TaxTMI 
TaxTMI 
2025 (10) TMI 867
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....ENT: (PER. BHARATI DANGRE, J.) 1. The two Writ Petitions are heard collectively since there is a common question of seminal importance being, whether it is permissible to initiate proceedings under the Central Goods and Service Tax Act, 2017 (CGST Act, 2017) against the Assessee by clubbing or bunching of different financial years, as it is urged that under the Scheme of the CGST Act, 2017 which provides for levy and collection of tax on intra State supply of Goods and Services by the Central Government, the Tax period commensurate the period of Return, which necessarily is dependent on the financial year. 2. Upon the pleadings being completed, we have heard the learned Counsel, Mr Bharat Raichandani for the Petitioner, Ms Asha Desai, learned Standing Counsel representing Respondents No.1 and 2 and the learned Additional Government Advocate, Mr Shubham Priolkar, representing the State of Goa. 3. By consent of parties, we deem it appropriate to issue Rule which is made returnable forthwith. For the sake of convenience, we refer to the pleadings in M/s Milroc Good Earth Developers in Writ Petition No. 2203 of 2025 (Filing). The Petitioner, a Partnership Firm, involved in ....
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....eveloper and the Developer undertook to construct new buildings and hand over the same to the members of the Society and the Petitioner was permitted to use the FSI for the construction of the sale component. 5. Based on the intelligence collected by the Department that the Petitioner is engaged in supply of construction service but has failed to pay GST on the construction services, certain data/documents were collected and summons were issued to the Petitioner under Section 17 of the CGST Act. The case of the Petitioner is that it cooperated in the proceedings by attending the summons from time to time but being not satisfied with the stand adopted, impugned Show Cause Notices were issued fastening a liability amount on the Petitioner, on the construction services provided to the landowner. It was also alleged that the Petitioner availed ineligible Input Tax Credit (ITC) and he is not entitled to reverse the ITC. 6. It is in this background, the Show Cause Notices were issued but instead of getting into the merits of the matter, Mr Raichandani, has pressed into service, one proposition of law which, according to him, has been well settled by various decisions of the distinc....
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....g of the annual Return for the financial year to which the tax not paid relates. It is, therefore, his submission that the notice shall be issued for any Tax period based on filing of Return, namely, monthly or annual Return and if it is based on annual Returns, it can be only for the Tax period within the relevant financial year but the Act do not contemplate assessment beyond the relevant financial year. According to Mr Raichandani, once the Act mandates for issuance of notice in a particular manner, it has to be done in that same manner and in no other way. It is the contention of Mr Raichandani that the Scheme involved never contemplated consolidated assessment. Apart from this, it is also the submission of Mr Raichandani that when there is limitation prescribed in the Scheme, by issuing consolidated notices, the time limit for subsequent financial year get curtailed and this would cause serious prejudice to the Petitioner and this could never have been the intention of legislature, when it introduced Sections 73/3, 74/3 in the statute, which refers to the issuance of statements for respective tax periods and he would submit that a notice under Section 73/1, 74/1 is issue....
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....n light of the above counter arguments, we deem it appropriate to issue Rule, and by making the Rule returnable forthwith, we have taken up the Petition for final hearing. As far as the preliminary objection raised by Ms Asha Desai about the Petition being premature, we find substance in the submission of Mr Raichandani who would submit that since the issue raised before this Court is a jurisdictional issue and if the Authority lack jurisdiction to have a composite assessment for different tax periods/assessment years, then the formality of responding to the Show Cause Notice shall not be encouraged and we agree with him, as we are pronouncing upon the issue as to whether it is permissible to issue Show Cause Notice covering different tax periods, we do not find it appropriate to relegate the Petitioners to file their response and let the issue be decided by the Authority as, in any case, we find that the jurisdiction in the Authority will be dependent upon the Scheme of the Statute and we have heard respective Counsel on the merits of the matter. 11. The Central Goods and Services Tax Act, 2017, an Act which makes provision for levy and collection of tax, on intra-State supply ....
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....ory registration in prescribed cases, apart from setting out the procedure for registration. Section 35(1), included in Chapter VIII under the head of 'Accounts and Records', make it mandatory for every registered person, at his principal place of business, a true and correct account of -- (a) production or manufacture of goods; (b) inward and outward supply of goods or services or both; (c) stock of goods; (d) input tax credit availed; (e) output tax payable and paid; and (f) such other particulars as may be prescribed Section 36 prescribe the period for retention of accounts and by virtue of this provision, it is imperative for every registered person to maintain books of accounts and or other records in accordance with the provisions of sub-section (1) of section 35 shall retain them until the expiry of seventy-two months from the due date of furnishing of annual Return for the year pertaining to such accounts and records. 13. Chapter IX contain provision pertaining to Returns and as per Section 37, every registered person, shall furnish electronically, in such form and manner as may be prescribed, the details of out....
