A consolidated show cause notice issued under Section 73 covering multiple financial years is legally unsustainable

Issue

• Whether a single consolidated Show Cause Notice (SCN) issued under Section 73 covering multiple financial years (2020-21, 2021-22, 2022-23, and 2023-24) is legally permissible, or whether separate notices for each relevant assessment year are mandatory.

Facts

• Multiple Financial Years: The case pertains to Financial Years 2020-21, 2021-22, 2022-23, and 2023-24.
• Issuance of Consolidated SCN: The first respondent issued a single consolidated Show Cause Notice (Ext.P1) under Section 73 covering all four financial years.
• Petitioner’s Challenge: The petitioner filed a writ petition challenging Ext.P1, asserting that issuing a single composite notice across multiple years is impermissible in law and that separate notices for each assessment year are mandatory.
• Precedential Reliance: The petitioner relied on Division Bench judgments that held consolidated proceedings covering multiple tax periods under Section 73 to be legally invalid.

Decision

• The court held that consolidated show cause notices issued for multiple financial years under Section 73 are legally unsustainable, adhering to established Division Bench principles. [Para 2]
• The court quashed the consolidated Show Cause Notice (Ext.P1). [Para 3]
• The court granted liberty to the respondent authority to issue separate, year-wise show cause notices for each relevant assessment year. [Para 3]
• The court directed that the period from the date of Ext.P1 until the receipt of a certified copy of the judgment be excluded when computing limitation for initiating fresh proceedings. [Para 3]
• All other legal and factual contentions were kept open. [Para 3]

Key Takeaways

• Mandatory Year-Wise Notices under Section 73: Tax authorities cannot club multiple financial years into a single consolidated Show Cause Notice under Section 73; separate notices must be issued for each individual assessment year.
• Quashing with Liberty to Re-issue: When a composite notice is quashed on jurisdictional or procedural grounds, revenue authorities retain the liberty to re-initiate proceedings via separate, year-specific notices.
• Exclusion of Time for Limitation: The period spent during litigation challenging the invalid composite notice is excluded while computing statutory limitation limits for initiating fresh year-wise proceedings.