one investigation shut out every other proper officer: a transfer of one set of allegations cannot, without identity of subject matter, operate as a "blanket ouster" of another officer's jurisdiction.

No double penalty under Section 75(13)

Vertilink also invoked Section 75(13), which says that once a penalty is imposed under Section 73 or 74, no penalty for the same act or omission can be imposed on the same person under any other provision. The court found that the DGGI case had closed against the petitioner only because the principal noticee paid, and the company could not point to any order requiring it to pay tax, interest or penalty in that case. Being named as a co-noticee was not enough to attract the bar.

Missed appeal and delay decided the petition as much as the merits

The Bench listed four grounds for dismissal: an unused appeal remedy, unexplained delay, the absence of identical subject matter, and the inapplicability of Section 75(13). It said a rectification application "cannot by itself obliterate the delay". The court did leave one route open: if the competent authority passes an order on the pending rectification application, the company may pursue any remedy available in law against that order. The court expressed no view on issues that may arise before that authority.

What this means for businesses facing both DGGI and State GST action

Many taxpayers receive a DGGI or Central notice and then a State notice, or the reverse, for the same year. This judgment shows that a Section 6(2)(b) objection will be tested issue by issue. A taxpayer raising it should be ready to show that both notices seek to determine the same liability on the same allegation, not only that the invoices or periods overlap. Mapping each demand line in both notices against the other is the practical starting point.

The ruling also shows the cost of treating a jurisdiction objection as a reason to skip the appeal. Vertilink pressed its objection through a rectification application, but no appeal was filed within time, and that weighed heavily against the company. Where credit is denied because suppliers did not pay tax, the dispute will usually turn on the Section 16(2) conditions for input tax credit. How reversals and reclaims were reported also matters, and the guide on Rule 37A reversal when a supplier does not file GSTR-3B explains how that works.

Where the other notice is a Section 74 fraud notice, the Supreme Court's ruling that Section 74 notices must state the foundational facts of fraud or suppression is relevant in testing it. On the same day, a Division Bench headed by Justice Kshetarpal held in a separate case that GST liability can be determined after a person's death under Section 93. The Vertilink decision has also been reported in LiveLaw's report on the Vertilink ruling.

The judgment does not say what happened to the rectification application, and it decides nothing on whether the ₹10.58 crore demand is correct on its facts. Those questions remain with the GST authorities.

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