Clubbing of Show Cause Notice for more than one financial year

Clubbing of Adjudication Orders in GST

1. GST annual returns are being filed only financial year wise. The Department also in most of the cases issue Show Cause Notices in the fashion of one SCN per Financial Year. However, in cases connected with Audit by GST Department, though data is collected year wise, SCN is issued clubbing the entire period. which is only for the sake of convenience of the Officer. Adjudication order is also passed in all such audit cases covering the audit period in one order. The issue of whether this practice is permissible under GST Law is addressed by the Madras High Court.

2. The Madras High Court, vide order dated 21/07/2025 has addressed this issue comprehensively in the matter of Ms RA And Co Represented By Its Partner Murali Nellaiyah Versus The Additional Commissioner Of Central Taxes, Chennai - 2025 (7) TMI 1401 - MADRAS HIGH COURT.

3. Despite the fact that SCN can not be issued for more than one financial in one  notice, the authorities issue one single SCN covering more than one financial year purely for the sake of convenience. To bring awareness amongst all connected with this issue, the operating portion of the order of the High Court is reproduced for wide publicity.

4. The judgment as passed the High Court is in para  28 of  the order. The same is furnished below in the same language as passed by the High court.

5. The GST Act permits only for issuance of show cause notice based on the tax period. Therefore, if the  annual return is filed, the entire year would be considered as a tax period and accordingly, the show cause notice shall be issued based on the said annual returns.

6. If show cause notice is issued before the filing of annual returns, the same can be issued based on the filing of monthly returns;

7. If show cause notice is issued after the filing of annual returns or after the commencement of limitation, the said notice shall be issued based on the annual returns with regard to the relevant financial year.

8. No show cause notice can be clubbed and issued for more than one financial year since the same is impermissible in law.

9. In this case, without any jurisdiction, the impugned order came to be passed for more than one financial year, which is impermissible in law and hence, the same is liable to be quashed. Accordingly, the impugned order stands quashed based on the aspect of clubbing of impugned assessment order for more than one financial year.

10. In the result, this writ petition is allowed. No cost. (End of the operative portion).

11. The core issue as to whether SCN can be issued covering more than one financial year is a single SCN must be put to rest by the GST Authorities in all cases including cases covered under audits.

12. While the field formation expects 100% compliance of all sections and rules of GST Law and even for small violation, immediately take action as per Section 125 on general penalty, they completely and conveniently forget the fact that all sections as well as rules are meant not only for the tax payers but for the tax administrators as well.

13. There is a tendency amongst tax payers as well as the dealing tax professionals to immediately address the issues raised under the SCN. In my view, the moment a tax payer/ tax consultant receives a show cause notice which covers more than one financial year, we may file a writ petition in  the jurisdictional High Court against the SCN itself, wherever the stake is in Crores.

14. By referring to all such case laws, where High Courts all over India have taken a stand that clubbing is not permissible as per law, the SCN is liable to be quashed in most of the cases.

15. Even if the High Court is not in agreement on this view, we do not loose much except cost and efforts as still we have time to file the reply to SCN by excluding the period covered from date of filing the writ till the final order date.