Recently the Hon’ble Madras High Court in M/S R A and Co v. The Additional Commissioner of Central Taxes, W.P. No. 17239 of 2025 (decided on July 21, 2025), has once again reaffirmed the well settled principle that under the Goods and Services Tax (GST) framework. That a show cause notice or SCN or assessment order cannot cover multiple financial years in a consolidated manner.
In a strongly worded ruling, the Court held that issuance of a single SCN and a composite assessment order covering six financial years is impermissible under Sections 73 and 74 of the CGST Act, 2017. The judgment underscores that each financial year is a distinct “tax period”. Thus, requiring separate notices and adjudication, and any attempt to “bunch” them together is void ab initio.
This judgment, builds upon the earlier decisions in both Titan Company Ltd. and Veremax Technologies Services Ltd. It has significant implications for GST proceedings nationwide.
Facts of the Case
• The Additional Commissioner of Central Taxes, South Commissionerate, sent a ‘single’ show-cause notice to the petitioner here being R A and Co. The said notice covered six fiscal years from 2017–18 to 2022–23 together.
•The petitioner argued that the statutory mandate under Sections 73 and 74, which call for the issuance of notices per financial year, is violated by grouping several years into a single SCN.
•The Petitioner also argued that the notice was issued at the fag end of the limitation period for FY 2017–18, which compelled them to respond for all six years in one go, causing severe hardship and depriving them of the ability to produce year-wise records or avail amnesty schemes selectively.
•The Department argued that the phrase “any period” in Sections 73 and 74 authorises issuance of a consolidated notice for a block of years. They further submitted that “tax period” includes monthly or annual returns, hence clubbing several financial years was permissible.
Issue Before the Court
Whether the GST authorities can issue a single show cause notice and pass a composite assessment order covering more than one financial year under Sections 73 and 74 of the CGST Act?
Findings of the Madras High Court
The Hon’ble Court decisively answered in the negative, quashing the impugned order. The operative part of the judgment reads as follows:
“(iv) No show cause notice can be clubbed and issued for more than one financial year since the same is impermissible in law.
(v) In this case, without any jurisdiction, the impugned order came to be passed for more than one financial year, which is impermissible in law and hence, the same is liable to be quashed. Accordingly, the impugned order stands quashed based on the aspect of clubbing of impugned assessment order for more than one financial year.”
The Court emphasised that Sections 73(1)/(3) and 74(1)/(3) must be read with Section 2(106) of the CGST Act, which defines a “tax period” as the period for which a return is required to be furnished. Thus, SCNs must be issued year-wise, aligned with returns filed annually.
It further observed that:
• Clubbing multiple years into one SCN frustrates the statutory limitation under Sections 73(10) and 74(10), which are distinct for each financial year.
• Such bunching prevents effective rebuttal by assessees, since evidence, reconciliations, and amnesty benefits are year-specific.
• The expression “any period” cannot be stretched to authorise consolidated SCNs covering several financial years.
Precedent Support
The Court’s reasoning is consistent with earlier rulings:
1. Titan Company Ltd. v. Joint Commissioner of GST & Central Excise [(2024) 15 Centax 118 (Mad.)]
o Court decided that, in accordance with Section 73(10), bunching SCNs for several years is prohibited.
o Court also observed that: “by issuing bunching of show cause notices, the respondents are trying to do certain things indirectly which they are not permitted to do directly and the same is not permissible in law.”
o This decision was also later affirmed in W.A. Nos. 2389 & 1397 of 2024.The Division Bench here also directed that assessment orders must be passed year-wise with at least four weeks’ gap between them.
2. State of J&K v. Caltex (India) Ltd. [AIR 1966 SC 1350] (Constitution Bench)
o The Supreme Court held: “where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods.”
o This principle from the Apex Court squarely applies to all GST assessments per judicial discipline.
3. M/s Veremax Technologie Services Ltd. v. Assistant Commissioner of Central Tax [2024 (9) TMI 1347 – Karnataka HC]
o In a similar case, the Karnataka High Court invalidated a combined Show Cause Notice. The said covered the fiscal years 2017–18 through 2020–21.
o The Court further ordered that separate SCNs be issued year wise by the Authorities. And that as per Section 73 (10) of the CGST Act year-wise limitation and adjudication is required.
Key Takeaways from the Judgment
1.Each Year is a Separate “Tax Period
The decision clarifies that every fiscal year is an independent time period for taxes. And ought to be handled as such, with its own proceedings for the purposes of Sections 73 and 74.
2.Limitation Cannot Be Circumvented
By bunching several years into one SCN, authorities cannot indirectly override the statutory limitation period.
3.Procedural Fairness to Taxpayers
Consolidated notices undermine natural justice by denying taxpayers the ability to raise a proper year wise defence.
4.No Administrative Convenience Argument
The Department has argued that sending out numerous notices is onerous. But the Courts have dismissed this argument. Statutory protections cannot be superseded by administrative convenience.
Our Comments
This judgment is another strong reminder that statutory procedure cannot be sacrificed at the altar of administrative convenience. Taxpayers have a vested right in limitation provisions, which operate as a defence against stale claims.
By reaffirming the Titan, Veremax, and Caltex principles, the Madras High Court has closed the door on validity of consolidated SCNs under GST. In the future, tax authorities need to make sure that:
•Separate SCNs are issued per financial year.
•Limitation periods are applied distinctly for each year.
•Adjudication orders are passed independently with sufficient time gaps.
This ruling provides businesses with a useful precedent to contest any “bunched” notices, especially those sent near the statute of limitations.
Conclusion
The ruling in R A and Co v. The Additional Commissioner of Central Taxes makes it abundantly clear: composite SCNs and assessment orders spanning multiple years are void ab initio under GST law. As the Court held:
“No show cause notice can be clubbed and issued for more than one financial year since the same is impermissible in law… Accordingly, the impugned order stands quashed.”
In order to keep assessments firmly tied to the statutory framework of year-wise limitation and due process, this case will act as a guide for both taxpayers and the Department.
Author Details: Apoorva Lamba (3rd Year Student Madhav Mahavidyalya, Jiwaji University, Gwalior)
Link to similar articles: https://jpassociates.co.in/judicial-discipline-in-gst/
