There is only one set of Laws on GST in India

This topic may look strange but I am prompted to choose this as in several cases the provisions or rules on GST are  more often wrongly applied by both at adjudication level as well as at first appeal level. While the reasons may be many, there is no change in the mindset of the tax officials even after 1000s of such orders where the provisions or rules have been wrongly applied were set aside or even quashed by the jurisdictional high courts in India.

The best example may be section 74 of the CGST Act which is often misapplied. This is so despite the fact that CBIC has issued instruction on how and when to apply section 74 on 13/12/2023 itself. I really wonder whether the tax officials while applying section 74 do so deliberately by disregarding the CBIC instructions or pretend as if they are not aware of such instructions, despite the fact that the instructions are binding on them.

I really wonder as to whether how many taxpayers and tax professionals as well as tax officials are aware of the above instructions. At the cost of repetition, the operative portion is reproduced for creating awareness amongst all concerned.

3.3 From the perusal of wording of section 74(1) of CGST Act, it is evident that section 74(1) can be invoked only in cases where there is a fraud or wilful mis- statement or suppression of facts to evade tax on the part of the said taxpayer. Section 74(1) cannot be invoked merely on account of non-payment of GST, without specific element of fraud or wilful mis-statement or suppression of facts to evade tax. Therefore, only in the cases where the investigation indicates that there is material evidence of fraud or wilful misstatement or suppression of fact to evade tax on the part of the taxpayer, provisions of section 74(1) of CGST Act may be invoked for issuance of show cause notice, and such evidence should also be made a part of the show cause notice.

The second example is clubbing of tax period as per the whims and fancies of tax officials while issuing the show cause notice as well as while passing orders under section 73 or 74. The show cause notice has to be essentially issued only on the basis of financial year except for July 2017 to March 2018. There is no provision under the GST laws for issuing single SCN for multiple financial years. The High Courts have come down heavily on several occasions by quashing the SCN or OIO where it pertains to multiple years.

The underlying logic is very simple as the system does not permit a taxpayer to file the annual returns for multiple years in one go. The tax officials know pretty well this concept and deliberately cross the border with ulterior motive to save time. There is nothing wrong in issuing more than one SCN on a single day so long as time limit as covered in 73 or 74 is not crossed. There is similarly absolutely no bar on tax officials to pass more than one order on a single day so long as the same is passed within permitted time. This aspect is always deliberately not followed only for the sake of ease as well as convenience by the Audit Team. I have examined 100 SCNs issued by GST Audit team and interestingly, all the SCNs were for multiple financial years. While this is so, the adjudication officials who are jurisdictional officers follow the principle that for one SCN there should be only one order.

I appeal to all taxpayers and tax professionals to take stock of the cases where single order was passed for more than one financial year and in case there are cases, and that too under section 107, prefer appeal before GSTAT immediately. To facilitate such action, purely on one simple argument that single show cause notice  for multiple years or single order under section 73 or 74 for more than one year is impermissible, I give reference of few such case laws.

While there are many sections as well as rules which are often than not misapplied by the tax officials for which they do not change their attitude even when such orders are quashed subsequently by the jurisdictional high courts, this article intends to criticize two things. The objective is to see at least a small reduction on application of section 74 as well as to fight vehemently on all orders before GSTAT wherever the orders are under 107 and the same is a single order for more than one financial year.

1. On the last day of the year 2025, the high court of Andhra Pradesh in W P 34429 of 2025 in the matter of Madeena Steels Vs Assistant Commissioner and four others set aside both OIO as well as OIA.
2. M/s. Emmanuel Constructions Private Ltd., Versus The Principal Secretary to The Govt. Finance Department Bengaluru, Deputy Commissioner of Commercial Taxes (Audit) -4. 9, Bengaluru, The Assistant Commissioner of Commercial Taxes (Enforcement) -21 Bangalore - 2025 (11) TMI 824 - KARNATAKA HIGH COURT.  Consolidated SCN quashed
3. 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   Order quashed
4. 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. Consolidated SCN quashed and set aside.

Strangely, Delhi high court took the stand that single SCN for multiple financial year is permissible, but only for cases of fraudulent availment of ITC.

It may thus be concluded that almost all jurisdictional high courts are taking uniform view which is most likely to be accepted by Supreme Court when such issue reaches the Supreme Court.