Consolidated Show Cause Notices (SCNs) and orders covering multiple financial years are legally impermissible and liable to be quashed.
The Dispute: Annual vs. Composite Assessment
The Conflict: The Revenue issued a single, consolidated Show Cause Notice (Ext.P1) and a subsequent combined order (Ext.P3) covering five financial years (2018-19 to 2022-23).
The Revenue’s Stance: Bundling years is often done for administrative convenience, especially when the nature of the tax discrepancy (e.g., ITC mismatch) is recurring across periods.
The Petitioner’s Stance: Each financial year has its own limitation period, its own set of facts, and its own “taxable event.” A composite notice makes it impossible to challenge year-specific issues effectively.
The Judicial Verdict: The “Separate Year” Mandate
The Court ruled in favour of the Assessee, quashing the bundle based on the following legal logic:
1. Legislative Intent of Section 73
The Court held that Section 73 (and Section 74) of the CGST Act operates on an annual basis. Since the law prescribes specific due dates for filing Annual Returns for each year, the “starting point” for computing the 3-year limitation period is different for every year.
2. Procedural Chaos of Bundling
If five years are bundled:
A taxpayer might have an “audit” defense for 2018-19 but a “rectification” defense for 2021-22.
The limitation period for 2018-19 might have expired, while 2022-23 is still “open.”
A composite order mixes these distinct legal timelines, resulting in an order that is “vitiated” (legally corrupted).
3. Exclusion of Limitation
While the Court quashed the order, it protected the Revenue’s right to tax. It gave the Department liberty to issue separate notices for each year. Crucially, the time spent in this litigation (from the date of the quashed order until the judgment copy is received) will be excluded when calculating the limitation period for the fresh notices.
Strategic Takeaways for Taxpayers in 2026
Check the “From-To” Dates: If you receive a notice (DRC-01) where the “Period” field spans multiple years (e.g., April 2018 to March 2023), you have a strong jurisdictional ground to challenge it as “invalid” based on this Kerala HC precedent.
Limitation Defense: This ruling is particularly powerful for older years like 2018-19. If the Department is forced to issue a new separate notice now, they may find that the limitation period for that specific year has already lapsed.
Appellate Strategy: Even if you have already lost at the first appeal stage, you can raise this “Composite Notice” issue in a Writ Petition. Jurisdictional errors (like bundling years) can be raised at any stage of litigation.
2026 Compliance: In the current “Faceless” environment, the GST portal is being updated to prevent the generation of composite DRC-07s. However, manual notices issued by state authorities often still fall into this “bundling” trap.