Composite GST Notices and Orders Clubbing Multiple Assessment

Composite GST Notices and Orders Clubbing Multiple Assessment Years Are Impermissible and Legally Unsustainable

Issue

Whether issuing single, composite show-cause notices and passing composite assessment/demand orders clubbing multiple assessment years under Sections 73, 74, and 75 of the CGST/KGST Act is legally sustainable.

Facts

Composite Proceedings: A batch of writ petitions was filed by various petitioners challenging composite demand/assessment notices and composite orders passed by proper officers.
Clubbing of Assessment Years: In each petitioner’s case, the proper officer issued a single notice and passed a composite order covering and aggregating multiple financial/assessment years.
Assessee’s Contention: The petitioners contended that composite proceedings across multiple years are impermissible under the CGST scheme, relying on prior Division Bench rulings.
Revenue’s Defense: The Revenue relied on the Supreme Court ruling in State of J&K v. Caltex to argue that composite actions for multiple years are valid.

Decision

The High Court held that State of J&K v. Caltex was distinguishable as it arose under a completely different statutory framework and did not adjudicate the specific competence to issue composite notices under GST.
Following the Division Bench precedents in Lakshmi Mobile Accessories and Tharayil Medicals, the Court affirmed that the CGST assessment scheme operates year-wise, making composite notices and composite orders impermissible.
The impugned composite notices and orders across multiple years were held legally unsustainable and quashed.
Liberty was granted to the Revenue to initiate fresh proceedings by issuing separate, year-wise notices.
The period from the issuance of the respective quashed notices/orders until the receipt of the certified copy of the judgment was directed to be excluded when computing limitation.
The issue was decided in favour of the assessee.

Key Takeaways

Strict Prohibition on Year Aggregation: Proper officers cannot club multiple assessment years into a single, composite show-cause notice or demand order under Section 73 or Section 74 of the CGST Act.
Year-Wise Statutory Architecture: Assessment, demand, and limitation mechanisms under the GST framework function strictly on a year-by-year basis.
Exclusion of Limitation Period: When composite orders are quashed with liberty to issue fresh period-wise notices, the time spent during the invalidated proceedings is excluded for limitation purposes.

HIGH COURT OF KERALA

K.P Salih

Assistant Commissioner of Central Tax and Central Excise

ZIYAD RAHMAN A.A., J.

WP(C) NO. 19658, 19810, 19831, 19836, 19885, 19900, 19946, 19948, 20909, 22396, 22551 OF 2025

MARCH 5, 2026

Aditya Venugopalan, Mahesh Chandran, Smt. Saranya Babu, Abhishek S., Rohit P., Anwin Gopakumar, Smt. Anjana A., Smt. Gopika B.S. and Aswin Gopakumar, Advs. for the Petitioner. P. R. Sreejith, Suvin R. Menon, SCs, K.T. Bosco, Adv. and R. Harishankar for the Respondent.

JUDGMENT

1. In all these cases, the challenge is raised by the respective petitioners, against the composite notices and orders issued under the provisions of the CGST Act, for multiple assessment years. According to the petitioners such a composite notice is not legally sustainable in view of the principles laid down by a Division Bench of 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. Dy. Commissioner, SGST (Kerala)[2025 KHC OnLine 467]. In the said decisions, issuance of composite notices and orders was found to be not legally sustainable.

2. The learned standing counsel appearing for the respondents in W.P.(C) Nos.19658/2025, 19831/2025 and 22396/2025, filed a statement opposing the reliefs sought in these writ petitions by placing reliance upon the observations made by the Constitution Bench of the Honourable Supreme Court in State of Jammu and Kashmir v. Caltex (India) Ltd. 1965 SCC OnLine SC 168/(1966) 17 STC 612. It was pointed out by the learned standing counsel for the respondents that, the observations made in the said decision were not brought to the notice of the Division Bench of this Court while deciding Lakshmi Mobiles Accessories (supra) and Tharayil Medicals (supra).

3. I have carefully gone through the observations in the Caltex (India) Ltd.’s case (supra) and find that the observations therein cannot be made applicable to the cases at hand. Firstly, the said decision was rendered under the provisions of the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005, where the scheme of the Act was different. Secondly, the observations relied on by the learned Standing Counsel for the respondents would indicate that, the competence of the officer to issue a composite notice for multiple assessment years was not exactly the question considered in the said decision.

4. In the said decision, while challenging the judgment passed by the High Court, among other contentions, the State also raised a contention that, the High Court committed an error in taking the view that, the taxing authorities were not entitled to levy sales tax for the period from January 1, 1955 to September 6, 1955, because the assessment was a composite one relating to the entire period from January 1, 1955 to May, 1959, and the assessment which was bad in part, has infected throughout and must be treated as invalid. This contention was accepted by the Honourable Supreme Court and held that, the assessee will not be entitled to any benefit with regard to the transaction of sales between January 1, 1955 to September 6, 1955. Thus, even though the Honourable Supreme Court found that the assessment was bad for the period from January 1, 1955 to May, 1959, the reasons that prompted the High Court to arrive at that conclusion, was not applicable to the period from January 1, 1955 to September 6, 1955. The Honourable Supreme Court also found that, as far as the transactions relating to the said period are concerned, the same are separable for the purpose of assessment. Therefore, it can be seen that, the observations made therein, were with respect to the peculiar facts and circumstances of the case existed therein and it did not deal with the general power of the officer concerned to issue a composite notice or composite order.

5. On the other hand, in Lakshmi Mobiles Accessories and Tharayil Medicals’s cases (supra) the Division Bench of this Court specifically raised this as an issue and answered the same after analysing the various provisions under the CGST Act and the scheme for assessment. After doing such exercise, this Court came to a definite conclusion that such composite notices are not permissible. On the other hand, in Caltex (India) Ltd.’s case (supra), such an issue was never raised and the questions were considered in the factual circumstances of that case, that too under a completely different enactment.

6. Therefore, I am of the view that, the observations made in the Caltex (India) Ltd.’s case (supra) cannot be made applicable to the facts and circumstances of this case. In such circumstances, I am not inclined to accept the contentions raised by the learned Standing Counsel for the respondents.

7. As observed above, in the light of the principles laid down by this Court in Lakshmi Mobiles Accessories and Tharayil Medicals’s cases (supra), the issuance of composite notices and composite orders are not legally sustainable. In all these cases, the impugned notices and orders are composite, and were issued for multiple assessment years. Hence in the light of the principles laid down by this Court, an interference is required.

Accordingly, all these writ petitions are disposed of, quashing the impugned notices and orders, granting liberty to the respondents, to initiate fresh proceedings after issuing fresh demand notices separately for the relevant assessment years. However, it is clarified that the period from the date on which the respective notices/respective orders are issued, till the date of receipt of the certified copy of this judgment shall be excluded, while computing the period of limitation for initiating proceedings under the relevant provisions.