TaxTMI 
TaxTMI 
TaxTMI 
The Hon’ble Bombay High Court in the case of M/s. Milroc Good Earth Developers, Mariposa Beach Grove Versus Union of India, Additional Director, Directorate General of India (DGGI), Pune, Additional Commissioner of Central Tax, Goa Commissionerate, Joint Commissioner of Central Tax, Goa Commissionerate, State of Goa., The Assistant Commissioner, Central Goods & Services Tax, Deputy Director, Directorate General Of Goods and Service Tax Intelligence (DGGI) Zonal Unit Pune, The Commissioner, Central Goods & Services Tax Margao. - 2025 (10) TMI 867 - BOMBAY HIGH COURT held that the Revenue’s act of consolidating various financial years into a single Show Cause Notice for GST demand and recovery of ineligible Input Tax Credit is without jurisdiction, amounting to judicial overreach, and therefore such demand notices are liable to be quashed.
Facts:
Milroc Good Earth Developers (“the Petitioner”), a partnership firm engaged in supply of taxable goods, is developing residential projects named Colina and Adarsh in Goa, acting as Developer in agreements with landowners and societies.
The Union of India (“the Respondents”) including the DGGST Intelligence (DGGI), issued consolidated Show Cause Notices dated March 28, 2025, aggregating GST demands and recovery of ineligible ITC on construction and TDR services from financial year 2017-18 to 2023-24.
The Petitioner contended that the provisions of the CGST Act, 2017 mandate assessment and issuance of Show Cause Notices for each tax period separately, with limitation and compliance to be computed independently per financial year based on the returns filed. The Petitioner argued that consolidation violates the statutory scheme, frustrates limitation periods, and denies year-specific defenses, rendering the Notices invalid and unlawful.
The Respondent contended that the Petitioner can contest claim before competent authority, noting no jurisdictional defect and justifying consolidation based on practical reasons.
Issue:
Whether issuance of a single consolidated Show Cause Notice covering multiple financial years under the CGST Act is permissible or whether such clubbing is contrary to the statutory scheme, limitation provisions, and is a jurisdictional overreach?
Held:
- Observed that, the CGST Act contemplates determination of tax liability based on ‘tax period,’ which is defined as the period for which a return is filed, mandating taxation and assessment per tax period.
- Noted that, Sections 73 and 74 set out limitations for issuance of Show Cause Notices linked distinctly to specific financial years and require issuance of notices at least 3/6 months prior to the limitation expiry per year.
- Held that, there is “no scope for consolidating various financial years,” as attempted by the impugned consolidated SCNs, since this impairs the statutory limitation framework and procedural rights of the assessee.
- Noted that the recent Madras High Court decision in the case 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 holding that issuance of composite Show Cause Notices across multiple assessment years is impermissible and violates limitation and jurisdictional mandates.
- Held that, consolidated notices infringe on the assessee’s right to mount year-specific rebuttals and represent a “colourable exercise” of power by circumventing limitation provisions.
- Quashed and set aside the consolidated Show Cause Notices issued to the Petitioner for multiple assessment years on the ground of lack of jurisdiction and declaring it to be judicial overreach.
Our Comments:
The Court read that the bunching of notice for more than one financial year is against the spirit Section 73 and Section 74 of the Act. The Supreme Court in the case of The State of Jammu and Kashmir and Others Versus Caltex (India) Ltd. - 1965 (12) TMI 125 - Supreme Court has held that “where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods.”. This demonstrates that each tax year is a self-contained unit for assessment, a principle universally applied by High Courts in GST disputes. The Madras High Court has held in various cases, for instance in the case of Titan Company Ltd., Represented by its Authorized Signatory Mr. P. Manivannan Versus The Joint Commissioner of GST & Central Excise, The Additional Commissioner of GST & Central Excise - 2024 (1) TMI 619 - MADRAS HIGH COURT has clearly held that bunching of notices is impermissible.
