Single GST SCN under Sections 73/74 cannot validly cover multiple tax periods: High Court

The dispute before the High Court arose from the issuance of consolidated show cause notices (SCNs) under Sections 73 and 74 of the CGST Act, 2017, covering multiple financial years. The assessees challenged such notices on the ground that the GST law contemplates the issuance of SCNs separately for each financial year or tax period. It was argued that references to “financial year” in limitation provisions, along with the structure of Form GST DRC-01, implied that proceedings must be year-specific.

The assessees also raised concerns regarding jurisdiction, procedural fairness, and potential overlap between fraud and non-fraud proceedings. The Revenue, on the other hand, contended that the statutory language permits flexibility and that consolidated notices are necessary for efficient adjudication, especially in cases arising from audits, inspections, or investigations spanning multiple years.

Issue Before Court: Can a single show cause notice under Sections 73/74 validly cover multiple tax periods or financial years?

HC’s Decision: The High Court has resolved a long-standing debate by ruling that tax authorities may issue a single, consolidated Show Cause Notice (SCN) covering multiple financial years. By focusing on the statutory language “any period” found in Sections 73 and 74, the Court determined that the law does not restrict notices to a single-year window. While financial years are still used to track deadlines for final orders, they do not limit the investigative scope of the notice itself. This decision reflects a pragmatic approach to tax administration, acknowledging that audits often span several years.

The Court warned that forcing separate notices for every year would result in “impractical and absurd” administrative burdens. Additionally, the ruling clarified that procedural forms like GST DRC-01 cannot override the primary law. From a jurisdictional standpoint, the total cumulative demand determines which authority oversees the case, with built-in safeguards to transition between “fraud” and “non-fraud” classifications as needed. Ultimately, this judgement prioritises legislative efficiency and streamlined legal processes, sparing both the government and taxpayers from a mountain of repetitive paperwork while ensuring that the core legal requirements for transparency and jurisdiction remain firmly in place.

To Read Full Judgment, Download PDF Given Below.