TaxTMI 
TaxTMI 
2025 (7) TMI 1402
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.... Mr.I.Dinesh in W.P.No.7766 of 2025, Mr.Srinath Sridevan, Sr.counsel, for Mr.Adithya Reddy, in W.P.Nos.9000, 9001 & 13959 of 2025, Mr.M.Narasimha Bharathi in W.P.Nos.9100 & 15499 of 2025, Mr.J.Ashish, in WP.Nos.12084 & 22277/2025, Ms.Vandana Vyas, in W.P.No.14805 of 2025, Ms.V.Anumitha in W.P.No.15215 of 2025, Mr.R.Ganesh Kanna in WP.No.16111/2025, Mr.Adithya Reddy in WP.No.16840, 19849, 19861 & 22281/2025, Mr.P.V.Balasubramaniam, Sr.counsel, for Mr.Harish Bindumadhavan, in W.P.Nos.16845 & 16852 of 2025, Ms.B.R.Varshini in W.P.No.20367 of 2025, Mr.Joseph Prabakar, in WP.No.22808 of 2025 For the Respondents : Mr.AR.L.Sundaresan, Additional Solicitor General Assisted by Ms.Revathi Manivannan, Sr.St.counsel in W.P.No.22281 of 2025 & Mr.R.P.Pragadish, Sr.St.counsel & Mr.J.Nalinidhar, JPC, in WP.Nos.29716, 29720 & 29726 of 2024 for R1 to R4 in WP.Nos.3597 & 22808/2025 Mr.Rajnish Pathiyil, SPC in WP.No.34137/24 Mr.K.S.Ramaswamy, Sr.St.counsel & Mr.J.Vasu, Jr.St.counsel in WP.No.2270 of 2025 Mr.C.Harsha Raj, SGP, for R5 in W.P.No.3597 of 2025 & for R2 in WP.No.16111 of 2025 Mr.Sai Srujan Tayi, SPC, & Ms.Pooja Jain, JPC, in WP.Nos.7616, 7646, 7766, 9000, 9001, & 14805 of 2025 & 20367 of....
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....8 to 2022-23, the said notice will be issued 3 moths prior to the end of limitation of the 1st financial year, i.e., 2017-18. In such case, though the limitation is very much available for the subsequent financial years, viz., 2018-19 to 2022-23, the petitioners were forced to file their replies for the said notice at the very fake end of limitation. Under these circumstances, the petitioners were unable to collect all the relevant documents to substantiate their cases, which causes unnecessary hardships to the petitioners. 3.5 When a single assessment order is passed for more than one financial years, the Assessee will also face the following hardships: i) The petitioners will not be able to file an application for compounding of offences, under Section 138 of GST Act, for any particular financial year. ii) If the respondent introduced the Amnesty Scheme for any one or two financial years, the petitioner cannot avail the said Scheme without paying the amount demanded by the respondent for all the financial years included in the notice/order. iii) If the petitioner is intend to contest the issue pertaining to one or two years and is willing to remit th....
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....rring judgement dated 21.03.2025 rendered in W.A.Nos.2389 & 1397 of 2024, which was filed challenging the aforesaid Titan judgement, he would submit that based on the agreement of the parties, the said appeal was decided, wherein it was directed that the assessment orders have to be passed by the Department for each assessment years independently with a gap of minimum 4 weeks. 3.10 They had also referred the following judgements in support of their contentions: (i) M/s.Bangalore Gold Club vs. Assistant Commissioner of Commercial Taxes (Enforcement) reported in 2024-VIL-1023-KAR; (ii) M/s.Veremax Technologie Services Limited vs. The Assistant Commissioner of Central Tax reported in 2024-VIL-1028-KAR; (iii) M/s.Tharayil Medicals vs. The Deputy Commissioner and another reported in 2025-VIL-356- KER; (iv) Ghanshyam Das vs. Regional Assistant Commissioner of Sales Tax, Nagpur reported in MANU/SC/0216/1963; (V) Kamalammal vs. Board of Revenue by the Commissioner of Commercial Taxes, Madras and another reported in 1963 SCC OnLine Mad 307; (vi) Shyama Charan Shukla vs. The State of Madhya Pradesh and others reported in MANU/MP/0051/1....
