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of <h1>Short payments of GST and clubbing of tax periods barred; notice under Section 74 quashed in part.</h1> Decision addresses short payments of GST and the impermissibility of clubbing distinct tax periods when issuing show cause notices under the CGST Act. The ... Short payments of GST - Suppression of taxable value - clubbing of period, while issuing notice u/s 74 of the CGST Act - HELD THAT:- The issue involved is covered by a judgment passed by the Division Bench of this Court at Goa in M/s. Milroc Good Earth Developers Vs. Union of India & Ors. [2025 (10) TMI 867 - BOMBAY HIGH COURT], wherein, the Court held that if an authority lacks jurisdiction to have composite assessment for different tax periods/assessment years, then the formality of responding to show cause notice shall not be encouraged - As could be seen, the Division Bench has, in categorical terms, held that there is no scope for consolidating various financial years/tax period while issuing show cause notice under Section 74 of the CGST Act. The aforesaid judgment was then considered by the Division Bench of this Court in Rite Water Solutions (India) Ltd. Vs. Joint Commissioner, CGST & Central Excise, Nagpur and Ors. [2025 (11) TMI 1939 - BOMBAY HIGH COURT], wherein, the Court reiterated that there is no scope for consolidating various financial years/tax period while issuing show cause notice under Section 74 of the CGST Act. In the present case, since this Court has, subsequent to decision of the Delhi High Court, taken a different view, the authorities below will be bound by the subsequent judgments. The Hon’ble Supreme Court has neither stayed nor overruled the view taken in above two cases. The argument of Counsel for respondent nos. 2 and 3, therefore, cannot be accepted. It is well settled that despite alternate remedy, the Writ Petition is maintainable, at least in four contingencies, viz., a) the Writ Petition has been filed for enforcement of a fundamental right protected by Part – III of the Constitution of India; b) there has been a violation of the principles of natural justice; c) the order or proceedings are wholly without jurisdiction; or d) the vires of a legislation is challenged. The Counsel ought not to have wasted time on this point, particularly when he was put to notice. The show cause notice issued in September – 2023 by respondent no.2 is quashed and set aside - Petition allowed in part. Issues: Whether a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017 can validly club or consolidate multiple financial years/tax periods into a single notice, and whether the impugned notice issued in September 2023 is maintainable.Analysis: The Court examined the statutory scheme of assessment and recovery under the CGST Act, noting the concept of tax being tied to distinct tax periods (monthly or annual returns) and the limitation framework embodied in Sections 73 and 74 including the timelines in sub-section (10). The Court considered binding precedents of this High Court which held that there is no scope for consolidating different financial years/tax periods in a single show cause notice under Section 74, and contrasted those decisions with a contrary view from another High Court. The Court applied the principle that authorities within the State are bound by the law declared by this High Court, and found the petitioner's challenge to be a substantive challenge to jurisdiction in issuing a consolidated notice under Section 74.Conclusion: The show cause notice issued in September 2023 under Section 74 of the CGST Act is quashed and set aside. The respondents are at liberty to re-issue a notice only strictly in accordance with the provisions of Section 74 and subject to any other legal impediment. Costs previously imposed were recalled and the petition is disposed of accordingly.Ratio Decidendi: Section 74 of the CGST Act must be applied with regard to distinct tax periods and does not permit consolidation of multiple financial years into a single show cause notice; a consolidated notice issued in contravention of that scheme is liable to be quashed.
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