GST show cause notices cannot club multiple financial years where year-wise limitation and separate tax periods apply.

A GST show cause notice under Section 74 must relate to a specific tax period or financial year, because limitation for demand and recovery runs year-wise from the relevant due date. A notice that clubs multiple financial years or tax periods is impermissible under the statutory scheme, as it collapses separate limitation periods into one consolidated demand. Applying its earlier view, the HC held that the impugned notice and consequential order could not stand to the extent they combined distinct years. The proceedings were therefore quashed to that extent, while the revenue was left free to proceed afresh in accordance with the Act.

---

---

Issues: Whether a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017 can consolidate multiple financial years or tax periods, and whether the impugned notice and consequential order were liable to be set aside.

Analysis: The statutory scheme treats the tax liability under GST as referable to a defined tax period, and the limitation for demand and recovery under Sections 73(10) and 74(10) runs year-wise from the relevant due date. A single notice combining distinct financial years collapses separate periods having different due dates and separate limitation clocks, which is not permitted by the scheme of the Act. The Court applied its earlier view that consolidation of multiple financial years or tax periods in one notice under Section 74 is impermissible, and held that the contrary view of another High Court did not displace that binding position within its jurisdiction.

Conclusion: The impugned show cause notice and order, having clubbed multiple financial years, were quashed and set aside.

Final Conclusion: The proceedings were annulled to the extent they rested on a consolidated demand for multiple years, while leaving the revenue free to proceed afresh in accordance with the statutory framework.

Ratio Decidendi: Under the GST scheme, a demand under Section 74 must be issued with reference to the specific tax period or financial year to which the alleged short payment relates, and a consolidated notice covering multiple years is impermissible where the statute requires year-wise limitation and assessment.

---