SINGLE SHOW CAUSE NOTICE (SCN) CANNOT BE ISSUED FOR MULTIPLE TAX PERIODS

High Court of Karnataka

Veremax Technologie Services Limited

Vs 

Assistant Commissioner of Central Tax

Appeal Number : 15810 of 2024 (T-RES)

Date of Judgement : 04/09/2024

BACKGROUND

In this petition, petitioner challenges the impugned show cause notice dated 03.05.2024 at Annexure – D and the order dated 21.11.2023 at Annexure – B issued by the respondent for the tax periods 2017-18, 2018- 19, 2019-20 and 2020-21. The petitioner contends 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. 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.

ISSUE

Is the consolidation of multiple tax periods into a single show cause notice under Section 73 of the CGST Act, 2017 legally valid ?”

Important Para

Para 3. The petitioner relies on the judgment of the Hon’ble Madras High Court in the case of M/s. Titan Company Ltd. vs. Joint Commissioner of GST. The Madras High Court, while addressing a similar issue, relied on the Hon’ble Supreme Court’s decision in State of Jammu and Kashmir and Others vs. Caltex (India) Ltd. The Hon’ble Apex Court held that where an assessment encompasses differ-ent assessment years, each assessment order can be distinctly separated and must be treated independently.

Para 5. Section 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 principles enunciated in the judgment cited by the Hon’ble Supreme Court are directly applicable to the present case.

Para 6. For the reasons aforementioned, this Court concludes 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.

Para 7. Accordingly, this Court proceeds to pass the following: ORDER

• The writ petition is
• The impugned show cause notice dated 03.05.2024 (Annexure-D) issued by the respondent for the tax periods 2017-18, 2018-19, 2019-20 and 2020-21 are hereby quashed;

This order, however, does not preclude the respondent from issuing separate show cause notices for each assessment year in compliance with Section 73 of the CGST Act, 2017.