HC Upholds Multi-Year GST SCN, Declines Writ, Directs Appeal Route

The petitioner, engaged in supply and installation of CCTV systems, was subjected to GST audit for FY 2017–18 to 2021–22. During audit, an Observation Memo quantified a liability of about Rs. 49.52 lakh, which the petitioner paid. However, subsequent proceedings continued on a separate audit issue, culminating in issuance of a show cause notice proposing a massive demand exceeding Rs. Rs. 19.97 crore on allegations of wrongful classification of services and incorrect tax rate application.

The petitioner contested the demand, asserting that its services qualified as works contract services taxable at 12% under the relevant notification and denying any suppression or fraud. A detailed reply was filed and personal hearing granted, but the adjudicating authority passed an Order-in-Original confirming the entire demand along with penalties. Aggrieved, the petitioner approached the High Court, primarily challenging the validity of a consolidated SCN covering multiple financial years and seeking waiver of pre-deposit.

Issue Before Court: Whether a GST show cause notice and adjudication covering multiple financial years is valid, and whether such issues can be directly challenged in writ jurisdiction.

HC Held: The High Court dismissed the writ petition and declined to interfere with the Order-in-Original. It held that the petitioner had an efficacious alternative remedy by way of appeal under Section 107 of the CGST Act, which must ordinarily be availed. On the issue of consolidation of multiple years, the Court relied on its earlier decision in Ambika Traders and clarified that the statutory language under Sections 73 and 74 particularly the expressions “for any period” and “for such periods” permits issuance of notices covering more than one financial year, subject to conditions.

The Court rejected the petitioner’s attempt to confine this principle only to cases involving fraudulent ITC, observing that the statutory framework itself allows such consolidation. The Court further held that mere pendency of contrary views before other High Courts or even before the Supreme Court does not dilute the binding nature of existing precedent. Since the petitioner’s grievances, including classification disputes and procedural objections, fall squarely within the appellate domain, no exceptional grounds were made out for invoking writ jurisdiction.

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