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....oresaid, comes the provision of payment of taxes included in Chapter X and the most crucial provision under Section 49, which pertain to payment of tax which shall be credited to the electronic cash ledger to be maintained in such manner as may be prescribed and it also prescribe the manner in which the amount of input tax credit available in the electronic cash ledger of the registered person shall be utilised. The explanation appended to the said Section has defined the expression 'tax dues' to mean the tax payable under the Act and 'other dues' to mean the interest, penalty, fee or other amounts payable under the Act. 16. In the Scheme of CGST, our attention is drawn to Chapter XII, a provision for assessment and we find Section 59 is a provision for self-assessment and furnish a Return for 'each Tax period' as specified in Section 39. Therefore, there is a provisional assessment where the taxable person is unable to determine the value of goods or services or both or determine the rate of tax applicable thereto, he may request the proper officer in writing giving reasons for payment of tax on a provisional basis, pursuant to which the proper officer shall pass an order withi....
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....hich contemplate a provision for annual Return under Section 44, which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the Return furnished for the financial year, with the audited annual financial statement for every financial year. The Act thus contemplate for furnishing of annual Returns for every financial year along with the audited final statement. 18. When we have perused the scheme of assessment and payment of tax, we find that the taxes payable under the Act commensurate with Return filed for 'each tax period' and this is may be in the form of self-assessment or provisional assessment as provided in the Act. However, what is important to note is that there is a prescription of period of five years of due date on which 'annual Return' is filed for the relevant financial year and provision of payment and recovery is also included in the statutory scheme in form of Section 73 and 74, which underwent significant amendment by the Act 15 of 2024 and the provision as per sub-section (12) shall be applicable for determination of tax pertaining to the period up to Financial Year 2023-24 and for financial year 2024-25 and on....
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....ear, 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: "where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods." 11. Section 73(3)/74(3) of the GST Act refers to issuance of "statement", for subsequent "tax periods", containing the details of tax liabilities pertaining to the respective tax periods. If a notice, under Section 73(1)/74(1) of the GST Act, is issued for any particular tax period, a statement shall be issued, in terms of Section 73(3)/74(3) of GST Act, for the subsequent months and the said statements shall deemed to be a notice issued under Section 73(1)/74(1) of the GST Act. 12. In Sec....
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.... 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 case of the assessee will fall under Section 73 of the CGST/SGST Act. We find that insofar as the time limit prescribed under Section 73(10) of the CGST/SGST Act is concerned, it is three years instead of five years and further, the aspect of fraud, wilful misstatement and suppression do not arise for consideration in proceedings under Section 73. Thus, by issuing a composite notice, the assessing authority, cannot bypass the mandatory requirement of Section 73 to complete the assessment by falling back on a larger period of limitation under sub-section (10) of Section 74. If such a recourse is permitted, then certainly the said action would be a colourable exercise of the power conferred by the statute and will offend express provisions of the CGST/SGST Act qua limitation. This reason would also prompt us to hold that in cases where the assessing officer finds that an assessee is liab....
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....where the issue that fell for consideration was whether the Order-in-Original dated 23.01.2025 passed by the Additional Commissioner, Adjudication (DGGSTI), North Delhi and the facts reveal, that the entity, a sole proprietorship of Mr Gaurav Gupta registered under the VAT regime migrated to the GST regime and a search operation was carried out at the residential premises of the Petitioner and various files/records were resumed by the GST Department and the proprietor was arrested by the Directorate of GST Intelligence. A Show Cause Notice came to be issued along with form DRC-01 by the DGGI, for five financial years from 2017-2018 to 2021-2022 demanding a sum of Rs. 83,76,32,528/- on the ground of alleged fraudulent availment and wrongful passing of Input Tax Credit. It is in this background, the Delhi High Court appreciated the submission advanced in light of the specific provision of Section 74(9) of the CGST 2017 in the backdrop of Section 75. It is in the wake of whole sole fraud which attracted the attention and was the focus point of the decision, the Bench took into consideration the definition of the term 'tax period' as defined in Section 106 and when it interpreted th....