The Hon’ble High Court of Karnataka in the case of M/s. Veremax Technologie Services Limited Versus The Assistant Commissioner Of Central Tax Bengaluru. - 2024 (9) TMI 1347 - KARNATAKA HIGH COURT quashed the consolidated SCN issued for four financial years (2017-18 to 2020-21) under Section 73 of the CGST Act, as it was contrary to the section 73 (10) of the GST Act and directed to issue separate SCNs for each assessment year in compliance with Section 73 of the CGST Act.
However, contrastingly, the Delhi High Court in the case of Ambika Traders Through Proprietor Gaurav Gupta Versus Additional Commissioner, Adjudication DGGSTI, CGST Delhi North. - 2025 (8) TMI 315 - DELHI HIGH COURT, the Court examined the text of Sections 74(3) and 74(4) of the CGST Act and highlighted the use of the terms “for any period” and “for such periods,” as opposed to “financial year” or “assessment year.” The Court reasoned that, these words directly point to a legislative intention to allow authorities to issue consolidated notices for several years, especially in situations involving complex or ongoing frauds. The factual scenario in this case involved claims of fraudulent ITC where the relevant purchase and supply transactions spanned different years, making it necessary to analyze patterns across years to identify fraudulent conduct. The Court held that in cases involving the wrongful or fraudulent availment of ITC, a multi-year SCN is not only permitted but sometimes required, since the complete chain of fraud often emerges only when linked transactions across years are collectively scrutinized.
The Court also emphasized that such a consolidated notice must be clear and must uphold the principles of natural justice. Notably, the judgment stated that there is no statutory prohibition against consolidated SCN in these scenarios under Section 74, and thus it does not constitute a “jurisdictional error.” Furthermore, the Court recognized the practical and evidentiary necessity of clubbing periods when “fabricated ITC frauds” are often revealed only through patterns visible across different tax years. The Supreme Court declined to interfere with this interpretation, by dismissing the SLP filed by the Assessee.
Similarly, the Kerala High Court’s ruling in M/s. XL INTERIORS Versus DEPUTY COMMISSIONER (INTELLIGENCE), DEPUTY COMMISSIONER (TPS), TAXPAYER SERVICE DIVISION, SGST DEPARTMENT DEPUTY COMMISSIONER (ADJUDICATION-III), TAXPAYER SERVICES, SGST DEPARTMENT, SGST COMPLEX - 2025 (1) TMI 401 - KERALA HIGH COURT, where it was held that issuance of a consolidated Show Cause Notice (SCN) under Section 74 of the CGST Act for multiple financial years is “not illegal”. The Kerala Bench emphasized that Sub-section (3) of Section 74 refers to a ‘period’ rather than a particular financial year, permitting authorities to club multiple years in a single SCN. This approach reflects the legislative intention and practical necessity, recognizing that GST frauds, particularly involving wrong or fraudulent Input Tax Credit (ITC) claims, often span multiple financial years and require holistic examination.
Furthermore, the Bombay High Court in the case of M/s. RioCare India Private Limited Versus Assistant Commissioner CGST and C. Ex. & Ors. - 2025 (1) TMI 518 - BOMBAY HIGH COURT, held that a notice under Section 74(1) can cover any period provided the notice is issued at least six months before the limitation period prescribed under Section 74(10). The Court dismissed the writ petition challenging the consolidated SCN on limitation grounds, reinforcing that consolidated SCNs are valid where issued in compliance with prescribed timelines and procedural safeguards. Both judgments align with the decision in Ambika Traders(supra), acknowledging the statutory allowance for multi-year SCNs in fraudulent ITC situations, affirming the practical and legal rationale behind such consolidations.
Relevant Provisions:
Section 73 (10) of the CGST Act, 2017
“73. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-
(10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.”
Section 74 (10) of the CGST Act, 2017:
74. Determination of tax pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful- misstatement or suppression of facts.-
“(10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date of erroneous refund.”
Section 2(106) of the CGST Act, 2017
“(106) 'tax period' means the period for which the return is required to be furnished;”
(Author can be reached at [email protected])