Summary:

The issue before the Hon’ble Madras High Court (‘the High Court’) was whether issuing a single Show Cause Notice (‘SCN’) and passing a single composite assessment order (‘AO’) for multiple financial years (FYs) is permissible under the provisions of the Goods and Services Tax Act (‘the GST Act’). The High Court held that issuing a single SCN and passing a composite AO for multiple FYs is against the limitation scheme and not permissible.

Facts:

• The Respondent (GST Department) issued a single SCN covering a period of six FYs, from FY 2017-18 to FY 2022-23, and passed a composite AO
• The Petitioner challenged the SCN and the resultant order before the High Court, contending that “bunching” of assessment periods is arbitrary and illegal as it creates unnecessary hardship and prejudices the Petitioner’s right to contest specific periods, seek compounding of offences, or avail year-specific amnesty schemes

Issue before the High Court:

• Whether issuing of single SCN and passing a single composite AO for more than one FY is allowed under the provisions of the GST Act?

Discussion and Ruling:

The High Court allowed the Writ Petition and quashed the composite AO on the following basis:

• The GST Act treats each FY as a separate unit, with limitation periods fixed individually for each FY. Therefore, clubbing more than one FY for the purpose of issuing a SCN would not be in accordance with the provisions of Section 73 or 74 of the GST Act
• A conjoint reading of Sections 73 and 74, along with Section 2(106) which defines the term ‘tax period’ as the period for which a return is required to be furnished either monthly or annually, makes it clear that a SCN can be issued only for such periods for which returns are statutorily required to be filed
• The limitation period under Sections 73(10) and 74(10) is calculated separately from the due date of filing the annual return for each FY
• This reinforces the view that a SCN can be issued for a part of a FY based on monthly returns or for an entire FY based on the annual return, but it cannot be clubbed for more than one FY
• Such a practice undermines the assessee’s rights to submit year-specific rebuttals, seek compounding of offences for a particular year under Section 138, or avail amnesty schemes that may apply only to certain years under Section 128
• The High Court relied on its ruling in Titan Company Ltd. v. Joint Commissioner [(2024) 15 Centax 118 (Mad.)], wherein it was held that bunching of SCNs and AOs is impermissible. The Petitioner also referred to the judgment dated 21.03.2025 in W.A. Nos. 2389 & 1397 of 2024, in which the High Court directed that separate AOs must be issued for each FY
• The High Court concluded that the issuance of a single SCN and passing a composite AO for multiple years is without jurisdiction and impermissible in law. As a result, the composite AO was quashed, and the writ petition was allowed