2026-VIL-568-GAU
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SGST High Court Cases

GST – Issue of Consolidated Show Cause Notice encompassing multiple financial years - The petitioners contend that the proceedings under Sections 73 and 74 must be initiated financial year-wise, not consolidated across multiple years, while the Revenue submits that Sections 73(3), 73(4), 74(3) and 74(4) of the Act expressly permit issuance of notices "for any period" and "for such periods" without restricting to a single financial year – HELD – There is no express bar in the statutory provisions of the Act prohibiting issuance of consolidated Show Cause Notices for different financial years together under Sections 73(1) or 74(1), nor is there any bar in passing consolidated orders for different financial years together under Sections 73(9) or 74(9) of the Act - The cause of action for issuing notice confers jurisdiction upon the Proper Officer to issue notice upon the existence of material facts satisfying the conditions - The restrictions on exercise of power to issue notice appear only in Section 73(2) and 74(2) of the Act which impose temporal restrictions regarding the time limit for issuance of notice, namely three months prior to the limitation period under Section 73(10) and six months prior under Section 74(10), but these provisions do not restrict the consolidation of multiple financial years – The sub-Section (3) and (4) of Section 73 and Section 74 of the Act expressly contemplate that if a notice is issued for any period under Sub-Section (1), the Proper Officer may serve a statement for periods other than those covered under Sub-Section (1), and such statement is deemed to be a notice, which demonstrates legislative intent permitting consolidated proceedings - While limitation periods are computed independently for each financial year under Section 73(10) and 74(10) of the Act, this does not preclude consolidation at the stage of notice and proceedings - Each financial year constitutes a separate cause of action and the doctrine of severability applies such that if a consolidated notice pertains to a period barred by limitation, that particular period can be segregated and excluded from the order - The proceedings under Sections 73 and 74 are adversarial and adjudicatory in nature distinct from assessment proceedings in Chapter XII, and therefore the financial year-specific scheme of assessment does not apply to demand and recovery proceedings in Chapter XV - The Proper Officer is within his jurisdiction to issue consolidated Show Cause Notices and pass consolidated orders for multiple financial years, subject to compliance with the limitation periods prescribed in Sections 73(2), 73(10), 74(2) and 74(10) respectively - The writ petitions are disposed of with liberty to the petitioners to approach the appropriate appellate forums under the Act – The petitions are disposed ofrnrnThe cause of action for initiation of proceedings under Section 73 and Section 74 of the CGST Act - The difference between Section 73(1) and Section 74(1) of the Act of 2017, is therefore clear that when it is a case of fraud or any willful misstatement or suppression of fact to evade tax, Section 74 of the Act of 2017 would be attracted otherwise, Section 73 of the Act of 2017 would be applicable. However, a perusal of both Section 73(1) and Section 74(1) of the Act of 2017 do not specify that the said notice should be against a single financial year or for that matter, for each financial year, there has to be a separate notice. The reason is that the cause of action for initiation of the notice under Section 73(1) or Section 74(1) of the Act of 2017 by virtue of the said Sub-Sections confers a jurisdiction upon the Proper Officer to issue the notice on the existence of the material facts satisfying the Proper Officer to issue the notice under Section 73(1) or 74(1) of the Act of 2017 as the case may be. In other words, the said Sub-Section (1) of Section 73 and Section 74 of the Act of 2017 do not impose any restrictions when the conditions stipulated in Sub-Section (1) satisfies the Proper Officer.
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