2026-VIL-430-KAR
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SGST High Court Cases

GST - Validity of issue of Consolidated Show Cause Notice covering multiple financial years under Sections 73 and 74 of the CGST Act, 2017 – Revenue in appeal against Ld. Single Judge Order holding that issuance of consolidated notices is impermissible - Whether the issuance of consolidated show cause notices under Sections 73 and 74 of the CGST Act, 2017 covering multiple financial years is permissible – HELD - On a combined reading of the provisions of the CGST Act and particularly Sections 73 and 74 of the Act, the irresistible conclusion would be that the proceedings under Sections 73 and 74 of the Act were never intended to be confined to a financial year - The use of the expression "any period" in these provisions indicates that the proceedings are not confined to a specific tax period or financial year. The provisions governing filing of returns, assessment, audit, and determination of demand are structured independently for each tax period or financial year, but the consequential proceedings under Sections 73 and 74 are not restricted in the same manner - The prescription of limitation under sub-section (10) of Sections 73 and 74 operates within a limited sphere and does not control or restrict the scope of issuance of the notice. Mere reference to “financial year” in sub-section (10) neither indicates, nor can it be construed to mean, that Sections 73/74 are confined to a financial year. Such an interpretation is not borne out from a plain reading of the provisions - The reference to tax period or financial year in the Form-GST DRC-01 cannot be relied upon to say that SCN shall be confined to a financial year. It could at the best may be relevant for computation of limitation under Sub-Section (10) and it would not affect the exercise of power under Sections 73 and 74 of the Act – The SCNs issued under Sections 73/74 do not prohibit coverage of multiple financial years. Such notices are neither tax period–specific nor financial year–specific. There is no statutory bar to issuance of a common SCN covering multiple tax periods or financial years. Any interpretation to the contrary would amount to rewriting the language of Sections 73/74, which is impermissible – The Bench concur with the view taken by the High Courts of Delhi, Allahabad, and Jammu & Kashmir. For the reasons, not inclined to concur with the view taken by the High Courts of Bombay, Kerala, Madras, Andhra Pradesh, and Himachal Pradesh - The order of learned Single Judge is not sustainable and set aside. The writ appeal is allowed - Contention regarding pecuniary jurisdiction – HELD - The submission that, if show cause notices are confined to a financial year or tax period, the pecuniary jurisdiction would remain at a lower level, whereas aggregation would enhance the quantum and shift jurisdiction to a higher authority, is of no relevance. The assessee’s concern is only that the show cause notice be adjudicated by a proper officer vested with jurisdiction, whether territorial or pecuniary - It is settled position of law that an assessee has no right to chose the Adjudicating Authority. Merely because combining of more than one financial year, the pecuniary jurisdiction shifts to an officer of the higher rank, no prejudice would be caused to the assessee, since statutory safeguards, remedies and determination of tax would remain as it is. Therefore, the respondent/assessees contention with regard to pecuniary jurisdiction cannot be accepted. [para 40, 41] - Protection of limitation – HELD - If any portion of the period covered by the notice is demonstrated to be beyond the limitation stipulated under sub-section (10), the same would be liable to be excluded as being time-barred. However, issuance of a consolidated show cause notice would not dilute or take away the protection of limitation available under Sub-Section (10) of Sections 73 and 74 of the Act. Each period forming part of notice must satisfy scrutiny on the touchstone of limitation and any portion falling short of such test cannot be sustained. [para 42]
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By CA Vivek Jalan

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