ONE NOTICE, MANY YEARS - THE JURISDICTIONAL CONFLICT IN GST ADJUDICATION

The Backbone of GST - Why Each Financial Year Stands as a Separate Legal Universe

The GST framework is not a loose, flexible system; it is built on a carefully engineered structure in which each financial year functions as an independent, self-contained legal unit. This is evident from the way the law operates-returns are filed separately for each year, liabilities are computed and assessed year-wise, and compliance obligations are evaluated within clearly defined annual timelines. This design is not accidental. It reflects a conscious legislative intent to bring certainty, predictability, and administrative clarity into the tax system. By treating each financial year as a distinct compartment, the law ensures that both the taxpayer and the tax authorities operate within well-defined boundaries, thereby maintaining discipline in assessment and adjudication.

It is against this structured and disciplined framework that a seemingly simple question arises: can a single show cause notice validly cover multiple financial years? At first glance, such an approach may appear efficient and convenient, especially in ongoing transactions. However, the issue becomes far more complex when examined through the lens of law. It raises deeper legal concerns about the limits of the 'tax period' concept, the role of limitation within the statutory framework, and the boundaries of jurisdiction under GST. What appears as a question of procedural convenience, therefore, opens up a wider debate on how far the statutory scheme can be stretched without disturbing its underlying discipline.

What may appear to be a mere procedural choice is, in reality, a question that strikes at the very foundation of GST law. Over time, this issue has moved beyond isolated disputes and become a serious legal controversy. Conflicting decisions across various High Courts have deepened the uncertainty, and the matter has now reached a stage where it requires authoritative resolution by a Larger Bench. The debate, therefore, is no longer about convenience or drafting style-it is about preserving the structural discipline of GST and ensuring that its foundational principles remain intact.

Drawing the Line Clearly - The Bombay High Court Affirms Year-Wise Discipline in Paras Stone Industries Case

Judicial clarity on this issue began to take a definitive and authoritative form with the Bombay High Court's decision in M/s Paras Stone Industries, through proprietor Shri Sunil Shatrughan Mishra Versus Union of India & Ors. - 2026 (1) TMI 839 - BOMBAY HIGH COURT. The Court was confronted with a show cause notice (SCN) issued under Section 74 in September 2023 that sought to cover three distinct financial years-2017-18, 2018-19, and 2019-20-within a single proceeding. What initially appeared to be a matter of procedural convenience thus assumed greater legal significance, as it directly raised the question of whether the GST statutory scheme permits the consolidation of multiple tax periods. The issue, therefore, was not merely about drafting or format, but about the permissible limits of jurisdiction and the structural discipline embedded in GST law.

While adjudicating the matter, the Court did not proceed in isolation but relied upon its earlier binding precedents in 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 and Rite Water Solutions (India) Ltd. Versus Joint Commissioner, CGST & Central Excise, Nagpur & Ors. - 2025 (11) TMI 1939 - BOMBAY HIGH COURT. These decisions had already examined similar questions and laid down a consistent interpretational approach. Building on this established judicial line, the Court adopted a firm and unequivocal stance that the GST framework does not permit the clubbing of multiple financial years into a single SCN. The reasoning was not based on administrative convenience or procedural preference, but on a principled reading of the statutory provisions governing GST adjudication.

Crossing the Jurisdictional Boundary - When Consolidation Turns into an Abuse of Statutory Power

The Bombay High Court went a step further and held that the issuance of a consolidated SCN covering multiple financial years is not merely a procedural irregularity but amounts to a clear case of jurisdictional overreach, effectively expanding the authority of the proper officer beyond statutory limits and bypassing safeguards relating to limitation and classification of offences. The power to initiate proceedings is not unbounded; it is carefully structured within the law, particularly through the concept of distinct tax periods and corresponding limitation periods. When multiple financial years are brought together into a single proceeding, this carefully balanced structure is disturbed, and the authority exercises power not contemplated by the statute.

