2024 (11) TMI 518 - HC - GST

Court Nullifies Combined Tax Notices; Orders Separate Assessments for Each Year Under CGST Act 2017.

The HC quashed the consolidated show cause notices dated 05.08.2024 under the CGST Act, 2017, which combined demands for the financial years 2017-2023. ... Challenge to impugned Notices on account of the fact that the same purport to club / consolidate / group the demand for more than one financial year i.e., for the tax period from 2017 to 2023 - HELD THAT:- The said issue came up for consideration in the case of M/S. BANGALORE GOLF CLUB VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, KORAMANGALA, BENGALURU [2024 (10) TMI 116 - KARNATAKA HIGH COURT], in which, the co-ordinate Bench of this Court held 'This Court concludes that the show cause notices issued by the respondent are fundamentally flawed. The practice of issuing a single, consolidated show cause notice for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents.' As is clear from the aforesaid judgment of this Court, the issue in controversy involved in the present petition is directly and squarely covered by the aforesaid judgment and consequently, the impugned Notices deserve to be quashed by reserving liberty in favour of the respondents to issue separate / independent Notices for each assessment year in terms of Section 73 of the CGST Act, 2017. The impugned Notices at Annexures-A and B both dated 05.08.2024 and all further proceedings pursuant thereto are hereby quashed - Petition allowed. Issues:Consolidation of demand for multiple financial years in show cause notices under the Central Goods and Services Tax (CGST) Act, 2017.Analysis:The primary issue in this case is whether the show cause notices dated 05.08.2024, which consolidated demands for multiple financial years (2017-2023), are valid under the CGST Act. The petitioner challenged the consolidation of tax periods in a single notice, arguing that separate notices should have been issued for each assessment year as per Section 73 of the CGST Act. The Court referred to a similar case involving M/s. Bangalore Golf Club where a consolidated show cause notice was deemed flawed. The Court emphasized that each assessment year must be treated independently, citing the judgment of the Hon'ble Supreme Court in State of Jammu and Kashmir and Others vs. Caltex (India) Ltd., AIR 1966 SC 1350. The Court found the consolidation of demands for multiple assessment years to be in violation of the CGST Act and legal precedents.The Court observed that Section 73(10) of the CGST Act specifies time limits for actions related to tax due, emphasizing that actions must be completed within the designated year as per legal provisions. Relying on established legal principles and precedents, the Court concluded that the respondent erred in issuing consolidated show cause notices covering multiple assessment years. Consequently, the Court quashed the impugned show cause notices dated 05.08.2024 and directed the respondent to issue separate notices for each assessment year in compliance with Section 73 of the CGST Act.The judgment in M/s. Bangalore Golf Club vs. Assistant Commissioner of Commercial Taxes was cited to support the decision to quash the impugned notices dated 05.08.2024. The Court allowed the petition, disposed of the case in line with the Bangalore Golf Club judgment, and reserved liberty for the respondents to issue separate notices for each assessment year as required by the CGST Act. The impugned notices and all subsequent proceedings were quashed, with a directive to proceed in accordance with the law by issuing separate notices for each assessment year.In conclusion, the Court's decision centered on the invalidity of consolidated show cause notices for multiple assessment years under the CGST Act, emphasizing the need for separate notices for each assessment year to comply with legal requirements and precedents.