Composite Show Cause Notices Covering Multiple Financial

Composite Show Cause Notices Covering Multiple Financial Years Are Legally Unsustainable And Must Be Issued Year-Wise

Issue

Whether the revenue authorities are legally permitted to issue a single, consolidated Show Cause Notice (SCN) and subsequent demand orders under Section 73 spanning multiple financial years, or if they are required to issue separate, year-wise notices and orders.

Facts

The petitioner is a taxpayer whose assessments for multiple financial years, spanning from 2017-18 to 2021-22, were initiated by the revenue authorities.
In 2023, the respondent issued a single, consolidated Show Cause Notice covering all these financial years combined.
Following the consolidated notice, the tax department issued the summary of notice (Form GST DRC-01) and the final demand order (Form GST DRC-07) on the same date, February 6, 2025.
The petitioner filed a writ petition challenging the validity of the consolidated SCN, Form DRC-01, and Form DRC-07, asserting that the law prohibits clubbing multiple assessment years into a single proceeding and that certain periods were barred by limitation.

Decision

Held, that relying on binding Division Bench precedents, the issuance of a composite or consolidated Show Cause Notice across multiple distinct financial years is legally unsustainable under the GST framework.
Held, that the impugned consolidated SCN, along with the subsequent Form DRC-01 and Form DRC-07 orders, are liable to be set aside.
Held, that the respondent revenue authorities are granted permission to split the proceedings and issue fresh, separate, year-wise notices to the taxpayer for the relevant periods.
Held, that for the purpose of computing the statutory limitation period for taking fresh action, the entire duration between the issuance of the original composite notice and the receipt of the certified copy of this judgment shall be strictly excluded. [Decided in favour of the assessee]

Key Takeaways

No Clubbing of Financial Years: Under Section 73 of the CGST/SGST Act, each financial year is a distinct unit of assessment. Tax authorities cannot aggregate multiple years into a single omnibus Show Cause Notice.
Procedural Year-Wise Separation: To maintain jurisdictional and limitation clarity, the revenue must maintain separate files, issue individual year-wise notices, and pass independent adjudication orders for each financial period.
Limitation Toll for Fresh Actions: When a composite notice is quashed purely on this technical/procedural ground, courts will generally safeguard the revenue’s interests by excluding the litigation time from the statutory limitation period, allowing fresh, proper notices to be served.

HIGH COURT OF KERALA

Floor Gardens

Assistant Commissioner, Central GST and Central Excise

ZIYAD RAHMAN A.A., J.

WP(C) NO. 1968 OF 2026

JULY 1, 2026

Reghunathan V.G., Adv. for the Petitioner. P.R. Sreejith, Additional Standing Counsel for the Respondent.

JUDGMENT

1. This writ petition is submitted by the petitioner challenging Ext.P1 consolidated Show Cause Notice which was issued by the respondents for multiple financial years namely, 2017-2018 to 20212022, Ext.P2 Summary Show cause notice and Exts.P5 and P6 consequential summary orders. The main challenge raised against the sustainability of the same is that, issuance of a composite notice for multiple assessment years was found to be not legally sustainable as per the decision rendered by this Court in Joint Commissioner (Intelligence & Enforcement) v. Lakshmi Mobile Accessories 108 GST 750/95 GSTL 356 (Kerala)/[2025 KHC OnLine 149] and Tharayil Medicals v. Deputy Commissioner, SGST Department, Thrissur (Kerala)/[2025 VIL 356 KER].

2. After hearing the learned counsel for the petitioner and the learned Standing Counsel for the respondents, I find merits in the said submission, in view of the fact that, such a finding was indeed entered into by the Division Bench of this Court in the decisions referred to above.

3. In such circumstances, in the light principles laid down by this Court in the above referred judgments, an interference is required. Accordingly, this writ petition is disposed of, quashing Ext.P1 consolidated Show Cause Notice which was issued by the respondents for multiple financial years namely, 2017-2018 to 2021-2022, Ext.P2 Summary Show cause notice and Exts.P5 and P6 consequential summary orders, granting liberty to the respondent to issue separate notices for the relevant assessment years. However, the period from the date of issuance of composite notice till the date of receipt of certified copy of the judgment shall be excluded while computing the period of limitation for initiating fresh proceeding.

4. As it is pointed out by the learned counsel for the petitioner that the petitioner has raised a specific question with regard to the period of limitation with reference to the date of issuance of DRC-01 and, according to him, even though the show cause notice was issued in the year 2023, the summary of the notice was issued only on 06.02.2025, and on the same date itself, DRC-07 was also issued. Therefore, it is clarified that the exclusion of the time granted by this Court will not take away the right of the petitioner to pursue the aforesaid contention with regard to the validity of the notice issued.