TaxTMI 
TaxTMI 
A Procedural Shortcut With Substantive Consequences
The controversy over consolidated show cause notices under GST has become one of the most frequently litigated procedural issues. At first glance, the issue may appear technical. A single notice covering several financial years may seem administratively convenient, especially where the Department believes the same pattern of transactions continued over time. But tax procedure is not merely a matter of convenience. Limitation, jurisdiction and the taxpayer's right to know the precise period of allegation are integral to the statutory scheme.
The Calcutta High Court decision in State Bank of India Versus The Commercial Central Goods and Service Tax and Central Excise, SLG Commissionerate, Central Revenue Building and Ors. - 2026 (7) TMI 149 - CALCUTTA HIGH COURT, addresses this issue directly. The Court held that a single consolidated show cause notice under Section 74 of the CGST Act, 2017, clubbing multiple financial years from 2018-19 to 2023-24, was impermissible. The consequential Order-in-Original dated 12.12.2025 was also set aside.
The decision is significant because it treats year-wise limitation as a jurisdictional control. The Court did not merely ask whether the taxpayer had received notice. It asked whether the notice itself was authorised by the statute. The answer turned on the language of Section 74(10), particularly the expression 'for the financial year'. According to the Court, each financial year is an independent unit for limitation and adjudication. A consolidated notice cannot be used to stretch limitation across years.
The Notice That Tried to Carry Six Years Together
The petitioner, State Bank of India, challenged a consolidated show cause notice dated 25.06.2025 issued under Section 74 of the CGST Act. The notice clubbed the financial years 2018-19 to 2023-24. The petitioner had earlier supplied inter-branch invoices and other records. In reply to the notice, it filed calculation worksheets, invoice-level details, and copies of invoices. A specific objection was also taken that a single show cause notice could not be issued for multiple tax periods or financial years.
Despite these objections, the authority passed an Order-in-Original dated 12.12.2025 confirming a GST demand of Rs.5,48,56,775/-, along with interest and equal penalty. The petitioner challenged both the notice and the order. It argued that the consolidated notice was contrary to Section 74, that limitation had to be tested separately for each financial year, and that the authority had acted without jurisdiction.
The Revenue resisted the writ petition on two main grounds. First, it argued that the petitioner had an appellate remedy under Section 107 and therefore should not be allowed to invoke writ jurisdiction. Secondly, it contended that where transactions span several years, a consolidated show cause notice was permissible. The Revenue relied on decisions including M/s. Mathur Polymers Versus Union Of India & Ors. - 2025 (9) TMI 112 - DELHI HIGH COURT, and Sampa Das v. Union of India, WPA 4367 of 2023.
The Court, however, found that the core issue was jurisdictional. If Section 74 itself did not permit such a consolidated notice, the existence of an appellate remedy would not prevent writ interference.
Year-Wise Limitation Is the Spine of Section 74
Section 74 deals with the determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised by reason of fraud, wilful misstatement, or suppression of facts. Sub-section (1) authorises the issuance of a notice. Sub-section (2) requires the notice to be issued at least six months before the time limit for issuing the order. Sub-section (9) provides for determination after considering the taxpayer's representation. Sub-section (10) prescribes the outer time limit for issuing the order.
The decisive language lies in Section 74(10). The proper officer must issue the order within five years from the due date for furnishing the annual return 'for the financial year' to which the tax not paid, short paid, or ITC wrongly availed relates. The Court treated this phrase as central. The legislature did not create a single rolling period for all past years. It linked the limitation period to the annual return of the relevant financial year.
This has an important consequence. If limitation is calculated with reference to each financial year, the notice and proceedings must also respect that year-wise structure. One cannot combine several years and then argue that the consolidated proceeding remains valid merely because one of the years is still within time. Such an approach would allow limitation for earlier years to be indirectly revived by attaching them to later years.
The Court also read Section 74 with the definitions of 'tax period' under Section 2(106) and 'return' under Section 2(97). A tax period means the period for which a return is required to be furnished. Returns under GST are linked to particular periods, including monthly returns and annual returns for a financial year. Therefore, a show cause notice under Section 74 must be anchored to the relevant tax period or financial year. It cannot float across multiple years without statutory backing.
