2026 (1) TMI 834 - HC - GST

Composite intimation and show cause notice across multiple tax periods: composite notices quashed; authorities may reissue separately.

Validity of composite intimation and show cause notice across different financial years is addressed: where subject matters pertain to distinct tax ... Validity of composite intimation and show cause notice across multiple tax periods - Adjudicatory competence to issue composite notices and requirement of separate proceedings where subject matters differ - Limitation for adjudication and effect of non-consideration of statutory reply - definition of 'tax period' - HELD THAT:- Without going into the merits of the case and subject matter of Intimation, DRC-01A as well as Show Cause Notice DRC-01, in view of undisputed plea that subject matters of the financial years involved in the present case are different and therefore, separate Intimations and if necessitated so after considering the response separate Show Cause Notices DRC-01 are to be issued, Intimation dated 20.06.2024 (Annexure P-1) and Show Cause Notice dated 05.08.2024 (Annexure P-2) are quashed and set aside along with all consequential orders issued in pursuance thereto, but with liberty to the respondents to take appropriate action in accordance with law on or before 15.12026, if so required and thereafter proceed further as per relevant provisions of law. It is observed that for pendency of the present petition and for not filing response to Show Cause Notice (Annexure P-2) within prescribed time by the petitioner, limitation period shall not come in the way of the authority concerned for initiating process and passing appropriate order in the matter either way, however the same shall be done within a reasonable period, but not beyond 31.3.2026. The petition along with pending application(s), if any, is disposed of in the aforesaid terms. Issues: (i) Whether a composite intimation in Form DRC-01A and composite show cause notice in Form DRC-01 under Section 74 of the CGST Act can be issued by clubbing tax demands pertaining to multiple financial years where the subject matters for those years are different; (ii) Whether the intimation dated 20.06.2024 (DRC-01A) and show cause notice dated 05.08.2024 (DRC-01) should be quashed and whether the authority has liberty to initiate fresh proceedings within a prescribed period.Issue (i): Whether a composite intimation/notice by clubbing multiple financial years is permissible when subject matters differ.Analysis: The issue focuses on the permissibility of issuing a single composite intimation or show cause notice under Section 74 where returns/periods and the subject matter differ across financial years. The statutory definition of 'tax period' and the nature of the subject matters for the years in question were examined to determine if consolidation was permissible. Consideration was given to whether the matters across years were one and the same such that a composite proceeding would be valid.Conclusion: Composite intimation and composite show cause notice by clubbing demands for multiple financial years where the subject matters are different are not maintainable; the conclusion is in favour of the assessee.Issue (ii): Whether the specific intimation dated 20.06.2024 and show cause notice dated 05.08.2024 should be quashed and whether the authority may re-initiate proceedings.Analysis: The determination addressed the validity of the impugned DRC-01A and DRC-01 issued in the present facts and the consequences flowing from defective consolidation. The availability of statutory limitation for adjudication and the effect of non-response by the petitioner were considered only to the extent necessary to allocate liberty to the authority to act within law and time limits fixed by the Court.Conclusion: The intimation dated 20.06.2024 (DRC-01A) and show cause notice dated 05.08.2024 (DRC-01) are quashed and set aside. The respondents are granted liberty to initiate appropriate proceedings afresh in accordance with law within the timelines specified by the Court; the conclusion is in favour of the assessee.Final Conclusion: The decision results in quashing the impugned composite intimation and show cause notice while permitting the revenue to initiate separate proceedings as required by law within the time specified by the Court, preserving the authority's right to adjudicate where lawfully permissible.Ratio Decidendi: Where the subject matter or issues for different tax periods/financial years are not the same, consolidation into a single composite intimation or show cause notice under Section 74 of the CGST Act is impermissible; defective composite proceedings must be quashed, subject to the authority's right to re-initiate separate proceedings in accordance with statutory limitation and procedure.