Consolidated Show Cause Notice under Section 73 covering multiple financial years is legally unsustainable and void

Issue

• Whether a single consolidated Show Cause Notice (SCN) issued under Section 73 covering multiple financial years (2020-21 to 2024-25) is legally permissible, or whether separate notices for each relevant assessment year are mandatory.

Facts

• Multiple Assessment Years: The case covers multiple financial years spanning from FY 2020-21 to FY 2024-25.
• Issuance of Composite SCN: The 2nd respondent issued a single consolidated Show Cause Notice (Ext.P1) under Section 73 covering all these financial years together.
• Writ Challenge: The petitioner filed a writ petition challenging Ext.P1, contending that issuing a composite notice across multiple assessment years is legally unsustainable and that individual notices for each assessment year are mandatory.
• Binding Precedent: The petitioner relied on Division Bench decisions establishing that separate notices must be issued for each relevant year under Section 73.

Decision

• The court held that issuing a consolidated show cause notice for multiple assessment years under Section 73 is impermissible in light of settled Division Bench principles.
• The court quashed the composite Show Cause Notice (Ext.P1).
• The court granted liberty to the respondents to issue fresh, separate show cause notices for each relevant assessment year.
• The court ordered that the period from the date of Ext.P1 until the receipt of a certified copy of the judgment be excluded while computing limitation for fresh proceedings.
• All other legal and factual contentions were kept open. [Para 2]

Key Takeaways

• Strict Year-Wise Requirement under Section 73: Tax authorities are legally bound to issue separate Show Cause Notices for each individual tax period or assessment year rather than clubbing multiple years into a single composite notice.
• Procedural Invalidity Vitiates SCN: A consolidated multi-year notice issued under Section 73 suffers from a fundamental legal defect, rendering it liable to be quashed at the initial stage.
• Limitation Protection for Revenue: When an invalid composite notice is quashed, the period consumed in litigation is excluded from the statutory limitation period, allowing the Revenue to issue valid year-wise notices.