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....be decided is as to whether the respondents can issue single show cause notice for more than one financial year ? 7. Now, let me examine the provisions of Sections 73 & 74 of the GST Act, which deals with regard to the issuance of show cause notice. Hence, it would be apposite to extract the relevant portions of Sections 73 & 74 of the GST Act, which read as follows: "73. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice al....
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....ce along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under sub-section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods other than those covered under subsection (1) are the same as are mentioned in the earlier notice. (5) to (8) ................. (9) The proper officer shall, after considering the representation, if any, made by the person ....
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....hen the Act mandates for issuance of notice in a particular manner, the notice has to be issued accordingly. Therefore, there is a clear bar for "bunching of show cause notice", i.e., issuance of single show cause notice for more than one financial year. 11. Section 73(10)/74(10) of the GST Act specifically provides the time limit of 3 years/5 years from the last date for filing the annual returns for the financial year to which the tax dues relates to. Thus, the GST Act considered each and every financial year as separate unit, due to which, the limitation has been fixed for each and every financial year separately. When such being the case, clubbing more than one financial year, for the purpose of issuance of show cause notice, would not be considered as in accordance with the provisions of Section 73/74 of the GST Act. Therefore, the limitation period of 3 years/5 years would be separately applicable for every financial year, thus, the limitation period would vary from one financial year to other. It is not that the limitation would be carried over or continuing in nature, so as to, club the financial years together. For these reasons also, the bunching of show cause notice i....
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....equired to be furnished" 17. A reading of the above Section would show that "tax period" means the period, for which, the return is required to be furnished. Therefore, based on the filing of returns, the tax period will be determined. In GST Law, an Assessee is required to file monthly return as well as annual return. Therefore, based on the monthly return, notice, under Section 73/74, can be issued, for any particular month. Likewise, based on the annual returns, notice, under Section 73/74, can be issued for the entire financial year or otherwise, as decided by the department, but not more than the relevant financial year. 18. Now, it would be apposite to extract the definition of the word "return" in terms of Section 2(97) of the GST Act, which reads as follows: 2(97) "return" means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder; 19. A reading of the above would show that the "return" is prescribed by the Act or the Rules made thereunder. As stated above, an Assessee is required to file monthly return as well as annual return and issuance of show cause notice should be strictly based on the tax per....
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.... financial year. Hence, the rights of the petitioners, to file an appeal against the assessment order, will get prejudicially affected. 25. That apart, when a notice was issued and order was passed under Section 74 of the GST Act by clubbing more than one financial year, where the case was made out for any particular tax period and there is a scope to set aside the said order for remaining tax period, the petitioners' right to contest the matter pertaining to any particular tax period under Section 73 of the GST Act will get affected since the Department will look into the said matter from the perspective of commission of offence under Section 74 of the GST Act for all the years mentioned in the notice when it was intact committed only particular financial year. 26. In a similar situation, this Court has already held that the bunching of show cause notice is impermissible vide order passed in Titan case, wherein, it has been stated as follows: "13. The main contention of the petitioner was that bunching of show cause notices was not allowed in law and it is against the provisions of Section 73 of the Act. Section 73(10) of the Act specifically provides a time lim....
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.... and the same is liable to be quashed." 27. Further, in the judgement rendered in M/s.Tharayil Medicals case by the Hon'ble Division Bench of Kerala High Court, it has been stated as follows: "11. When we read sub-sections (9) and (10) of Section 74, which specifically refer to " financial year to which the tax not paid or short paid or input tax wrongly availed or utilised relates" while passing the final order of adjudication, it presupposes that independent show cause notice be issued to the assessee for each different years of assessment while proceeding under Section 74. We are constrained to hold so because, as we noted earlier, the assessee can raise a distinct and independent defence to the show cause notice issued in respect of different assessment years. In other words, the entitlement to proceed and assess each year being separate and distinct, and further the time limit being prescribed under the Statute for each assessment year being distinct, we see no reason as to why we should not hold that separate show cause notices are required before proceeding to assess the assessee for different years of assessment under Section 74. 12. There is yet an....