The Madras High Court recently observed that the bunching of the show cause notice ( SCN ) is against spirit of provisions of Section 73 of the Central Goods and Service Tax Act, 2017 ( CGST Act ).
N.L.Rajah, Senior Counsel appearing on behalf of the petitioner submitted that the first and foremost grievance of the petitioner is that the respondent had issued bunching of show cause notices dated 28.09.2023 for five Assessment Years starting from 2017-18 to 2021-22.
According to the Senior Counsel, in terms of Section 73 of CGST Act, 2017, bunching of show cause notices is not permissible and it only provides for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or wilful misstatement or suppression of facts.
Further, it was submitted that sub-section 10 of Section 73 provides that an order determining the tax from a person should be passed within three years from the due date for furnishing of annual return for the financial year to which the tax due relates to and therefore, he would submit that determination of tax due under Section 73 is with reference to a financial year and the limitation date to complete the proceedings and issue an order is three years from the due date to file annual return for that particular financial year.
On the other hand, the Senior Standing Counsel appearing on behalf of the respondents submitted that there is no provision under Section 73 of the CGST Act prohibiting the respondents from issuing bunching of show cause notices and in the absence of such provision, the petitioner cannot come before the Court and that the respondent is not empowered to issue bunching of show cause notices.
A Single Bench of Justice Krishanan Ramaswamy observed that “Therefore, I find fault in the process of issuing of bunching of show cause notices and the same is liable to be quashed. However, since the petitioner has made an representation before the authorities concerned for splitting up of the show cause notices.”
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