The Rajasthan High Court has issued notice on a writ petition challenging multiple GST show cause notices on the ground that authorities unlawfully consolidated demands relating to four financial years into a single proceeding and allegedly split tax demands to keep each notice within the pecuniary jurisdiction of a Superintendent.
However, the bench of Justice Arun Monga and Justice Ashutosh Kumar has allowed the departmental proceedings to continue while the matter remains pending.
The petitioner/assessee has approached the Rajasthan High Court challenging a series of show cause notices issued under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017 for the financial years 2018-19, 2019-20, 2020-21 and 2021-22.
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According to the petitioner, instead of issuing separate proceedings for each assessment period, the GST authorities clubbed the notices into a single consolidated proceeding. The company contended that such consolidation is contrary to the statutory framework of the CGST Act and is legally impermissible.
A significant issue raised before the High Court concerns the pecuniary jurisdiction of the officer issuing the notices.
The petitioner relied upon the Circular dated February 9, 2018, arguing that a Superintendent is empowered to issue show cause notices under Section 74 only where the tax liability does not exceed ₹20 lakh.
It was argued that the department allegedly adopted a colourable exercise of power by artificially splitting the total demand into multiple amounts below ₹20 lakh each, thereby enabling the Superintendent to issue the notices instead of an Assistant Commissioner, who would otherwise possess the requisite jurisdiction for higher-value demands.
After hearing the preliminary submissions, the Division Bench found it appropriate to issue notice to the respondents.
The respondents’ counsel, who had accepted advance notice, sought time to file a counter affidavit responding to the allegations raised in the writ petition.
While entertaining the writ petition, the High Court declined to halt the adjudication process initiated through the impugned show cause notices.
The case raises two important questions under GST administration: Whether GST authorities can legally club show cause notices covering multiple financial years into one consolidated proceeding. Whether tax authorities can split demands to remain within the pecuniary jurisdiction of a lower-ranking officer, instead of issuing notices through the competent higher authority.
The Rajasthan High Court’s eventual decision could provide important guidance on the scope of jurisdiction of GST officers and the procedural validity of consolidated proceedings under Section 74 of the CGST Act.
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