This concern assumes even greater significance when different financial years are governed by different statutory provisions. Certain years may involve cases under Section 73, while others may attract Section 74 involving allegations of fraud or suppression. A consolidated notice in such circumstances risks blurring this distinction and may enable indiscriminate application of stricter provisions. Such an approach may amount to a colourable exercise of power.

The Court also addressed the Department's argument that the assessee should first exhaust the appellate remedy before approaching the High Court. Rejecting this contention, it reiterated the well-established principle that where the very initiation of proceedings is without jurisdiction, the existence of an alternate remedy does not bar the exercise of writ jurisdiction under Article 226 of the Constitution. Equally important is the Court's recognition of the prejudice caused to the taxpayer. A consolidated notice compressing multiple financial years into a single proceeding may deprive the assessee of a meaningful opportunity to present year-specific defences within statutory timelines. Such compression undermines procedural fairness and weakens effective defence, thereby reinforcing the principle that efficiency in administration cannot override statutory safeguards or the requirements of natural justice.

Hierarchy Over Convenience - Why Jurisdictional High Court Rulings Must Prevail

A significant dimension of the Bombay High Court's ruling lies in its firm handling of conflicting judicial precedents. The Revenue sought to rely on the Delhi High Court's decision in M/s. Mathur Polymers Versus Union Of India & Ors. - 2025 (9) TMI 112 - DELHI HIGH COURT, which adopted a more flexible approach by permitting consolidated show-cause notices across multiple financial years. This reliance highlighted the growing divergence of judicial opinion on the issue and raised an important question-whether authorities can choose between competing High Court decisions based on convenience or preference.

The Bombay High Court decisively rejected this line of argument and reaffirmed a foundational principle of judicial discipline: authorities functioning within a particular State are bound by the decisions of their own jurisdictional High Court. Even where contrary views exist in other jurisdictions, such decisions carry only persuasive value and cannot override binding precedent within the State. This principle is not merely technical-it is central to maintaining order and coherence within the legal system. Allowing authorities to selectively rely on favourable judgments from other High Courts would lead to inconsistency, uncertainty, and uneven application of law at the field level.

By reinforcing the primacy of jurisdictional High Court rulings, the Court ensured that tax administration remains consistent, predictable, and disciplined. It prevents forum shopping by authorities and safeguards taxpayers from the arbitrary application of the law based on selective precedents. Ultimately, the message is clear and unequivocal: certainty in tax law does not flow from convenience or choice, but from adherence to judicial hierarchy and the binding nature of local precedent.

A Fractured Judicial Landscape - When GST Interpretation Splits Across High Courts

Despite clarity from the Bombay High Court and similar views from other High Courts, the legal position remains unsettled, with divergent interpretations continuing across jurisdictions. What appears settled in one jurisdiction is viewed differently in another, creating inconsistency in the application of GST law and highlighting the absence of a uniform judicial approach.

The Delhi High Court, in M/s. Mathur Polymers Versus Union Of India & Ors. - 2025 (9) TMI 112 - DELHI HIGH COURT and Ambika Traders Through Proprietor Gaurav Gupta Versus Additional Commissioner, Adjudication DGGSTI, CGST Delhi North. - 2025 (8) TMI 315 - DELHI HIGH COURT, adopted a more flexible and pragmatic approach. It held that consolidated SCNs may be lawful when transactions are interconnected or form a continuous pattern spanning multiple financial years. According to this view, strict compartmentalisation of financial years should not obstruct effective tax administration, especially in cases involving complex or ongoing commercial arrangements. This interpretation shifts the focus from rigid statutory segmentation to the practical realities of business transactions.

This broader and more flexible approach was further reinforced by the Allahabad High Court in S.A. Aromatics Pvt. Ltd. v. Union of India (2026 SCC Online All 191, dated 20.01.2026), thereby strengthening the alternative judicial perspective. As a result, two competing judicial approaches-one insisting on strict year-wise discipline as an integral feature of GST law, and the other permitting consolidation in the interest of administrative practicality. This divergence has transformed the issue into a significant judicial conflict, making an authoritative resolution not merely desirable but necessary for restoring certainty and consistency in the law.

