The Calcutta High Court has quashed a Goods and Services Tax (GST) show cause notice and the consequential adjudication order issued against the State Bank of India (SBI), holding that the GST authorities acted without jurisdiction by issuing a single show cause notice covering multiple financial years under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017. 

The bench of Justice Aniruddha Roy observed that each financial year constitutes a separate unit for limitation purposes and that clubbing multiple years into one notice is impermissible under the statute. 

The dispute arose after the GST department issued a composite show cause notice to SBI under Section 74 of the CGST Act alleging tax short-payment over multiple financial years, namely FY 2018-19 to FY 2023-24. Following adjudication, the department confirmed an Integrated GST (IGST) demand of ₹5.48 crore, imposed an equivalent penalty of ₹5.48 crore, and directed recovery of interest, taking SBI’s total liability to approximately ₹10.97 crore. 

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SBI challenged both the notice and the adjudication order before the High Court, arguing that the proceedings were fundamentally without jurisdiction.

Represented by Senior Advocate Sakya Sen, SBI contended that the GST authorities had illegally clubbed six financial years into one show cause notice despite the limitation provisions under Section 74 treating each financial year independently.

The bank also argued that it had supplied all requested documents, including invoice-level details, calculation worksheets and 56 inter-branch invoices, during both the audit stage and in reply to the show cause notice. The adjudicating authority ignored these materials and incorrectly recorded that supporting invoices had not been furnished. The demand relating to earlier financial years was already barred by limitation. Invocation of Section 74, which applies to cases involving fraud, wilful misstatement or suppression of facts, was unjustified. 

The GST department opposed the writ petition primarily on the ground of maintainability, arguing that SBI had an effective statutory appellate remedy under Section 107 of the CGST Act.

The department further submitted that limitation involved mixed questions of law and fact and therefore should be examined by the appellate authority rather than in writ proceedings. It also contended that where alleged tax irregularities extended across several years, issuance of a consolidated show cause notice was legally permissible. 

The Court identified the principal issue as whether a single show cause notice under Section 74 can validly cover multiple financial years.

After examining the statutory framework, Justice Roy observed that Section 74(10) expressly links limitation to “the financial year” to which the alleged tax short-payment relates. The Court held that the legislature consciously treated each financial year as a distinct assessment unit.

According to the Court, the limitation period prescribed under Section 74 applies separately to every financial year and cannot be enlarged by combining several years into one proceeding. Doing so would effectively enable the department to revive time-barred demands, which the statute does not permit. 

The Court further noted that the definition of “tax period” under Section 2(106), read with the provisions governing returns, reinforces that proceedings must correspond to the relevant return period and cannot be extended across multiple financial years through a single notice. 

The High Court concluded that issuing one composite show cause notice for multiple financial years violated Section 74 of the CGST Act and was therefore without jurisdiction.

Consequently, the Court held that the Order-in-Original founded upon such an invalid notice was also unsustainable in law. 

Rejecting the department’s objection regarding availability of an appellate remedy, the Court held that the existence of an alternative statutory remedy is not an absolute bar where the impugned action suffers from an apparent jurisdictional error.

Relying on Supreme Court precedents including Godrej Sara Lee Ltd., Whirlpool Corporation, and Mohd. Nooh, the Court observed that constitutional courts are empowered to exercise writ jurisdiction where proceedings are ex facie without jurisdiction or violate statutory provisions. 

Allowing SBI’s writ petition, the High Court quashed the show cause notice dated June 25, 2025; set aside the consequential Order-in-Original dated December 12, 2025; clarified that it had not examined the merits of the tax allegations; and granted liberty to the GST authorities to initiate fresh proceedings strictly in accordance with law, if otherwise permissible. 

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