Clubbing Multiple FY U/s 74 Impermissible Without Fraud Allegation: Bombay HC Quashes Consolidated GST Notices

The Aurangabad Bench of the Bombay High Court has quashed multiple show cause-cum-demand notices issued by the Directorate General of GST Intelligence (DGGI) on the ground that they impermissibly clubbed several financial years into a single notice. The Bench of Justices Arun R. Pedneker and Vaishali Patil-Jadhav has observed that the statutory scheme under the CGST Act makes the limitation for determination of tax dependent upon the due date for furnishing the annual return for the respective financial year to which the demand relates. The limitation, therefore, runs independently for each financial year. Clubbing multiple financial years in a single show cause notice has the effect of aggregating distinct tax periods governed by separate limitation timelines, which may prejudice the assessee’s right to raise year-specific defences. The petitioners had challenged show cause-cum-demand notices dated June 25, 26, and 27, 2025, issued by the Additional Director, DGGI under Section 74 of the CGST Act. The notices covered multiple financial years in a single consolidated proceeding. In two of the petitions, adjudication had already been completed pursuant to the impugned notices, and final orders had been passed. By way of amendment, the petitioners also challenged those adjudication orders on jurisdictional grounds. The principal contention advanced on behalf of the petitioners was that the statutory scheme under Section 74 contemplates year-wise determination of tax liability. Since limitation is linked to the due date of furnishing the annual return for each financial year, independent notices must be issued for each year. Consolidation of multiple financial years in a single notice, it was argued, defeats the limitation framework and prejudicially affects the assessee’s rights. The Court had consistently held that consolidation of multiple financial years in a single show cause notice under Section 74 is not permissible unless exceptional circumstances exist. The Union of India opposed the petitions, arguing that writ jurisdiction should not ordinarily be invoked against show cause notices and that an efficacious alternate remedy of appeal was available, especially in cases where adjudication had already been completed. The respondents also relied on decisions of the Delhi High Court, including Ambika Traders v. Additional Commissioner, DGGSTI, to contend that consolidated notices may be permissible in cases involving fraudulent input tax credit (ITC) spanning several years. The Bombay High Court noted that in Ambika Traders, the Delhi High Court had permitted consolidated notices in cases involving fraudulent ITC transactions spanning multiple years, where the fraud could not be established without analyzing interlinked transactions across financial periods. However, the Division Bench observed that in the present batch of cases, the impugned notices did not allege a composite or indivisible fraudulent mechanism spanning multiple years. There was no indication of a continuous, interlinked design necessitating consolidation. The Court emphasized that under Sections 73 and 74 of the CGST Act, limitation for determination of tax is intrinsically linked to the respective financial year and the due date of filing the annual return. Therefore, limitation runs independently for each financial year. Clubbing multiple financial years in a single show cause notice, the Court held, effectively aggregates distinct tax periods governed by separate limitation timelines and may prejudice an assessee’s right to raise year-specific defences. Reaffirming its earlier view in Milroc Good Earth Developers, the Bench held that issuance of a single consolidated show cause notice covering multiple financial years is unsustainable in law, unless exceptional circumstances such as a composite fraud spanning years are specifically demonstrated. The Court quashed the impugned show cause-cum-demand notices issued under Section 74; set aside the consequential adjudication orders passed in two of the writ petitions; and granted liberty to the respondents to issue fresh notices strictly in accordance with Section 74 of the CGST Act for the respective financial years, if otherwise permissible in law. Case Details Case Title: Aasawa Brothers Corporate Avenue Versus UOI Citation: JURISHOUR-149-HC-2026(Bom) Case No.: WRIT PETITION NO. 11644 OF 2025 Date: 27/02/2026 Counsel For Petitioner: Advocate Makrand Joshi Counsel For Respondent: D. S. Ladda Click Here To Read Order Read More: Prison Overcrowding: Supreme Court Issues Sweeping Directions to Expand Open Correctional Institutions

Clubbing Multiple FY U/s 74 Impermissible Without Fraud Allegation: Bombay HC Quashes Consolidated GST Notices

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