Single GST SCN for Multiple Years Wrongly Aggregates Different Tax Periods with Different Due Dates & Limitations: Bombay HC Quashes Notice [Read Order]

The Nagpur Bench of the Bombay High Court recently quashed a consolidated Show Cause Notice (SCN) covering multiple financial years, issued under Section 74 of the Central Goodsand Services Tax Act, 2017 (CGST Act), noting that the GST framework treats each financial year as a separate tax period for assessment and recovery and that consolidation contravenes statutory limitations and due dates that are applicable to each period individually and independently.

A writ petition was filed by M/s Marfani Steel Impex, challenging a SCN dated 30 May 2025 issued by the Joint Commissioner, CGST, Nagpur-I.

The consolidated SCN was issued by the department against the petitioner-assessee, alleging suppression of taxable value and short payment of tax.

Shyam Dewani appearing for the petitioner contended that the issue involved is covered by a Division Bench order in M/s. Milroc Good Earth Developers Vs. Union of India & Ors. (2025), where the Court held that there is no scope for consolidating notices for various financial years and tax periods.

Ketki Jaltare-Vaidya, appearing for the Revenue, meanwhile argued that consolidation was permissible and relied on the Delhi High Court’s judgment in Mathur Polymers v. Union of India (2025), which upheld the validity of composite notices to prove illegal modality in cases involving fraudulent availment of Input Tax Credit (ITC), or when transactions are spread across several years.

The revenue counsel further buttressed their position, stating that the decision had been contested before the Supreme Court in a Special Leave Petition, where the Apex Court declined to interfere with the impugned judgment, rendering it final.

However, the Division Bench comprising Justice Anil L. Pansare and Justice Nivedita P. Mehta disagreed, reiterating that the Bombay High Court’s own decisions in Milroc and Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & C.Ex., Nagpur (2025) had conclusively held that there is no scope for consolidating multiple financial years or tax periods while issuing a notice under Section 74.

The Court observed that the GST Act prescribes a defined tax period for each financial year, with corresponding return and limitation provisions under Sections 73(10) and 74(10). A single SCN spanning multiple years would aggregate different tax periods with different due dates and limitations which harms the tax payers’ ability to respond year by year and violates the explicit year wise structure of the statute.

The Division Bench further clarified that its judgments in Milroc and Rite Water would be jurisdictionally binding in Maharashtra.

Regarding the Special Leave Petition before the Supreme Court, the Bench held that the concept of merger of judgment would not apply here since the Supreme Court dismissed the petition in limine and not on merit.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates