GST Demands Must Be Raised Year-Wise, Not Through Consolidated Notices: Bombay High Court

The Bombay High Court while quashing the Consolidated Notices held that the time limit operate year by year. Section 73(10) and 74(10) of the CGST Act fix the time limit to issue an assessment order within three years (Section 73) or five years (Section 74) from the last date for filing annual returns for the year to which the tax dues relate. Consolidation would collapse these years, specific steps and grounds, harming the tax payers’ ability to respond year by year and violating the explicit year wise structure of the statute. The bench of Justice Anil L. Pansare and Justice Nivedita P. Mehta has quashed a show cause notice and a consequential adjudication order issued under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act), holding that the GST authorities cannot consolidate multiple financial years or tax periods into a single notice for the purpose of demand and recovery. The Court reiterated that the statutory scheme of GST mandates year-wise determination of tax liability and separate limitation periods for each financial year. A Nagpur-based education service provider challenged a show cause notice issued by the Joint Director, Directorate General of GST Intelligence (DGGI), Nagpur Zonal Unit, and a subsequent order dated 30 December 2025 passed by the Additional Commissioner, CGST and Central Excise, Nagpur. The proceedings related to the period from April 2018 to March 2023. The department had alleged that the petitioner was rendering a composite supply of taxable commercial training services along with hostel facilities, resulting in short payment of GST and wrongful availment of input tax credit. Based on this premise, a consolidated notice under Section 74 of the CGST Act was issued for the entire five-year span. Challenging the action, the petitioner contended that clubbing multiple financial years into a single notice under Section 74 is impermissible in law, as the GST framework treats each financial year as a distinct tax period with its own limitation for assessment and recovery. The petitioner relied heavily on a Division Bench judgment of the Goa Bench of the Bombay High Court in Milroc Good Earth Developers v. Union of India, as well as a later Nagpur Bench decision in Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & Central Excise, both of which held that consolidated notices spanning several financial years are contrary to the CGST Act. The Court noted that in Milroc Good Earth Developers, it was categorically held that there is “no scope for consolidating various financial years/tax periods” in a single show cause notice under Section 74. The judgment analysed the GST scheme and observed that tax liability is linked to returns filed for each tax period, and the statute prescribes specific limitation periods running separately for each financial year based on the due date of the annual return or the date of an erroneous return. Reiterating these principles, the Bench in the present case emphasised that GST liability is anchored to a defined tax period, which may be monthly or annual, but is ultimately attributable to a particular financial year. Sections 73(10) and 74(10) of the CGST Act prescribe separate time limits for issuance of orders for each financial year. Issuing a single consolidated notice would mix different limitation periods and due dates, which the statute does not contemplate. Such consolidation also prejudices taxpayers’ ability to respond effectively on a year-wise basis, undermining procedural fairness. The department opposed the petition by relying on a judgment of the Delhi High Court in Mathur Polymers v. Union of India, which had taken the view that in cases involving alleged fraudulent availment of input tax credit spanning several years, consolidated notices may be permissible. It was further pointed out that the Supreme Court had declined to interfere with the Delhi High Court’s decision. The Bombay High Court rejected this contention, noting that the Supreme Court’s dismissal of the special leave petition was in limine and did not amount to affirmation of the Delhi High Court’s reasoning on merits. More importantly, the Court observed that since the Bombay High Court itself has taken a consistent and contrary view in Milroc Good Earth Developers and Rite Water Solutions, those decisions are binding on authorities within the State. The Bench also referred to the long-settled principle that until overruled by the Supreme Court or a larger Bench, the law declared by a High Court is binding within its territorial jurisdiction, even if another High Court has taken a different view. The Court partly allowed the writ petition and quashed both the show cause notice dated 1 May 2025 and the consequential adjudication order dated 30 December 2025. At the same time, it granted liberty to the GST authorities to re-issue notices strictly in accordance with Section 74 of the CGST Act, subject to there being no other legal impediment. Case Details Case Title: ICAD School of Learning Pvt. Ltd. Versus UOI Case No.: Writ Petition No. 736 Of 2026 Date: 06/02/2026 Counsel For Petitioner: Bharat Raichandani Counsel For Respondent: Ketki Jaltare-Vaidya Click Here To Read Order

GST Demands Must Be Raised Year-Wise, Not Through Consolidated Notices: Bombay High Court

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