A Defining Inflexion Point - Rollmet LLP and the Expansion of the Legal Debate

The decision of the Bombay High Court in M/s. Rollmet LLP, Shemaroo Entertainment Limited, Uttam Movies, Everest Fleet Private Limited, M/s. Golden Bullion, Jakin Mahendra Kothari, M/s. JDS Motion Pictures, J.V. Media Solutions, Ms. Mangal Entertainment, CD Safety and Security Services LLP, CTL Logistics India Private Limited, Commissioner, CGST and C Ex, Belapur, Mahavir Polyfilms Pvt. Ltd., Renault India Pvt. Ltd., Versus The Union of India, Central Board of Indirect Tax and Customs, Office of the Commissioner of CGST Palghar, Office of the Joint Commissioner of State Tax, The Superintendent CGST CX, Additional Commissioner CGST Central Excise, Principal Commissioner of CGST and CX, Mumbai East, Commissioner (Appeals II) of CGST and CX Mumbai. - 2026 (4) TMI 1218 - BOMBAY HIGH COURTmarks a crucial turning point in the evolution of this controversy. Unlike earlier cases that dealt with isolated disputes, the Court in Rollmet LLP was confronted with a batch of petitions filed by multiple assessees, all challenging the validity of consolidated show cause notices issued under Sections 73 and 74 of the GST law. This collective challenge highlighted the issue's widespread and recurring nature, elevating it from a case-specific dispute to a systemic legal concern. The depth and detail of the judgment further indicate that the controversy had matured into a complex interpretational issue requiring a more comprehensive judicial examination.

While the petitioners relied on the consistent line of earlier decisions such as 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, M/s Paras Stone Industries, through proprietor Shri Sunil Shatrughan Mishra Versus Union of India & Ors. - 2026 (1) TMI 839 - BOMBAY HIGH COURT., and Rite Water Solutions (India) Ltd. Versus Joint Commissioner, CGST & Central Excise, Nagpur & Ors. - 2025 (11) TMI 1939 - BOMBAY HIGH COURT, all of which had rejected the validity of consolidated notices, the Department presented a significantly broader and more expansive interpretational framework. It argued that the statutory language of Sections 73 and 74 does not expressly confine the issuance of show cause notices to a single financial year. Particular emphasis was placed on the use of the expression 'any period,' which, according to the Department, indicates legislative intent to permit flexibility rather than rigid compartmentalisation.

Developing this argument further, the Department relied on sub-sections (2) and (3), which refer to 'any period' and 'such periods other than those covered under sub-section (1),' to contend that the legislature consciously adopted expansive terminology to allow a wider scope of action. It was also argued that sub-section (10), which prescribes the limitation period for passing adjudication orders, operates in a distinct field and should not be read as restricting the issuance of notices under sub-sections (1) to (3). According to this interpretation, consolidation of multiple financial years into a single notice is not a jurisdictional error but a permissible and practical exercise of statutory power, particularly in cases involving interconnected or continuous transactions.

The Real Question - How Flexible Can GST Law Be?

The controversy highlighted in M/s. Rollmet LLP, Shemaroo Entertainment Limited, Uttam Movies, Everest Fleet Private Limited, M/s. Golden Bullion, Jakin Mahendra Kothari, M/s. JDS Motion Pictures, J.V. Media Solutions, Ms. Mangal Entertainment, CD Safety and Security Services LLP, CTL Logistics India Private Limited, Commissioner, CGST and C Ex, Belapur, Mahavir Polyfilms Pvt. Ltd., Renault India Pvt. Ltd., Versus The Union of India, Central Board of Indirect Tax and Customs, Office of the Commissioner of CGST Palghar, Office of the Joint Commissioner of State Tax, The Superintendent CGST CX, Additional Commissioner CGST Central Excise, Principal Commissioner of CGST and CX, Mumbai East, Commissioner (Appeals II) of CGST and CX Mumbai. - 2026 (4) TMI 1218 - BOMBAY HIGH COURT ultimately brings into focus a deeper interpretational divide within GST law. At its core lies a fundamental question-whether GST must operate through strict year-wise compartments, treating each financial year as an independent unit, or whether it permits a more flexible approach to address interconnected transactions spanning multiple years. The resolution of this question will directly shape the scope of jurisdiction, the role of limitation, and the balance between statutory discipline and practical tax administration.

