Consolidated SCNs for Multiple Years Under GST Are Impermissible

Consolidated SCNs for Multiple Years Under GST Are Impermissible

Title: Revenue Cannot Consolidate Multiple Financial Years in a Single Show Cause Notice; Such Clubbing is Without Jurisdiction and Constitutes a Judicial Overreach (Name of Court and Case typically mentioned in the full article)

Issue: Whether a single, consolidated Show Cause Notice (SCN) or assessment order issued by tax authorities, which covers demands for multiple, distinct financial years, is legally valid under the Goods and Services Tax (GST) Act.

Facts:

• The tax authority issued one SCN/order against the taxpayer, attempting to club tax demands, penalties, and interest relating to alleged non-compliance that spanned across several consecutive financial years.
• The taxpayer challenged this single composite notice/order, arguing that it violated the fundamental statutory procedures and the specific time limitations prescribed for each individual tax period.

Decision:

The court ruled in favor of the taxpayer, holding that the issuance of a single, composite Show Cause Notice or adjudication order for demands relating to multiple financial years is legally impermissible and without jurisdiction under the GST Act.

• The court typically quashes the consolidated SCN and the resultant order entirely.
• The tax authority is directed to initiate fresh proceedings, if necessary, by issuing separate and distinct notices for each financial year, ensuring compliance with the specific limitation periods applicable to each year.

Key TakeDowns:

• Violation of Statutory Procedure: Under the GST Act, each financial year is deemed a separate tax period with its own specific due dates and separate limitation periods under Sections 73 or 74 of the CGST Act. The composite notice violates this statutory framework.
• Jurisdictional Flaw: The act of clubbing multiple years into one proceeding is considered a jurisdictional flaw and not merely a procedural irregularity, as it undermines the specific safeguards provided to the taxpayer regarding time-barred assessments.
• Taxpayer Safeguard: This ruling provides crucial protection to taxpayers by ensuring that tax authorities adhere strictly to the rule book, preventing procedural shortcuts that could lead to arbitrary or time-barred recovery actions.