The Kerala High Court has held that the a consolidated notice would also result in a consolidated adjudication order covering several financial/assessment years and in the event of it being adverse to the assessee, the fee/pre- deposit required to be paid by an assessee for preferring a statutory appeal would also be higher.
The bench of Dr. Justice A.K.Jayasankaran Nambiar and Justice Easwaran S. has observed that higher pre-deposit could not have been the Scheme of the statutory provisions which are expected to adhere to principles of fairness in taxation.
The respondent/assessee challenged the show cause notice that sought to invoke Section 74 of the Central Goods and Services Tax Act \to demand differential tax, interest and penalty from it on an allegation of suppression of turnover during the financial years 2017-18 to 2023-24.
The main ground of challenge against show cause notice in the writ petition was that inasmuch as the appellants had issued a single consolidated notice for six different financial years, the respondent was prejudiced in that the time limit for submitting its reply to the show cause notice in respect of each of the assessment years in question would be circumscribed by the time limit prescribed in Section 74(10) of the CGST/SGST Act for the earliest of the six financial years namely 2017-18.
In particular, it was the case of the respondent/assessee that on account of the hasty action on the part of the appellants, the respondent/assessee was effectively denied an opportunity to cross-examine certain witnesses whose statements had been relied upon in the show cause notice issued to the respondent.
The Single Judge, who considered the matter, did not deem it necessary to entertain a challenge against the show cause notice on the ground of denial of opportunity to cross examine witnesses. In particular, it was noticed that although it was the contention of the respondent that an opportunity for cross examination was not being granted, there was nothing on record to assume that any procedure contrary to law would be adopted by the appellants herein. It was also observed that if an opportunity for cross examination, as required by law, was not granted, the same was a matter to be considered by the hierarchy of authorities under the CGST Act in adjudication proceedings before them.
The department contended that there is no provision envisaged under the CGST Act for issuing separate notices and orders for each financial year.
The court has held that issuing a consolidated show cause notice covering various financial/assessment years would cause prejudice to an assessee who would not get the full period envisaged for adjudication under the Statute, if that period is circumscribed by the limitation period prescribed in relation to an earlier financial/assessment year.
Case Details
Case Title: Joint Commissioner (Intelligence & Enforcement) Versus M/S. Lakshmi Mobile Accessories
Case No.: W.A.NO.258 OF 2025
Date: 5/02/2025
Counsel For Petitioner: Muhammed Rafiq
Counsel For Respondent: K.S.Hariharan Nair