Limitation Cannot Be Enlarged by Drafting Technique
The Court's deeper concern was not merely with form. It was concerned with the risk of limitation being defeated by drafting. If earlier years have their own limitation periods, the Department cannot club them with a later year to achieve indirectly what it cannot do directly. The law does not permit a time-barred period to be pulled into a live proceeding merely by issuing one composite notice.
This principle is rooted in a classic rule of statutory construction. Where a statute prescribes that a thing must be done in a particular manner and within a particular time, it must be done in that manner and within that time, or not at all. Other modes are excluded. In tax law, this rule is especially important because limitation is not a technical indulgence. It is a boundary on power.
The Court referred to The State of Jammu and Kashmir and Others Versus Caltex (India) Ltd. - 1965 (12) TMI 125 - Supreme Court, where the Supreme Court recognised that assessment years can be split up and dealt with separately. That principle supported the Court's conclusion that different financial years cannot be treated as one indistinguishable block for limitation purposes.
The Court also relied on Titan Company Limited v. Joint Commissioner of GST and Central Excise, Salem, 2023 SCC OnLine Mad 8082 = 2024-VIL-19-MAD, where the bundling of show cause notices was disapproved. The Bombay High Court decision 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, was also considered important. There, consolidated notices for multiple assessment years were treated as beyond jurisdiction in the relevant factual setting.
The Counter-current: Consolidated Notices Are Still a Live Debate
This subject is not free from conflict. The Revenue relied on M/s. Mathur Polymers Versus Union Of India & Ors. - 2025 (9) TMI 112 - DELHI HIGH COURT; and Sampa Das Vs. Union of India & Others rendered in WPA 4367 of 2023 to support the permissibility of consolidated notices. The Calcutta High Court distinguished those decisions. It noted that Mathur Polymers had noticed decisions against consolidated notices but had not addressed them in the same manner. Sampa Das was also distinguished because it involved disputed facts and a situation where limitation would not necessarily have intervened if separate notices had been issued.
The debate becomes even more interesting when one reads the Gauhati High Court judgment in M/s. Tata Projects Limited, M/s. Quantum Infratech, Bitchem Asphalt Technologies Limited Versus Union of India, State of Assam, Additional Commissioner Office of The Commissioner (Audit) CGST Shillong, Joint Commissioner CGST And CX Guwahati GST And Central Excise Commissionerate Guwahati, Commissioner (Appeals) CGST Central Excise And Customs Guwahati. Central Board Of Indirect Taxes And Customs, Principal Commissioner GST And Central Excise Commissionerate Guwahati, Joint Commissioner GST And Central Excise Commissionerate Guwahati, Office of Superintendent CGST Range Guwahati - 2026 (6) TMI 576 - GAUHATI HIGH COURT. In that case, the Gauhati High Court considered conflicting views of the High Courts and held that consolidated show-cause notices are not prohibited under Sections 73 and 74. It also held that consolidated orders are permissible. However, it clarified that the limitation must be tested separately for each financial year. The merits were left to be examined in statutory appeals.
Therefore, the real fault line is now visible. One view treats consolidation itself as impermissible where multiple financial years are clubbed under Section 74. Another view permits consolidation as a matter of procedure but insists that limitation must survive year by year. Both approaches recognise the importance of limitation. They differ on whether a consolidated notice is invalid at the threshold or can survive year-wise scrutiny.
For professionals, this conflict is highly practical. A taxpayer receiving a consolidated notice must examine the High Court's jurisdiction, the years covered, the due dates of annual returns, the limitation extensions, the nature of the allegations, and whether the notice separates year-wise facts and demands. For the Department, the lesson is equally clear. Administrative convenience must be weighed against the risk that the entire proceeding will be struck down.
A Writ Petition Can Lie When Jurisdictional Error Is Apparent
The Revenue argued that the petitioner should have filed a statutory appeal under Section 107. Ordinarily, High Courts exercise restraint where an effective appellate remedy is available. However, the rule of alternative remedy is not absolute. It is a rule of discretion and convenience, not a hard bar in every case.
