Bombay HC Refers Validity of Consolidated GST SCNs Across FYs to Larger Bench Amid Conflicting HC Rulings [Read Order]

In a recent ruling, the Bombay High Court referred the question of validity of consolidated Goods and Services Tax (GST) show cause notices issued across multiple financial years to a Larger Bench because there are conflicting views from different High Courts.

The case came from a batch of writ petitions filed by many assessees including Rollmet LLP challenging show cause notices issued under Sections 73 and 74 of the CGST Act, 2017. The petitioners argued that the department issued single consolidated notices by clubbing multiple financial years, which is against the scheme of the Act.

The counsel argued that GST law requires assessment and limitation to be applied year-wise, and issuing a combined notice violates Sections 73(10) and 74(10) which fix time limits for each financial year.

The petitioners relied on earlier judgments like Milroc Good Earth Developers and also decisions of Kerala, Madras and Karnataka High Courts, which held that such consolidated notices are not allowed.

On the other side, the revenue counsel argued that there is no restriction in the CGST Act for issuing consolidated notices. It argued that the law uses words like “any period” and “such periods,” which allows covering multiple years in one notice. They also argued that limitation is still calculated separately for each year and such notices do not extend the time limits.

The Division Bench of Justice G. S. Kulkarni and Justice Aarti Sathe observed that Sections 73 and 74 form a complete code for deciding tax liability and the language of these sections does not restrict notices to only one financial year. It observed that sub-sections (3) and (4) allow including other periods in the same proceedings if the grounds are same, so multiple periods can be covered.

The Bench explained that limitation under Sections 73(10) and 74(10) is for passing the final order and not for issuing show cause notice. It pointed out that both are different things and limitation for each financial year still remains even if notice is consolidated.

The court also observed that there is clear difference of opinion between High Courts. Some High Courts say consolidated notices are not valid, while Delhi High Court and Allahabad High Court have allowed such notices in cases involving complex transactions like wrongful ITC claims across many years.

Considering these conflicting views and importance of the issue, the court observed that the matter needs proper decision by a Larger Bench. It also pointed out that the earlier Bombay High Court decision in Milroc may need reconsideration.

The court also said that in cases where interim orders are already given, those will continue until the Larger Bench decides the issue.

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