GST Dept. Can’t Issue Consolidated SCN for Multiple FY: Bombay High Court

The Bombay High Court has reiterated that the GST department cannot issue a consolidated show cause notice (SCN) covering multiple financial years under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017, even in cases involving allegations of fraudulent availment of input tax credit (ITC). The Bench of Justice Anil L. Pansare and Justice Nivedita P. Mehta has observed that the statutory framework clearly indicates that tax determination must correspond to the relevant tax period, and therefore consolidating multiple financial years into a single show cause notice is inconsistent with the scheme of the Act. The petitioner approached the High Court challenging a show cause notice dated January 10, 2025, issued by the Assistant Commissioner of CGST & Central Excise, Nagpur-II under Section 74(1) of the CGST Act, 2017, which deals with tax demands arising out of fraud, wilful misstatement, or suppression of facts. The notice alleged that during the period September 2020 to July 2023 (Financial Years 2020–21 to 2023–24), the petitioner had suppressed taxable value and short-paid Central GST amounting to ₹1.69 crore. However, the petitioner contended that the notice was legally unsustainable because it clubbed multiple financial years into a single show cause notice, which is not permissible under the statutory framework of the GST law. The petitioner argued that the GST regime is structured around distinct tax periods, and assessments are tied to returns filed for each specific financial year. Therefore, a single notice combining multiple tax periods violates the scheme of the CGST Act. Reliance was placed on a prior judgment of the Bombay High Court in Milroc Good Earth Developers v. Union of India, where the Court had held that consolidated assessments across different tax periods are impermissible under the GST framework. The petitioner further argued that once the authority lacks jurisdiction to issue such a composite notice, requiring the taxpayer to respond to it would be a futile exercise. The High Court examined the statutory scheme of the CGST Act and noted that GST assessment and recovery provisions are intrinsically linked to returns filed for each tax period or financial year. The Court observed that the law prescribes specific limitation periods for issuance of orders under Sections 73 and 74, calculated from the due date of filing the annual return for the relevant financial year. The Court also referred to its earlier decision in Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & Central Excise, where a similar view was taken. The department argued that the present case involved fraudulent availment of input tax credit, and therefore, a consolidated show cause notice covering multiple years should be permissible, especially where the alleged transactions span several years. In support of their argument, reliance was placed on a judgment of the Delhi High Court in Mathur Polymers v. Union of India, where the Court had observed that consolidation may be justified in cases involving fraudulent ITC claims. Rejecting the Revenue’s contention, the Bombay High Court held that Section 74 of the CGST Act does not create any distinction permitting consolidation of notices even in cases of alleged fraud. The Bench clarified that the only relaxation available in cases involving fraud or suppression is a longer limitation period of five years from the due date of filing the annual return for the relevant financial year. However, this extended limitation does not authorise authorities to combine multiple financial years into a single show cause notice. The Court emphasized that under the GST regime the tax liability is linked to specific tax periods or financial years. Show cause notices must correspond to each relevant assessment period. Allegations of fraud do not permit clubbing of multiple financial years in one notice. Case Details Case Title: M/s. Shree Balaji Traders vs. The GST Commissioner, Nagpur-II, GST Commissionerate, Nagpur and ors. Citation: JURISHOUR-329-HC-2026(BOM) Case No.: WRIT PETITION NO. 1829 OF 2026 Date: 27-02-2026 Counsel For Petitioner: Shyam Dewani Counsel For Respondent: P. D. Rane, Advocate Click Here To Read Order Read More: Leasehold Rights Assignment Amounts To Transfer Of Immovable Property, No GST Payable: Bombay HC

GST Dept. Can’t Issue Consolidated SCN for Multiple FY: Bombay High Court

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