Single GST show cause notice clubbing multiple tax periods u/s73/74 held invalid; notice and proceedings quashed.

A dominant issue was whether a single/composite show cause notice under s.73/74 of the CGST/KGST Act, 2017 could validly club/consolidate multiple tax periods/financial years/block periods. Relying on binding HC precedent holding such bunching impermissible, the Court held that consolidation of multiple periods in one notice is invalid and illegal, warranting interference in writ jurisdiction. Consequently, the impugned show cause notice and all consequential proceedings, orders, and notices issued or proposed pursuant to it were quashed, and the petition was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

1) Whether issuance of a single/composite show cause notice by clubbing/consolidation/bunching/combining multiple tax periods/financial years/block periods under the CGST/KGST regime is illegal, impermissible, and without jurisdiction.

2) Whether, on the facts of the case, the impugned show cause notice covering multiple tax periods/financial years warrants interference by the Court, and if so, what consequential relief should follow.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity and jurisdiction to club multiple tax periods/financial years in a single/composite show cause notice

Legal framework (as discussed by the Court): The Court treated the controversy as governed by the legal position already concluded by it regarding show cause notices issued under Section 73/74 of the CGST/KGST Act, as addressed in an earlier decision relied upon and applied in the present case.

Interpretation and reasoning: The Court held that the central controversy is "directly and squarely covered" by its earlier ruling, wherein it had conclusively determined that clubbing/consolidation/bunching/combining multiple tax periods/financial years into a solitary/single/composite show cause notice under Section 73/74 is contrary to the CGST/KGST Act. Applying that binding determination to the present notice-which similarly related to multiple tax periods/financial years/block periods-the Court treated the defect as going to jurisdiction/authority of law.

Conclusion: Clubbing/consolidation/bunching/combining of multiple tax periods/financial years/block periods in a single/composite show cause notice is illegal, invalid, impermissible, and without jurisdiction or authority of law and contrary to the CGST/KGST Act; consequently, such a notice cannot be sustained.

Issue 2: Whether the impugned notice and consequential proceedings should be quashed; scope of liberty to proceed afresh

Legal framework (as applied by the Court): The Court applied its earlier concluded position that a composite notice covering multiple periods is impermissible and vitiates the notice and consequential proceedings. The Court also applied the remedial approach adopted earlier, namely quashing with liberty to initiate appropriate proceedings in accordance with law.

Interpretation and reasoning: Since the impugned notice was of the same character as the one previously held invalid (i.e., a single/composite notice encompassing multiple tax periods/financial years/block periods), the Court found that it "deserve[s] to be quashed." The Court extended the consequence not only to the impugned notice but also to "all further proceedings, orders, notices etc., pursuant thereto initiated/to be initiated," because the foundational notice itself was not legally sustainable.

Conclusion: The Court quashed the impugned show cause notice and all consequential proceedings pursuant to it. However, the Court reserved liberty to the authorities to initiate appropriate proceedings in accordance with law, and clarified that if such proceedings are initiated, the assessee would be entitled to contest/defend the same in accordance with law.

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