Allahabad HC Upholds Composite Notices but Rules Notices Issued Within 3/6 Months of Adjudication Deadline as Time-Barred

The Allahabad High Court has upheld composite notices but ruled that the notices issued within 3 or 6 months of adjudication deadline as time-barred. The bench of Justice Saumitra Dayal Singh and Justice Indrajeet Shukla examined several additional challenges raised by the petitioners, including parallel investigations, limitation, and the validity of clubbing multiple entities and years in one notice. The case arose from GST proceedings initiated following searches and inspections conducted by both Central GST (CGST) and State GST (WBGST) authorities, as well as actions by the Directorate General of GST Intelligence (DGGI). A show-cause notice was later issued covering multiple issues, taxable periods, and entities, which the petitioners challenged before the High Court. The petitioners raised several legal grounds attacking the validity of the proceedings. Parallel Proceedings by DGGI – Alleged Violation of Section 6(2)(b) One of the principal arguments was that parallel proceedings were initiated by DGGI despite earlier action by CGST and State GST authorities, including multiple searches and inspections. The petitioners relied on judicial precedents such as: Armour Security – where proceedings were disapproved when authorities had knowledge of earlier action by another GST authority. GK Trading – which also emphasized restrictions on parallel proceedings. It was argued that Section 6(2)(b) of the CGST Act restricts initiation of proceedings by multiple authorities on the same subject matter, and therefore the DGGI proceedings were without jurisdiction. The Court examined the factual matrix and the legal position, and this ground was considered in favour of the petitioners, noting that safeguards exist to prevent overlapping proceedings and harassment through multiple investigations on the same issue. Multiple Taxable Years Covered in a Single Show-Cause Notice The petitioners contended that covering several taxable or assessment years in a single show-cause notice was improper and contrary to settled principles of adjudication. However, the revenue relied on precedents from various High Courts. Judicial Position:The Court referred to rulings of Madras High Court, Karnataka High Court, and Kerala High Court. These decisions have generally upheld the validity of issuing a single show-cause notice covering multiple periods, provided the allegations and computation are clearly set out. Finding:Following this line of precedents, the Court decided this issue against the petitioners, holding that merely covering multiple years in one notice does not automatically invalidate proceedings. Two Separate Assessees Covered in a Single Show-Cause Notice Another challenge was that two different assessees were included in the same show-cause notice, despite having: Separate GST registrations Different products Separate factories Distinct registered addresses The petitioners argued that such clubbing caused procedural confusion and prejudiced their defense. The Court did not accept this contention and decided the issue against the petitioners, holding that in certain circumstances, proceedings involving connected transactions or investigations may be addressed together, and this alone does not invalidate a notice. Limitation Issue A significant contention was raised regarding limitation, specifically that the show-cause notice issued to Petitioner No. 2 was beyond the statutory time limit, as it was received on 08 October 2025, allegedly after expiry of the permissible period. Finding:On examining the timeline and statutory provisions, the Court found merit in this argument and decided this issue in favour of the petitioner, holding that proceedings initiated beyond limitation cannot be sustained. Core Legal Issue: Composite Invocation of Sections 73 and 74 Apart from the above grounds, the Court also examined the broader legal defect in the notice—simultaneous invocation of Sections 73 and 74 of the CGST Act. The Court reiterated that Section 73 applies where there is no fraud or suppression. Section 74 applies where fraud, wilful misstatement, or suppression is alleged. Since the legal ingredients, defenses, and consequences differ, combining both provisions in one proceeding creates uncertainty and violates statutory intent. Accordingly, the Court set aside the impugned proceedings, while granting liberty to authorities to proceed afresh in accordance with law. Case Details Case Title: M/S SA Aromatics Pvt Ltd and another Versus UOI Case No.: WRIT TAX No. - 7515 of 2025 Date: 20/01/2026 Counsel For Petitioner: Senior Advocate Dhruv Agarwal, Upasna Agrawal, Varun Srivastava, Salil Arora Counsel For Respondent: Senior Counsel N.C. Gupta Click Here To Read Order Read More: Rationalise Fees Prescribed for GSTAT

Allahabad HC Upholds Composite Notices but Rules Notices Issued Within 3/6 Months of Adjudication Deadline as Time-Barred

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