Clubbing Multiple Tax Periods In a Single Notice Is Impermissible under GST Act: Karnataka HC Quashes SCN [Read Order]

In a significant case, the High Court Of Karnataka held that clubbing multiple tax periods in a single notice is impermissible under Central; Goods and Service Tax ( CGST ) Act, 2017 and quashed the show cause notice (SCN) issued.

Veremax Technologie Services Limited , the petitioner challenged the impugned show cause notice dated 03.05.2024 and the order dated 21.11.2023 issued by the respondent for the tax periods 2017-18, 2018-19, 2019-20 and 2020-21. The petitioner contended that these notices, issued under Section 73 of the Central Goods and Services Tax (CGST) Act, 2017, are flawed due to the improper consolidation of multiple tax periods into a single show cause notice.

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The petitioner’s primary argument is that the respondent cannot issue a common show cause notice by grouping the tax periods from 2017-18 to 2020-21. The petitioner asserts that under Section 73 of the CGST Act, a specific action must be completed within the relevant year, and the limitation period of
three years applies separately to each assessment year. Consequently, the petitioner contends that clubbing multiple tax periods in a single notice is impermissible, and separate notices should have been issued for each assessment year under sub- Section (1) of Section 73.

It was observed that Supreme Court's decision in State of Jammu and Kashmir and Others vs. Caltex (India) Ltd.,wherein it was held that where an assessment encompasses different assessment years, each assessment order can be distinctly separated and must be treated independently.

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A single bench of Justice S.R.Krishna Kumar observed that ection 73(10) of the CGST Act mandates a specific time limit from the due date for furnishing the annual return for the financial year to which the tax due relates. The law stipulates that particular actions must be completed within a designated year, and such actions should be executed in accordance with the law's provisions.

The Court concluded that the show cause notices issued by the respondent are fundamentally flawed. The practice of issuing a single, consolidated show cause notice for multiple assessment years contravenes the provisions of the CGST Act and established legal precedents.

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While allowing the petition , the Court quashed the impugned show cause notice issued by the respondent for the tax periods 2017-18, 2018-19, 2019-20 and 2020- 21.Sri. Shankare Gowda M.N. appeared for the petitioner and Sri. Unnikrishnan M appeared for the respondent.

To Read the full text of the Order CLICK HERE 

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