Emphasising that issuance of consolidated notices for multiple years amounts to jurisdictional error and judicial overreach, the Bombay High Court quashes the show cause notices (SCN). The Court enlightens that the statutory scheme of the CGST Act, 2017, clearly mandates tax assessment & recovery based on distinct tax periods corresponding to financial years (FYS) or return periods, and there is no scope for clubbing or consolidating different FYs into a single SCN.
The Court added that the CGST Act contemplates for furnishing of annual Returns for every financial year along with the audited final statement, and therefore involve a definite tax period, based on the filing of the Return, which can be either a monthly or annual Return and if the assessment is based on an annual Return, the tax period shall be the relevant financial year.
The Division Bench comprising Justice Bharati Dangre and Justice Ashish S Chavan observed that the limitation period for issuance of assessment orders is prescribed under Sections 73(10) and 74(10) of the CGST Act as five years from the due date of annual return filing for the relevant financial year.
Therefore, pointing out that the bunching of show cause notices is contrary to the spirit of the CGST provisions, the Bench concluded that there is no scope for clubbing or consolidating different financial years into a single Show Cause Notice as attempted in the impugned notices in the present case.
Briefly, in this case, the petitioner, a partnership firm engaged in the construction and development of two projects, received an SCN demanding GST amounts exceeding Rs. 16 crores along with reversal of alleged ineligible ITC and penalty for the period FY 2017-18 to FY 2023-24. The notice invoked Sections 74(1), 74A, 50, and 122 of the CGST Act, alleging non-payment of GST on construction services and wrongful availing of ITC. The said notice also confirmed the GST demand of Rs. 99.44 lacs for FY 2017-18 to FY 2022-23.
The petitioner, therefore, questioned the legality of consolidated notices spanning multiple years, highlighting the impermissibility of ‘bunching’ of tax periods in show cause notices. This was opposed by the Revenue Department by contending that Section 74 allows issuing notices for any period, especially in cases involving fraud or wilful suppression of facts.
Case Distinguished:
Ambika Traders Through Proprietor vs Gaurav Gupta vs Additional Commissioner, Adjudication DGGSTI, CST Delhi [Writ Petition (C) No. 4783] dated July 29, 2025
Appearances:
Advocates Bharat Raichandani, Vibhav Amonkar, Nikhil Angle, and Raj Chodankar, for the Petitioner/ Taxpayer
Advocates Asha Desai and Shubham Priolkar, for the Respondent/ Revenue
