TaxTMI 
TaxTMI 
Only one month earlier we came across a single show cause notice which covered seven different years. I wished to cross check whether that was possible and concluded that it was absolutely possible by invoking section 74 during the period from 01/04/2024 till 05/08/2024, which was the last date for issuance of show cause notice under section 74 up to 2017-18. The SCN in the case of M/s. ARANMULA CHIT FUNDS PVT. LTD. Versus DEPUTY COMMISSIONER OF STATE TAX (INTELLIGENCE), THIRUVALLA AND DEPUTY COMMISSIONER, TAXPAYER SERVICES CIRCLE, PATHANAMTHITTA - 2026 (6) TMI 885 - KERALA HIGH COURT was according issued prior to 05/08/2024 covering all the first seven years of GST.
In a like manner it would have been possible to cover six years in one go during 06/08/2024 to 30/06/2025 and to cover five years during 01/07/2025 till 30/09/2025. Thanks to the introduction of Section 74A with effect from 01/04/2024 which has made it possible to control this by which it would be possible to cover only four years during 01/10/2025 till 31/08/2026. From September 2026 onwards SCN under 74 possible only for a maximum of three years.
I am of the view that introduction of 74A is a beneficial action for taxpayers as there is a curb on 73 as well as 74 after 01/04/2024. Even though the time for issuing show cause notice is possible up to 42 months from the due date for filing the respective GST annual return date, it saves them the next 12 months as the time limit of 54 months which was available up to financial year 2023-24 undern section 74 earlier is now not available from 01/04/2024.
Readers may wonder why this topic now, when all are busy on GSTAT appeals. It is my appeal to all benches of GSTAT to consider CBIC instructions dated 13/12/2023, wherein the main para reads as '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 mis-statement 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'.
In case each and every appeal that comes before any bench of the GSTAT where the show cause notice has been issued under Section 74 as to whether the SCN has been issued in line with CBIC instructions dated 13/12/2023, substantial relief is possible to the taxpayers. In the second place, while SCN are issued by jurisdictional authorities based on scrutiny of GST returns, in all cases it covers only one tax period. However, wherever audit is conducted and SCN is issued by Audit team it may cover a maximum period of 7 years as discussed above which is 4 years as on date till 31/08/2026. Incidentally, it may be also mentioned that several jurisdictional high courts have held that single SCN for multiple financial years is not permitted and have been set aside by remanding the cases to issue year wise SCN by excluding the duration during which the case was with the High court for time lines.
As one proceeds to file the appeal before GSTAT as on date, it is better to have year wise as well as issue wise break up for the entire demand. The audit team simply issues SCN for multiple financial years and APL 04 needs year wise break up and accordingly jurisdictional authorities issue APL 04 only with a break up of taxes (CGST/SGST/IGST) without any relied upon documents forcing the taxpayers to do some research to arrive at the respective figures.
During the last 9 years, as GSTAT was not in place and the writs before the high court is not an appropriate remedy, taxpayers suffered a lot which was only due to non- adherence of instructions of CBIC as well as passing orders in gross violation of section 75 etc. Now that GSTAT is in place. I appeal to the GSTAT to impose cost on all erring officials especially when the taxpayer is made to suffer due to the wrong action of the tax officer. This argument is put forth as show cause notices are issued simply based on differences between two GST returns, even though the differences could be reconciled and it would have been possible to prove that there was no violation at all.
The field formation may henceforth issue show cause notices strictly in line with CBIC instructions and by issuing separate show cause notice for each tax period to avoid any litigation which is totally unwarranted as GSTAT is already in place.