Composite GST show cause notice clubbing multiple tax years for input tax credit reversal held invalid; notice quashed.

A dominant issue was whether a single/composite show cause notice under ss. 73/74 of the CGST/KGST Act could validly club multiple tax periods/financial years to propose reversal of input tax credit. Applying its earlier ruling that such bunching/consolidation of distinct periods in one notice is invalid and illegal, the HC held the composite notice to be unsustainable in law; consequently, the impugned show cause notice and the consequential order were quashed, and the writ petition was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

(a) Whether a Single/Composite show cause notice that clubs/consolidates/bunches multiple tax periods/financial years/block periods is legally permissible under the CGST/KGST regime, and whether such a notice is without jurisdiction.

(b) Whether, once such impermissible clubbing is found, the impugned show cause notice and the consequential adjudication order (and all further proceedings pursuant thereto) are liable to be quashed, while reserving liberty to the authorities to initiate proceedings afresh in accordance with law.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (a): Validity and jurisdiction of a Single/Composite show cause notice covering multiple tax periods/financial years

Legal framework: The Court proceeded on the basis that show cause notices are issued under Sections 73/74 of the CGST/KGST Act, 2017, and examined the permissibility of issuing a Solitary/Single/Composite notice spanning multiple periods.

Interpretation and reasoning: The Court treated the controversy as directly covered by a prior decision of the same Court, which had conclusively held that "clubbing/ consolidation/ bunching/ combining of multiple tax periods/financial years" into a Single/Composite show cause notice under Sections 73/74 is "illegal, invalid, impermissible and without jurisdiction or authority of law" and "contrary to the provisions" of the CGST/KGST Act. Applying that binding reasoning to the present controversy, the Court held that the impugned notice suffered from the same defect because it related to multiple tax periods/financial years.

Conclusion: A Single/Composite show cause notice that combines multiple tax periods/financial years/block periods is impermissible in law and is without jurisdiction/authority of law; hence it is invalid.

Issue (b): Consequences-whether the impugned show cause notice and consequential order should be quashed; liberty to re-initiate proceedings

Legal framework: The Court exercised writ jurisdiction to grant certiorari-type relief against an invalid show cause notice and to address the validity of further proceedings/orders pursuant to such notice.

Interpretation and reasoning: Having held that the foundational show cause notice is vitiated due to illegal clubbing of multiple periods, the Court concluded that the notice "as well as" the subsequent adjudication order based on it "deserve to be quashed." The Court further followed the earlier decision's approach that, despite quashing, the authorities may be reserved liberty to initiate proceedings afresh "in accordance with law," and the affected party would be entitled to contest/defend such fresh proceedings.

Conclusion: The Court quashed (i) the impugned show cause notice, (ii) the impugned adjudication order, and (iii) all further proceedings/orders/notices pursuant thereto, while expressly reserving liberty to the authorities to initiate appropriate proceedings in accordance with law, with a corresponding right to contest/defend.

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