TaxTMI 
TaxTMI 
TaxTMI 
SCN-Jurisdictional Defect-No Reply-No OIO - Direct Writ - SCN Quashed
When an authority lacks jurisdiction, replying to the SCN should not be encouraged
Parties Involved
Petitioner: Paras Stone Industries
Respondents:
1. Union of India
2. Directorate General of GST Intelligence, Nagpur (second respondent) - who issued the SCN u/s 74.
3. Other GST Authorities (third and fourth respondent) - Concerned Central GST officers connected with enforcement/adjudication
Factual Matrix
1. In September 2023, second respondent issued a show cause notice u/s 74 of the CGST Act, 2017 [hereinafter referred to as “the Notice” and “the Act”].
2. The Notice clubbed together three distinct financial years, namely FY 2017–18, FY 2018– 19 and FY 2019–20, and alleging suppression of taxable value and short payment of GST.
3. The Notice was issued as one consolidated SCN, instead of separate, year-wise notices.
4. No reply was filed by the petitioner, no adjudication was carried out, and no Order-in- Original was passed pursuant to the Notice.
5. Contending that the very issuance of a consolidated notice was without jurisdiction, the petitioner directly approached the Bombay High Court by filing a writ petition in 2025, challenging the Notice itself.
Issue Involved:
Whether a show cause notice issued u/s 74 of the CGST Act can lawfully consolidate multiple financial years into a single notice, and if not, whether such a notice is without jurisdiction and liable to be quashed at the notice stage.
Relief Sought:
To quash the impugned show cause notice issued under Section 74 of the CGST Act on the ground that consolidation of multiple tax periods / financial years in a single notice is impermissible and renders the notice void ab initio.
Petitioner grounds:
1. The Notice was issued without jurisdiction, as it impermissibly consolidated multiple financial years into a single notice, contrary to the statutory scheme of year-wise assessment under the CGST Act.
2. Case laws relied upon
i. Section 74 does not permit clubbing of multiple financial years in one SCN.
ii. issuing consolidated show cause notices for multiple assessment years is without jurisdiction and since it is a judicial overreach, we quash and set aside the same.
iii. if the Authority lack jurisdiction to have a composite assessment for different tax periods/assessment years, then the formality of responding to the Show Cause
i. Clubbing of multiple years is contrary to the CGST Act, 2017, as explained in Milroc Good Earth Developers v. Union of India.
ii. Since notice hereunder is admittedly issued consolidating five years, the same will have to be set aside
Respondents’ Submissions:
1. The writ petition was not maintainable as the petitioner had an effective alternative statutory remedy under the CGST Act.
2. Issuance of a consolidated show cause notice covering multiple financial years was contended to be permissible.
3. Reliance was placed on M/s. Mathur Polymers Versus Union Of India & Ors. - 2025 (9) TMI 112 - DELHI HIGH COURT wherein it was held that
a. In cases of alleged fraud or suppression spread over several years, a consolidated SCN may be permissible
b. The Statute does not expressly prevent issuance of a consolidated SCN or order covering multiple years.
Findings and Analysis:
Local High Court Rulings prevail over Rulings of other State High Court
1. The respondents argued that the view taken by the Delhi High Court should be followed in preference to the judgments of the Bombay High Court in Milroc and Rite Water.
2. The Court rejected this contention, holding that in case of conflicting High Court views, authorities are bound by the judgments of their own High Court.
3. Since the Bombay High Court’s decisions had neither been stayed nor overruled by the Supreme Court, they were binding on authorities within the State.
4. The Court relied upon Commissioner Of Income-Tax, Vidarbha Versus Smt. Godavaridevi Saraf - 1977 (9) TMI 24 - BOMBAY High Court wherein it was held that until a contrary view is taken by the jurisdictional High Court or the Supreme Court, authorities must follow the prevailing High Court judgment.
5. Consequently, the arguments of Respondent Nos. 2 and 3 were rejected.
Maintainability of Writ Petition Despite Alternative Remedy
6. The respondents relied on Star India Industries v. State of Jharkhand & Ors. to contend that the petitioner ought to have availed the appellate remedy.
7. The Court reiterated the well settled principle that a writ petition is maintainable despite the availability of an alternative remedy where:
a. the Writ Petition has been filed for enforcement of a fundamental right protected by Part – III of the Constitution of India.
b. there has been a violation of the principles of natural justice.
c. the order or proceedings are wholly without jurisdiction or
d. the vires of a legislation is challenged. The Counsel ought not to have wasted time on this point, particularly when he was put to notice
8. The Court observed that counsel for the respondents ought not to have wasted judicial time on this issue, particularly after being put to notice.
9. Accordingly, the Court held that a direct writ petition at the SCN stage is maintainable where the proceedings are without jurisdiction.
10. The petition is, accordingly, partly allowed.
SCN is liable to be set aside
11. The Show cause notice issued in September – 2023 by second respondent is quashed and set aside
12. Clubbing multiple financial years was held to be a jurisdictional defect, and not a mere procedural irregularity; hence, the SCN itself was void.
13.The Court granted liberty to the department to issue a fresh notice strictly in accordance with Section 74, subject to law and limitation.
Persistence with Irrelevant Arguments
14.The Court deprecated the persistence with irrelevant arguments even after warnings were issued, noting that such conduct resulted in unnecessary wastage of judicial time.
15.Although costs were initially imposed, they were later recalled as a one-time indulgence, accompanied by a strict warning for future conduct.
Conclusion:
1. The Bombay High Court conclusively held that clubbing multiple financial years in a single SCN under Section 74 of the CGST Act is impermissible and constitutes a jurisdictional defect.
2. Since the notice itself was issued without authority of law, it was liable to be quashed at the notice stage, and the petitioner was not required to reply or await adjudication.
3. The Court reaffirmed that authorities are bound by the judgments of their own High Court in case of conflicting views, and accordingly quashed the SCN dated September 2023, with liberty to issue a fresh notice in accordance with law.