LEGALITY OF BUNCHING MULTIPLE FINANCIAL YEARS IN SINGLE GST DEMAND NOTICE

CBIC, Policy Wing has circulated a set of standard policy comments vide F.No. CBIC -20010/67/2025-GST/994 dated 16.09.2025 issued by CBIC (GST Policy Wing) on the legality of bunching multiple financial years into a single demand notice under the CGST Act, 2017 arising out of challenging the legality, constitutionality and validity of issuance of a consolidated demand notice covering multiple financial years in various High Courts. Accordingly, following assertions have been drawn:

• Composite SCNs for multiple financial years are legally permissible under sections 73/74 of the CGST Act, 2017.
• The proper officer is duly empowered to issue a Show Cause Notice for any period, subject to the statutory framework and there is no express bar in the statute.
• Composite SCNs for multiple financial years do not hit the limitation period provided under sections 73/74 of the CGST Act, 2017.
• Regardless of consolidation, the limitation period for each financial year remains unaffected and is taken into account independently so that the issuance of the notice or order meets the limitation criteria individually for each year concerned. Consolidation serves only as a procedural mechanism and does not dilute or override the temporal restrictions imposed by law on the issuance of notices/orders.
• Consolidation of such SCNs covering multiple financial years is advantageous even to the taxpayer, as it requires appearance only once for presenting submissions in defence at the stage of adjudication. This approach not only prevents duplication of proceedings but also ensures judicial economy by saving valuable time and effort of both the taxpayer and the adjudicating authority.
• It would be incorrect to say that each period necessarily requires a fresh SCN in every case. The law deems the statement as a valid notice, fulfilling the principles of due process. Thus, it can be said that consolidated or clubbed SCNs covering multiple tax periods on identical grounds are not only permissible but envisaged by the statute itself to avoid multiplicity of proceedings.
• Each tax period covered in the SCN is subject to its own limitation period as prescribed under sections 73(10) and 74(10) of CGST Act, 2017.
• Issuance of a consolidated show cause notice is necessitated to establish the modus adopted by such businesses and entities. Issuance of the show cause notice, financial year-wise wise may not be feasible and defeat the purpose of the investigation.
• Judgments in cases related to M/s Titan Company Ltd and M/s Tharayil Medicals decisions are distinguishable/ not binding pan-India.
• The SCNs which are bunched for multiple years and the break-up of the tax for each financial year is made available to the taxpayer, is in congruence with The State of Jammu and Kashmir and Others Versus Caltex (India) Ltd. - 1965 (12) TMI 125 - Supreme Court.
• Where the SCN clearly delineates the tax liability for each financial year, the taxpayer is fully informed of the demand and not prejudiced. The limitation period and the ability to respond to, contest to, or settle the liability on a year-wise basis remains intact, thereby satisfying the principles of natural justice.
• The bundling of multiple years in a single SCN does not result in disqualification from the scheme, provided the conditions under section 128A are satisfied for the eligible years.
• The monetary calculation under section 138(2) of the CGST Act remains proportionate to the tax involved, and compounding is permitted only after payment of the underlying tax, interest, and penalty as required under the third proviso to section 138(1) of the CGST Act, 2017.
• Even if it is assumed and argued that the consolidation of multiple years in one SCN constitutes an alleged irregularity, the same does not render the proceedings void under Section 160. The proceedings are substantively valid as they are undertaken within the four corners of the CGST Act, within the prescribed limitation period and in furtherance of the legislative intent of protecting government revenue.

Thus, the view of the revenue authorities is that there is no illegality in bunching multiple financial years in single GST demand notice.