The Calcutta High Court relied on M/s GODREJ SARA LEE LTD. Versus THE EXCISE AND TAXATION OFFICER CUM- ASSESSING AUTHORITY & ORS - 2023 (2) TMI 64 - Supreme Court The Supreme Court in that case reiterated that writ jurisdiction may be exercised where the issue is purely legal, where the order or proceeding is without jurisdiction, or where no detailed factual enquiry is required. The principles in Whirlpool Corporation Versus Registrar of Trade Marks, Mumbai & Ors. - 1998 (10) TMI 510 - Supreme Court, andThe Assistant Commissioner of State Tax and Others Versus M/s Commercial Steel Limited - 2021 (9) TMI 480 - Supreme Court, were part of the same line of reasoning.
In the present case, the defect was apparent from the notice itself. The notice admittedly covered multiple financial years. The question was whether Section 74 permitted that course. This was a legal issue requiring interpretation of the statute. The Court did not have to undertake a detailed factual enquiry to identify the defect. Once the notice was found to be without jurisdiction, the consequential order also could not survive.
This part of the judgment is valuable because it shows how procedural illegality can become jurisdictional. Not every defect in a notice justifies a writ petition. But where the defect goes to the authority to initiate proceedings in that form, the High Court may intervene at the threshold.
Penalty and Merits Were Left Untouched
The petitioner also raised issues regarding penalty, non-consideration of invoices, lack of reasons, and the invocation of Section 74 without establishing fraud, wilful misstatement or suppression. These issues were serious, but the Court did not finally decide them. It confined itself to the jurisdictional issue arising from the consolidated notice.
This is important for correctly reading the judgment. The Court did not decide whether the petitioner was liable or not on the merits. It did not examine the correctness of the demand transaction on a per-transaction basis. It did not grant immunity against fresh proceedings. It simply held that the notice and order, as framed, were contrary to Section 74 and without jurisdiction.
The Department was therefore granted liberty to proceed afresh strictly in accordance with law. This preserves the balance. The taxpayer is protected from an invalid consolidated proceeding. The Department is not prevented from issuing lawful notices, if otherwise permissible and within limitation.
The Practical Message for the GST Administration
The ruling carries a clear message for GST administration. If the Department seeks to proceed under Section 74, it must respect the statutory architecture of that provision. A notice should identify the relevant period, the basis for fraud or suppression, the demand for that period, and the applicable limitation. When multiple years are involved, treating each year separately is safer and legally cleaner.
For taxpayers, the judgment offers a useful defence where a consolidated notice combines several financial years and creates confusion about the limitation period. The first task should be to map each year separately. The due date of the annual return, the outer time limit for the order, the date of the notice, and the date of the order must be tested year by year. If the notice uses consolidation to blur limitation, the defect may go beyond procedure.
At the same time, taxpayers must be careful. Because of conflicting High Court views, a consolidated notice may not automatically fail in every jurisdiction or in every factual situation. The Gauhati High Court's view in Tata Projects shows that some courts may permit consolidation but still insist on year-wise limitation. Therefore, the better professional approach is to challenge both the form of the notice and the limitation year by year, while also filing detailed factual replies wherever required.
The Larger Message: Convenience Cannot Override Limitation
The lasting value of 2026-VIL-640-CAL lies in its insistence that limitation is part of jurisdiction. Section 74 confers strong powers on the Department in cases involving fraud, wilful misstatement or suppression. But strong powers come with clear statutory boundaries. One such boundary is time. Another is the financial year to which the tax relates.
A consolidated notice may appear efficient, but efficiency cannot replace statutory design. If each financial year has its own limitation period, that structure must be honoured. The Department may proceed afresh where the law permits, but it must do so in the manner prescribed by law.
For senior officers and professionals, the message is clear. GST litigation on consolidated notices is not merely about format. It is about jurisdiction, limitation and fairness in adjudication. A notice that tries to carry too many years together may end up carrying none of them lawfully.
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CA. RAJ JAGGI