The Calcutta High Court has held that the GST Department cannot issue a single show cause notice (SCN) covering multiple financial years under Section 74 of the Central Goods and Services Tax (CGST) Act, 2017. 

The bench of Justice Aniruddha Roy while holding the practice to be contrary to the statutory scheme, the Court quashed both the composite SCN and the consequential Order-in-Original passed against a public sector bank, while granting liberty to the department to initiate fresh proceedings strictly in accordance with law. 

The dispute arose after the GST authorities issued a composite show cause notice dated June 25, 2025 under Section 74 of the CGST Act covering multiple financial years from FY 2018-19 to FY 2023-24. The notice culminated in an Order-in-Original dated December 12, 2025 confirming GST demand of ₹5.48 crore (IGST), Equal penalty of ₹5.48 crore, and Interest under Section 50.

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The total financial exposure exceeded ₹10.97 crore. 

The bank challenged both the show cause notice and the adjudication order before the High Court.

The petitioner submitted that during the departmental audit it had supplied extensive documentary evidence, including detailed calculation worksheets; invoice-wise transaction details; and copies of all relevant invoices.

According to the bank, despite furnishing these materials both before and after issuance of the SCN, the adjudicating authority proceeded to pass the order by recording that supporting invoices and documents had not been produced, thereby ignoring the evidence already available on record. 

The principal challenge before the High Court was that a single show cause notice cannot legally cover several financial years because Section 74 prescribes an independent limitation period for each financial year.

The petitioner further argued that each assessment year constitutes a separate unit under the GST law; clubbing multiple financial years effectively extends statutory limitation beyond what Parliament has prescribed; and invocation of Section 74 itself was without jurisdiction in the absence of proper allegations establishing fraud, wilful misstatement or suppression of facts. 

The GST Department opposed the writ petition primarily on the ground that an appeal under Section 107 of the CGST Act was available.

The Department argued that questions regarding limitation and examination of evidence involved disputed facts requiring adjudication by the appellate authority rather than exercise of writ jurisdiction.

It further contended that where alleged fraudulent transactions span several years, issuance of a consolidated show cause notice is legally permissible. 

The Court undertook an extensive analysis of Section 74 of the CGST Act.

Justice Roy observed that sub-section (10) specifically prescribes that the adjudication order must be issued within five years from the due date of furnishing the annual return for the relevant financial year.

The repeated legislative use of the expression “financial year”, according to the Court, clearly demonstrates that Parliament intended each financial year to remain an independent assessment unit for purposes of limitation. 

The Court held that limitation under Section 74 cannot be enlarged by combining different financial years into one proceeding.

According to the judgment, every financial year carries its own independent limitation period, and once the statutory period expires, the Department cannot indirectly revive time-barred years by including them in a composite notice relating to another year. 

The Court observed that taxation statutes require strict interpretation, particularly where limitation provisions are concerned.

Interpreting Sections 2(97), 2(106) and Section 74 together, the Court held that the “tax period” under the GST regime is determined by the returns required to be furnished.

Since returns are filed either monthly or annually for a particular financial year, a show cause notice under Section 74 can only correspond to the relevant tax period represented by those returns.

The Court concluded that the GST statute contains no mechanism permitting one consolidated notice spanning multiple financial years.

The Court held that by issuing one show cause notice for several financial years, the department effectively attempted to overcome statutory limitation applicable to earlier years.

Such an exercise, the Court observed, amounted to doing indirectly what the law prohibited directly.

Consequently, the composite show cause notice was declared to be de hors the provisions of Section 74, illegal and without jurisdiction. 

While recognising that an appellate remedy ordinarily exists, the Court reiterated the settled principle that writ jurisdiction remains available where the impugned action suffers from an apparent jurisdictional defect.

Relying upon Supreme Court decisions including Godrej Sara Lee Ltd., Whirlpool Corporation, and Mohd. Nooh, the Court held that when the illegality is evident on the face of the record and does not require detailed factual inquiry, the High Court can exercise jurisdiction under Article 226 despite availability of a statutory appeal. 

Accordingly, the High Court has quashed the composite show cause notice dated June 25, 2025; set aside the consequential Order-in-Original dated December 12, 2025; held both actions to be without jurisdiction; and granted liberty to the GST authorities to initiate fresh proceedings strictly in accordance with law.

The Court clarified that it had not examined the merits of the tax dispute, and its decision was confined solely to the jurisdictional issue concerning issuance of a consolidated show cause notice for multiple financial years. 

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