When Courts Choose Caution - The Strategic Pause Before a Final Verdict

Confronted with sharply divergent judicial views and an increasingly complex legal landscape, the Bombay High Court in M/s. Rollmet LLP, Shemaroo Entertainment Limited, Uttam Movies, Everest Fleet Private Limited, M/s. Golden Bullion, Jakin Mahendra Kothari, M/s. JDS Motion Pictures, J.V. Media Solutions, Ms. Mangal Entertainment, CD Safety and Security Services LLP, CTL Logistics India Private Limited, Commissioner, CGST and C Ex, Belapur, Mahavir Polyfilms Pvt. Ltd., Renault India Pvt. Ltd., Versus The Union of India, Central Board of Indirect Tax and Customs, Office of the Commissioner of CGST Palghar, Office of the Joint Commissioner of State Tax, The Superintendent CGST CX, Additional Commissioner CGST Central Excise, Principal Commissioner of CGST and CX, Mumbai East, Commissioner (Appeals II) of CGST and CX Mumbai. - 2026 (4) TMI 1218 - BOMBAY HIGH COURT adopted a measured and balanced approach rather than delivering an immediate, conclusive ruling. While the Court acknowledged the existence of its earlier binding precedents, which had consistently held that consolidated SCNs were invalid, it also recognised that the issue had evolved beyond those earlier determinations. The arguments advanced by the Department were not merely repetitive but raised substantial questions of statutory interpretation that warranted deeper judicial examination. In doing so, the Court demonstrated a conscious awareness that the controversy had reached a stage where a simple reiteration of earlier views might not adequately address the complexities involved.

A significant factor that influenced this cautious approach was the Department's reliance on developments before the Supreme Court. Particular reference was made to the dismissal of Special Leave Petitions in M/s. Mathur Polymers Versus Union of India & Ors. - 2025 (11) TMI 1184 - SC Order and Ambika Traders Versus Additional Commissioner. - 2025 (9) TMI 1338 - SC Order, where the Supreme Court had declined to interfere with judgments permitting consolidated notices. Although it is well settled that dismissal of an SLP does not amount to a declaration of law under Article 141 of the Constitution, such developments nevertheless add a layer of complexity and cannot be entirely ignored while evaluating the issue. They signal that the controversy is not one-sided and that competing interpretations continue to coexist at different levels of the judiciary.

In light of these circumstances, the Court concluded that the matter had outgrown the stage of isolated adjudication and required an authoritative and comprehensive resolution. Accordingly, it directed that the issue be placed before the Hon'ble Chief Justice for the constitution of a Larger Bench. This step reflects judicial maturity and institutional discipline, recognising that where legal uncertainty deepens and conflicting views persist, the appropriate course is not fragmented rulings but a clear and unified pronouncement that settles the law with finality.

Beyond Procedure - The Stakes for GST Law

The issue of consolidated show cause notices ultimately raises a deeper question about the role of limitation within GST-whether it merely prescribes timelines or fundamentally shapes the structure of proceedings. The answer will determine how far jurisdiction can extend and whether administrative convenience can coexist with the statutory discipline embedded in the law.

At the Crossroads - The Future of GST Adjudication

The debate ultimately reflects a tension between certainty and practicality-between preserving year-wise statutory discipline and enabling efficient handling of multi-year transactions. With the issue now before a Larger Bench, the outcome will define the limits of jurisdiction and the role of limitation under GST. This is not merely a procedural question; it is a decisive moment that will shape the future direction of GST jurisprudence.