Single show cause notice covering multiple financial years for wrongful ITC availment held valid under Section 74(1)

The Bombay HC disposed of a writ petition challenging a single show cause notice (SCN) issued for multiple financial years regarding wrongful availment of input tax credit (ITC). The petitioner contended that separate notices should have been issued for each financial year. The HC held that Section 74(1) does not prohibit authorities from issuing one notice covering multiple periods for unpaid/short-paid tax or wrongly availed ITC due to fraud or willful misstatement, provided the notice is issued at least 6 months before the time limit under Section 74(10). Since there was no limitation issue, the HC found no prima facie grounds to entertain the writ petition and directed the petitioner to respond to the SCN and raise all arguments before the concerned authority.

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In the case before the Bombay High Court, the petitioner sought a Writ of Certiorari to quash a show cause-cum-demand notice issued under Section 74 of the Central Goods and Services Tax Act, 2017. The notice covered the period from 1st July 2018 to 31st March 2023. The petitioner argued that separate notices should have been issued for each financial year within this period.

The court, comprising Justices B. P. Colabawalla and Firdosh P. Pooniwalla, was not persuaded by the petitioner's argument. The court noted that Section 74, particularly subsection (1), does not prohibit the issuance of a single notice covering multiple financial years, provided it is issued at least six months before the time limit specified in Section 74(10) for issuing the order. Since there was no issue of limitation under Section 74(10) in this case, the court found no prima facie reason to entertain the writ petition challenging the show cause notice. The petitioner was advised to address their arguments before the concerned authority.

The writ petition was disposed of without an order as to costs, and it was noted that the order would be digitally signed and could be acted upon via fax or email.

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