The Madras High Court has quashed an assessment order passed by the Additional Commissioner of Central Taxes that bundled together tax demands for six financial years.
The bench of Justice Krishnan Ramasamy held that “bunching” of show-cause notices across multiple financial years is not permissible under the GST law and violates the statutory safeguards enshrined in Sections 73 and 74 of the CGST Act, 2017.
The petitioner/assessee, M/s R.A. & Co, a Chennai-based firm represented by partner Murali Nellaiyah, had challenged the Order which confirmed a tax demand of Rs. 30.13 crore along with interest and penalty for the financial years 2017–18 to 2022–23.
Advocate G.Natarajan, the Counsel for the assessee contended that the issuance of a single show-cause notice and passing of a single assessment order for six separate financial years was arbitrary and violative of the GST framework. It argued that such “bunching” deprived them of adequate opportunity to present evidence and explore legal remedies like compounding or amnesty schemes year-wise.
The court held that the GST Act mandates assessment on a per-financial year basis, especially when annual returns are the basis for initiating proceedings. Sections 73(1)/(3)/(10) and 74(1)/(3)/(10) make it clear that each financial year is an independent “tax period”, and notices should be served accordingly.
The court stated that bunching creates prejudicial hurdles for taxpayers, who may wish to contest specific years or avail selective reliefs like amnesty or compounding. The limitation period of 3 years under Section 73 and 5 years under Section 74 applies separately for each financial year, reinforcing the requirement for individual assessment orders.
The Court held the impugned order void ab initio due to lack of jurisdiction and quashed it on the ground that the clubbing of multiple financial years in a single show-cause notice is unsustainable in law.
The court ruled that Show-cause notices must be issued separately for each financial year, based on respective tax periods. Issuance of clubbed notices violates statutory provisions and adversely affects the taxpayer’s rights. Any such composite order is liable to be quashed as it causes jurisdictional overreach.
Case Details
Case Title: Ms R A And Co Versus The Additional Commissioner Of Central Taxes
Case No.: W.P.No.17239 of 2025 & W.M.P.Nos.19530 of 2025
Date: 21.07.2025
Counsel For Petitioner: G.Natarajan
Counsel For Respondent: A.P.Srinivas, Sr.St.counsel
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