Dept. Can’t Bundle 5+ FYs Into Single GST SCN: Karnataka HC

The Karnataka High Court has held that the department legally bundles 5+ financial years (FYs) into a single GST show cause notice. The bench of Justice S.R. Krishna Kumar quashed a composite show cause notice issued under the Goods and Services Tax (GST) law that sought to club multiple financial years into a single proceeding, holding that such “bunching” of tax periods is impermissible under the statutory framework of the CGST and KGST Acts. The ruling reiterates that GST assessments, limitation, and adjudication are intrinsically financial-year specific and cannot be collapsed into a consolidated notice. The petitioner contended that the impugned notice was wholly without jurisdiction as it clubbed several financial years into one composite demand, contrary to the scheme of the GST law. It was argued that every stage under the GST regime—registration, maintenance of accounts, filing of returns, availment of input tax credit (ITC), assessment, and limitation—is structured on a year-wise basis. Consequently, issuing a single notice for multiple years violates statutory provisions and principles of natural justice. Reliance was placed on a consistent line of judgments from the Karnataka High Court and other High Courts, including decisions in Veremax Technologies Services Ltd., Bangalore Golf Club, Chimney Hills Education Society, and Albatross Builders and Developers LLP, which have held that consolidated show cause notices spanning multiple assessment years are unsustainable in law The tax department opposed the petition, arguing that there is no express prohibition in the CGST/KGST Acts against issuing a single show cause notice covering multiple financial years. The Revenue relied on a departmental communication dated 16 September 2025 and certain decisions of the Delhi High Court to submit that consolidation is permissible, particularly where transactions span several years. However, the Court was not persuaded, noting that administrative circulars cannot override the clear statutory architecture and limitation framework prescribed by Parliament. After an extensive examination of the CGST/KGST Acts, the High Court held that the GST law is fundamentally designed around financial-year-specific assessment. The Court observed that provisions relating to returns (Sections 37, 39 and 44), accounts (Sections 35 and 36), payment and utilisation of tax and ITC, and determination of tax under Sections 73 and 74 all operate independently for each financial year. The Court emphasised that limitation under Sections 73(10) and 74(10) is expressly tied to the due date of furnishing the annual return for the relevant financial year. Permitting a composite notice would blur these statutory timelines, enable artificial extension of limitation, and potentially mix proceedings under Sections 73 and 74, thereby amounting to a colourable exercise of power. Special reference was also made to the insertion of Section 74A by the Finance Act, 2024, applicable from FY 2024–25 onwards, which expressly links determination of tax to a specific financial year—reinforcing the legislative intent that GST liability must be examined year-wise The Court further held that consolidated notices cause substantive prejudice to taxpayers. Each financial year involves distinct turnovers, ITC positions, contractual arrangements, and legal provisions. ITC eligibility under Section 16(4) is itself frozen on a year-to-year basis, making a consolidated allegation of “wrong ITC” across several years conceptually flawed. According to the Court, a single notice covering multiple years deprives the assessee of the opportunity to offer year-wise explanations and defences, thereby violating principles of natural justice. In conclusion, the High Court held that clubbing or bunching multiple financial years in a single show cause notice under Sections 73 or 74 of the CGST/KGST Acts is patently without jurisdiction and contrary to the statutory framework. The impugned notice dated 30 September 2025 was quashed. However, the Court clarified that the ruling does not preclude the tax authorities from issuing separate and independent show cause notices for each assessment year, strictly in accordance with law and within the prescribed limitation period. Case Details Case Title: M/S Pramur Homes And Shelters Versus UOI Case No.: Writ Petition No. 33081 Of 2025 (T-Res) Date: 11/12/2025 Counsel For Petitioner: Bharat B. Raichandani Counsel For Respondent: Jeevan J. Neeralagi Click Here To Read Order Read More: Same Income Can’t Be Taxed Twice: ITAT Patna Quashes Rs. 2.05 Crore Addition

Dept. Can’t Bundle 5+ FYs Into Single GST SCN: Karnataka HC

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Dept. Can’t Bundle 5+ FYs Into Single GST SCN: Karnataka HC

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