2024 (10) TMI 116 - HC - GST

Consolidation of show cause notices under CGST Act challenged; consolidated notices quashed for bypassing year-wise limitation rules

Challenge concerns validity of consolidated show cause notices that group multiple financial years. The prevailing legal position emphasises that time ... Consolidation of show cause notices across assessment years - Separate notice for each assessment year under Section 73 of the CGST Act, 2017 - Limitation period and year-specific action under Section 73 - Application of Caltex principle to assessments spanning multiple yearsConsolidation of show cause notices across assessment years - Separate notice for each assessment year under Section 73 of the CGST Act, 2017 - Limitation period and year-specific action under Section 73 - Application of Caltex principle to assessments spanning multiple years - The validity of issuing a single consolidated show cause notice under Section 73 of the CGST Act, 2017 covering multiple assessment years (2019-20 to 2023-24). - HELD THAT: - The Court accepted the petitioner's contention that actions under Section 73 must be year specific and governed by the limitation framework applicable to each assessment year. Reliance was placed on the Madras High Court decision referred to by the petitioner and the Supreme Court's principle in Caltex, which recognises that assessments relating to distinct years must be treated and separated as independent matters. Section 73(10) was noted as prescribing time limits measured from the due date for furnishing the annual return of the particular financial year, thereby precluding the impermissible clubbing of multiple years into a single show cause notice. Applying these principles, the Court found that issuance of a common consolidated notice for the tax periods 2019-20 through 2023-24 was contrary to the statutory scheme and established precedent, rendering the impugned notices legally flawed. The Court, however, left open the statutory right of the revenue to initiate separate proceedings by issuing distinct notices for each assessment year in conformity with Section 73. [Paras 4, 5, 6, 7]The consolidated show cause notice and its summary dated 07.05.2024 and 08.05.2024 respectively, insofar as they cover the tax periods 2019-20 to 2023-24, are quashed; respondent may issue separate show cause notices for each assessment year in compliance with Section 73.Final Conclusion: Writ petition allowed; impugned consolidated show cause notice and its summary quashed for impermissible clubbing of multiple assessment years; respondent permitted to issue separate notices year wise in accordance with Section 73 of the CGST Act, 2017. The High Court of Karnataka allowed the writ petition filed by a Club challenging a consolidated show cause notice for multiple tax periods from 2019 to 2023-24 under the Central Goods and Services Tax (CGST) Act, 2017. The Court quashed the impugned show cause notices and directed the respondent to issue separate notices for each assessment year in accordance with Section 73 of the CGST Act.