The Gauhati High Court has held that the Proper Officer under the Central Goods and Services Tax (CGST) Act, 2017 is legally empowered to issue a consolidated show cause notice covering multiple financial years under Sections 73 and 74 of the Act.

The bench of Justice Devashis Baruah examined a common jurisdictional challenge raised by the petitioners against GST proceedings initiated through composite show cause notices spanning several financial years.

The principal question before the Court was whether a Proper Officer exercising powers under Sections 73 or 74 of the CGST Act can issue a single show cause notice encompassing tax demands relating to multiple financial years, or whether separate notices are mandatory for each financial year.

The petitioners argued that the GST framework is structured around distinct tax periods and financial years. They contended that annual returns, limitation periods, assessments, and maintenance of records are all financial year-specific. According to them, the statutory scheme requires separate adjudication proceedings for each financial year, making consolidated notices without jurisdiction.

The taxpayers submitted that GST returns and annual returns are filed separately for each financial year. Limitation under Sections 73(10) and 74(10) is computed independently for every financial year. Proceedings under Sections 73 and 74 constitute reassessment and determination of tax liability and therefore should remain year-specific. Clubbing multiple years into one proceeding could prejudice taxpayers because different years may involve different facts, legal provisions, limitation issues and defences.

The petitioners relied on several High Court decisions, including judgments of the Kerala, Madras, Karnataka and Bombay High Courts, which had taken the view that separate notices are required for separate financial years.

The GST Department argued that Sections 73(3) and 74(3) expressly use the phrases “for any period” and “for such periods”, demonstrating legislative intent to permit consolidated proceedings.

According to the Department the Act contains no express prohibition against a composite notice. Limitation continues to apply independently to each financial year even within a consolidated proceeding. Consolidation promotes administrative efficiency and avoids multiple proceedings involving identical issues. Taxpayers also benefit because they need not defend multiple parallel proceedings.

The Department relied heavily upon decisions of the Delhi High Court in Ambika Traders and Mathur Polymers, as well as subsequent decisions of the Allahabad and Karnataka High Courts supporting consolidated notices.

The High Court undertook an extensive examination of the statutory scheme of the CGST Act.

The Court noted that while Sections 73(10) and 74(10) prescribe limitation with reference to the financial year to which the tax demand relates, Sections 73(1) and 74(1) themselves do not require that notices be confined to a single financial year.

Justice Baruah observed that the jurisdiction to issue a notice arises when the Proper Officer forms an opinion that tax has not been paid, has been short paid, has been erroneously refunded, or that input tax credit has been wrongly availed or utilised. The provisions do not impose any restriction requiring separate notices for separate years.

The Court further highlighted that Sections 73(3) and 74(3) specifically contemplate issuance of statements for “such periods other than those covered” by the original notice. This language, according to the Court, indicates that the legislature consciously recognised proceedings extending across multiple periods.

Importantly, the Court clarified that limitation remains year-specific. Even where a composite notice is issued, the department must independently satisfy the limitation requirements applicable to each financial year covered in the notice.

The petitioners had also relied upon the Finance Act, 2024 amendments introducing Section 74A and inserting Sections 73(12) and 74(12), arguing that the amendments reinforced the financial-year-specific nature of GST adjudication.

However, the Court was not persuaded. It observed that the amendments did not create any statutory prohibition against consolidated proceedings and did not alter the language of Sections 73(1), 73(3), 74(1), or 74(3).

The Court noted that recent judicial opinion has increasingly favoured the validity of consolidated show cause notices.

The Court observed that these decisions support the proposition that the CGST Act contains no statutory bar against issuance of a common show cause notice covering multiple financial years.

The Gauhati High Court has clarified that a consolidated GST show cause notice covering multiple financial years is not invalid merely because it clubs several years together. The CGST Act does not mandate separate notices for each financial year. However, statutory limitations applicable to each year must be independently complied with.

The ruling is likely to have far-reaching implications for GST audits, investigations and adjudication proceedings, particularly in large cases involving recurring issues across several years. It also strengthens the growing judicial trend favouring procedural consolidation while preserving taxpayer protections relating to limitation and substantive defences.

The Gauhati High Court’s decision provides important clarity on a contentious procedural issue under GST law. By upholding the legality of multi-year show cause notices, the Court has endorsed a pragmatic interpretation of Sections 73 and 74 while ensuring that limitation safeguards continue to operate separately for every financial year involved.

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