Consolidation of SCNs across years allowed where core allegation is fraudulent ITC; appeal allowed under Section 107 CGST

HC upheld that consolidation of SCNs for multiple years is permissible where the core allegation is fraudulent availing of ITC. The petition was disposed, granting the petitioner liberty to file an appeal under Section 107 CGST by 30 September 2025 with requisite pre-deposits. If filed within that time, the Appellate Authority must not dismiss the appeal as time-barred and shall decide it on merits.

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ISSUES PRESENTED AND CONSIDERED

1. Whether a single Show Cause Notice (SCN) can be issued in a consolidated manner covering transactions/periods spanning multiple financial years.

2. Whether issuance of a consolidated order/SCN for multiple years is impermissible under the language and scheme of Sections 73 and 74 of the CGST Act, having regard to distinctions between the terms "period"/"periods" and "financial year".

3. Whether consolidation of treatment for alleged fraudulent availment/utilisation of Input Tax Credit (ITC) across years is necessary or permissible for establishing a pattern of fraud, wilful misstatement or suppression of facts.

4. Procedural consequence: Whether an appeal against the impugned order is maintainable and whether the appellate authority can dismiss an appeal on the ground of limitation if filed within the liberty granted.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Permissibility of a single SCN for multiple years

Legal framework: Sections 73 and 74 of the CGST Act permit issuance of notice/statements "for any period" and "for such periods" (sections 73(3), 73(4), 74(3), 74(4)). By contrast, sections 73(10) and 74(10) employ the term "financial year" when prescribing time-limits for issuance of final orders.

Precedent treatment: The Court follows and applies prior authority holding that the statutory language contemplates notices for periods extending beyond a single financial year; consolidation is therefore permissible.

Interpretation and reasoning: The distinction in statutory language between "period(s)" (in sub-sections enabling service of statements) and "financial year" (in time-limit sub-sections) indicates legislative intent that notices may relate to periods which are not confined to a single financial year. The terms "for any period" and "for such periods" are significant and allow a consolidated SCN where appropriate.

Ratio vs. Obiter: Ratio - The statutory language authorizes issuance of consolidated notices covering multiple periods/years; Obiter - contextual observations about legislative consciousness in choice of terminology.

Conclusions: A single SCN issued for multiple years is permissible under Sections 73 and 74 of the CGST Act and does not, per se, contravene the statutory scheme.

Issue 2 - Relevance of "tax period" definition and nexus with consolidated notices

Legal framework: "Tax period" is defined as the period for which the return is required to be furnished; returns and matching of transactions may extend across returns/tax periods.

Precedent treatment: Prior authority relied upon emphasizes that the ITC mechanism and the defined "tax period" permit examination and linking of transactions across periods for determination of wrongly availed/utilised ITC.

Interpretation and reasoning: Because purchases, supplies and utilization of ITC may be recorded across different tax periods/financial years, the defined concept of "tax period" does not preclude consolidated examination; rather, it permits aggregation of linked transactions for proper adjudication.

Ratio vs. Obiter: Ratio - Definition of "tax period" supports consolidation where returns/transactions span periods; Obiter - practical observations about operation of returns matching in GST regime.

Conclusions: The definition of "tax period" and the operational realities of returns justify, and do not prevent, issuance of consolidated SCNs for linked transactions spanning multiple periods.

Issue 3 - Necessity and propriety of consolidation in cases of alleged fraudulent availment/utilisation of ITC

Legal framework: Sections 73 and 74 allow statements for further periods where the grounds relied upon are the same as in the earlier notice (subject to exceptions for fraud in certain contexts); provisions contemplate detecting fraud/wilful misstatement by connecting transactions across periods.

Precedent treatment: The Court follows authority recognizing that fraudulent availment/utilisation of ITC frequently requires analysis of a series of transactions over multiple years and that consolidated notices/orders may be necessary to establish a pattern.

Interpretation and reasoning: The nature of alleged fraud in ITC cases often involves fabricated purchases/supplies and layering across years; a solitary instance in one year may not reveal the modus operandi. Consolidated SCNs allow proper analysis of inter-year chains and to demonstrate wilful misstatement or suppression. The statutory language accommodating "periods" supports such consolidation, and where details per year are set out in the impugned order, transparency and decipherability are maintained.

Ratio vs. Obiter: Ratio - Consolidation is not merely permissible but, in fraud-pleaded ITC cases, may be required to establish the fraudulent scheme; Obiter - examples of misuse of ITC and legislative/administrative concern reflected in factual narration.

Conclusions: In cases alleging fraudulent availment/utilisation of ITC, consolidation of SCNs/orders across multiple years is legally permissible and often necessary to establish a consistent pattern of wrongdoing; issuance of a consolidated notice does not violate the statutory scheme where particulars for each year are reflected.

Issue 4 - Appellability and limitation in respect of the impugned order

Legal framework: The impugned order is an appealable order under the CGST Act; statutory appeal provisions and limitation provisions (as reflected in the Court's reference to appealability) are relevant.

Precedent treatment: The Court applies settled practice that an appeal lies against the impugned order and addresses consequences of filing within the liberty granted by the Court.

Interpretation and reasoning: Given the appealable nature of the order, the petitioner is granted liberty to file an appeal within a stipulated period subject to requisite pre-deposit requirements. The Court directs that if the appeal is filed within the stipulated time, the Appellate Authority shall not dismiss it on the ground of limitation and shall decide the appeal on merits.

Ratio vs. Obiter: Ratio - Direction that appellate authority shall not dismiss on limitation if appeal filed within the Court's liberty period and shall decide on merits; Obiter - procedural instructions regarding pre-deposit and timeline.

Conclusions: The impugned order being appealable, the petitioner is permitted to file an appeal within the specified extended timeline with requisite pre-deposits; the appellate authority is mandated to entertain and decide the appeal on merits rather than on limitation grounds if filed within that period.

Cross-references

See Issue 1 and Issue 3: The permissibility established under Issue 1 is applied in Issue 3 to the specific context of fraudulent ITC, demonstrating that statutory language and practical considerations converge to permit consolidation.

See Issue 4: Remedies and procedural directions follow from the substantive conclusions on permissibility and do not negate the legal correctness of consolidated SCNs where fraud is alleged.

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