Composite GST Show Cause Notice Covering Multiple Years Is Legally Impermissible and Volatile Under Section 73
Issue
Whether the issuance of a single, composite Show Cause Notice (SCN) under Section 73 spanning across multiple financial years (2021-22, 2022-23, and 2023-24) is legally sustainable, or whether the tax authorities are mandatorily required to issue separate notices for each individual financial year.
Facts
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Tax Period: Financial Years 2021-22, 2022-23, and 2023-24.
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The Action: The respondent GST authorities issued a consolidated composite Show Cause Notice (Ext.P1) that clubbed three distinct financial years under a single demand.
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The Challenge: The petitioner-assessee filed a writ petition challenging the validity of Ext.P1, arguing that the notice was fundamentally flawed and unsustainable under the law.
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Precedents Cited: The petitioner placed reliance on binding Division Bench rulings of the High Court, which established that separate notices are a mandatory prerequisite for each individual assessment period when fraud is not alleged.
Decision
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Composite SCN Quashed (In Favor of Assessee): The High Court held that the controversy was squarely covered by prior decisions. Following the clear principles laid down by the Division Bench that composite notices spanning multiple years are impermissible, the Court quashed the composite notice (Ext.P1).
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Liberty to Issue Fresh Notices: The Court granted the GST department full liberty to initiate fresh, lawful proceedings by issuing individual, separate notices for each of the relevant financial years.
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Limitation Protected: To prevent the revenue from being barred by time due to the litigation, the Court directed that the entire period from the date of issuance of Ext.P1 until the receipt of the certified copy of this judgment must be excluded when computing the statutory limitation period for the fresh notices.
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Merits Untouched: The Court did not look into the core tax or Input Tax Credit (ITC) discrepancies, leaving all other substantive contentions completely open.
Key Takeaways
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Financial Year Singularity: Under GST law, each financial year is considered an independent compartment with its own distinct due dates for annual returns, which directly govern the specific limitation deadlines for issuing notices under Section 73. Clubbing them creates a procedural defect.
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Binding Precedents Must Be Honored: Field officers cannot bypass settled legal positions established by higher judicial forums (like a Division Bench ruling) regarding notice mechanics to simplify their administrative workloads.
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Procedural Quashing Does Not Wipe Out Tax Liability: When a notice is struck down solely for procedural or structural defects (such as being a composite notice), the underlying tax demand survives, and the department is routinely permitted to re-fire the demands using the correct statutory format within a protected time window.