GST Officers can issue Consolidated Demand SCNs for Multiple Financial Years: CBIC validates ‘Bunching’ [Read Circular]

The Central Board ofIndirect Taxes and Customs (CBIC) has formally clarified that Goods and Services Tax (GST) officers are legally empowered to issue consolidated or “bunched” Show Cause Notices (SCNs) that jointly cover multiple financial years.

The CBIC issued the clarification through an internal letter dated September 2025 addressed to all Principal Chief Commissioners/ Chief Commissioners of CGST Zones. The letter also contains a comprehensive list of issues that often arise in this situation and policy comments formulated on the basis of relevant legal provisions under the Central GST Act, 2017 (CGST Act).

The clarification from CBIC has been issued in response to extensive litigation before jurisdictional high courts challenging the validity of multi-year SCNs on grounds that Sections 73 and 74 of the CGST Act require separate notices for each financial year.

Rejecting this view, the Board states that the statute contains no restriction limiting SCNs to a single financial year. Instead, it has been stated that Sections 73(1), 73(3), 74(1) and 74(3) expressly allow officers to issue notices “for any period” or “for such periods,” language that clearly accommodates consolidated notices in the event that the grounds of demand are common.

The Board further clarifies that the practice of consolidation is only a procedural mechanism used to avoid duplication of proceedings and reduce compliance burden for taxpayers.

A consolidated notice does not alter or extend statutory limitation. Under Sections 73(10) and 74(10), limitation continues to run independently for each financial year as included in the notice. Even when a single composite notice is issued, the limitation threshold for each year is applicable by itself, and orders must be passed within the prescribed deadlines.

To reinforce its position, CBIC relied on the Delhi High Court ruling in Ambika Traders v. Additional Commissioner, DGGSTI (2025), where the Court upheld the validity of consolidated SCNs, particularly in cases involving fraudulent or bogus Input Tax Credit (ITC).

The Court held that fraud often spans several financial years and that a consolidated notice may be not only permissible but necessary establish the illegal modality adopted by such businesses and entities.

Contrary Rulings

The letter also references the contrary ruling of the Madras High Court in M/s. Titan Company Ltd. v. Joint Commissioner of GST & Central Excise (2023) and by the Kerala High Court in M/s. Tharayil Medicals v. Union of India (2025) does not have pan-India applicability and therefore cannot and do not constitute binding precedents for authorities functioning in other States or Union Territories.

A notable decision of the Supreme Court in State of J&K v. Caltex (India) Ltd. (1966) was referenced which held that composite tax assessments can be segregated to identify and adjudicate the portion for the period that is valid from the one that is not. The CBIC has maintained that this principle supports the validity of multi-year SCNs where officers clearly disclose year-wise tax liability.

CBIC additionally confirms that consolidated SCNs do not affect a taxpayer’s eligibility under the GST Amnesty Scheme or the provisions for compounding offences under Section 138 of the CGST Act. Taxpayers may still settle eligible years or contest specific years separately. Even if consolidation is viewed as an irregularity, CBIC notes that Section 160 protects such notices from invalidation when they conform to the Act’s substantive intent.

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The CBIC has directed all field formations including GST administrative units and officers who operate in the field, to rely on these standard policy comments and defend consolidated SCNs provided that the individual limitation requirements of each case are duly met and that taxpayers are not prejudiced due to the consolidation of demand notices.

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