TaxTMI 
TaxTMI 
2025 (7) TMI 1401
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....passing the assessment orders for each and every financial years under section 73 and 74 of the GST Act. When such being the case, the notice under said Sections shall be issued to the Assessee separately for each financial year. Hence, he would contend that the bunching of notice for more than one financial year is against the spirit of section 73 and 74 of GST Act. 2.3 He would also submit that while bunching, the show cause notices were issued at the fake end of the limitation period, due to which, the petitioner may not be able to collect the evidences within time. In this case, the show cause notice, which was issued for more than one financial year, viz, 2017-18 to 2022-23, had been 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. 2.4 ....
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.... which tax was not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised. Therefore, he would submit that independent notices have to be issued for each and every financial years, otherwise, the interest of the petitioners would be prejudicially affected. Further, he would contend that the bunching of show cause notices/orders is bad in law. In this regard, he had referred to the judgement of this Court in Titan Company Ltd., vs. Joint Commissioner of GST & Central Excise reported in (2024) 15 Centax 118 (Mad.), wherein it has been held that bunching of notices is impermissible. 2.8 Further by referring 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. 2.9 Therefore, he prayed this Court to quash the impugned order passed by the respondent since the same is unsustainable in law. 3. Respondents' submissions: 3.1 ....
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.... 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 along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder. (2) The proper officer shall issue the notice under sub-section (1) at least three mont....
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....imit 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 chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due d....
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....an one financial year. 10. 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 is impermissible. In this regard, the Constitution Bench of the Hon'ble Apex Court in the decision rendered, which was reported in AIR 1966 SC 1350 (State of Jammu and Kashmir and Others v. Caltex (India) Ltd) has held as follows....
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....mined. 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. 17. 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; 18. 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 periods, which is determined based on filing of returns. Therefore, it is clear that the show cause notice can be issued either based on the monthly return or based on the annual return for the entire financial year or part thereof as ....
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.... 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. 25. 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 limit of three years from the due date for furnishing of annual return for the financial year to which the tax due relates to. In the present case, notice was issued under Section 73 of the Act for determination of the tax and therefore....
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....ions (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 another reason why we should hold that separate show-cause notices are issued for different assessment years. There may be cases where proceedings are initiated in the guise of a show cause notice under Section 74 wherein, on facts, the....