Single Composite GST Assessment Order Spanning Multiple Financial Years is Legally Impermissible
Issue
Whether a single composite assessment order issued under the GST Act covering multiple financial years/tax periods is legally sustainable, or if the revenue department is required to initiate separate, year-wise assessment proceedings.
Facts
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The petitioner is a registered company under the Goods and Services Tax (GST) framework.
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The 1st respondent (tax authority) conducted adjudication proceedings for the tax period spanning from April 1, 2018, to March 25, 2025.
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Following the audit/adjudication, the respondent issued a single, consolidated assessment order in FORM GST DRC-07 dated October 25, 2025, which aggregated the tax demands and liabilities across multiple financial years into a single document.
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The petitioner approached the High Court via a Writ Petition to challenge the dynamic validity of the single composite assessment order, while keeping all other alternative grounds of defense open.
Decision
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Held, yes: The Writ Petition is allowed, and the impugned composite assessment order dated October 25, 2025, is formally set aside.
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Held, yes: Relying on established Division Bench precedents, the court ruled that the tax authorities cannot legally issue a single Show-Cause Notice (SCN) or a composite assessment order spanning more than one tax period before the annual return due date, or for more than one year after the due date.
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Held, yes: The revenue department is granted the liberty to initiate fresh, separate adjudication and assessment proceedings individually for each distinct assessment year.
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Held, yes: All other substantive grounds of challenge raised by the assessee concerning the merits of the tax liability are left open for future consideration.
Key Takeaways
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Year-Wise Segregation is Mandatory: Under Sections 73 and 74 of the GST Act, each financial year constitutes a self-contained unit for assessment due to distinct statutory deadlines and annual return filings; hence, bundling multiple years into one order is a fatal procedural defect.
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Protection of Appellate Rights: Issuing composite assessment orders improperly curtails the procedural safeguards of the assessee, particularly affecting the limitation calculations, penalty relief mechanisms, and pre-deposit requirements for separate year-wise appeals.
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Procedural Defect Reopens Investigation: When a court quashes an order purely due to its composite nature, it generally does not erase the tax liability itself; the revenue retains the right to split the demands and reinstitute individual year-wise cases within the legally permissible timeframes.