Facts of the Case

The Gauhati High Court heard a batch of three writ petitions involving common jurisdictional issues regarding the maintainability of proceedings under the Central Goods and Services Tax Act, 2017.

  • WP(C) No. 2922/2025 (M/s Tata Projects Limited, Assam): The petitioner is engaged in works contract services. Following an audit covering the Financial Years 2017–18 to 2021–22, the department issued a consolidated Show Cause Notice (SCN) under Section 74(1) for the periods 2018–19 to 2021–22, and another SCN under Section 73(1) for the period 2018–19. An Order-in-Original was subsequently upheld by the Commissioner (Appeals), confirming the tax demands.
  • WP(C) No. 20/2026 (M/s Quantum Infratech, Assam): The petitioner is a partnership firm engaged in constructing residential buildings. Following search operations and statements recorded, the department issued a collective SCN under Section 74(1) read with Sections 122(1A) and 122(3)(a) against the firm, its partners, and the accountant, covering the period from July 2017 to March 2023. The demand was later confirmed via an Order-in-Original and subsequent Order-in-Appeal.
  • WP(C) No. 1113/2026 (Bitchem Asphalt Technologies Limited): The petitioner deals in road-building materials. It was served a consolidated SCN under Section 74 clubbing together Financial Years 2018–19 to 2020–21, alleging underreporting of taxable turnover. An Order-in-Original was passed, which the petitioner challenged directly via a writ petition bypassing the standard appellate route.

Issues Involved

  1. Whether the Proper Officer, while exercising powers conferred under Section 73 or Section 74 of the CGST Act, 2017, has the valid jurisdiction to issue a single, consolidated Show Cause Notice encompassing different financial years.
  2. Whether the statutory framework of the CGST Act implicitly or explicitly restricts the department from passing a consolidated assessment/adjudication order spanning multiple financial years.
  3. Whether writ petitions should be entertained by the High Court under Article 226 when an alternative, statutory, and efficacious appellate remedy is readily available under the Act.

Petitioner’s Arguments

  • Independent Financial Units: The petitioners argued that the architecture of the GST regime revolves around distinct tax periods and independent financial years. Returns under Section 39 are tax-period specific, annual returns under Section 44 are financial-year specific, and books must be maintained accordingly.
  • Limitation Period Discontinuity: It was contended that the limitation under Sections 73(10) and 74(10) runs independently for each financial year based on its specific annual return due date. Clubbing years cumulatively violates the structurally isolated "limitation windows".
  • Prejudice Caused: Combining financial years into one notice creates procedural prejudice because distinct years involve different defenses, separate sets of facts, independent limitation boundaries, and varying statutory provisions.
  • Reliance on Precedents: The petitioners heavily relied on judgments from the Kerala, Madras, and Bombay High Courts (such as M/S Tharayil Medicals, Dhanlaxmi Bank, and Titan Company), which initially held that consolidated show cause notices for multiple years are impermissible.

Respondent’s Arguments

  • Absence of Statutory Bar: The Revenue argued that Sections 73(1) and 74(1) employ the phrases "for any period" and "for such periods" in Sub-sections (3) and (4), clearly proving that the Legislature consciously permitted consolidated proceedings spanning multiple years.
  • Limitation vs. Notice Separation: While limitation must be computed independently for each financial year under Section 73(10) and 74(10), there is no express statutory embargo restricting the clubbing of multiple years into a single procedural SCN.
  • Administrative Efficiency: Issuing consolidated notices reduces administrative redundancy, avoids conflicting findings, minimizes multiplicity of proceedings, and aids in holistic evaluations of continuous tax evasion transactions.
  • Declaration of Law: The Revenue cited the Delhi High Court verdicts in Ambika Traders and M/S Mathur Polymers, noting that the Supreme Court dismissed the Special Leave Petition against Mathur Polymers with a categorical declaration of "no reason to interfere," thus creating a binding declaration of law under Article 141 of the Constitution.

Court Order & Findings

The Hon'ble Judge Devashis Baruah rejected the petitions and ruled in favor of the Revenue on the core jurisdictional issues:

  • No Bar on Consolidation: The Court held that there is absolutely no bar against issuing a consolidated Show Cause Notice for different financial years together under Section 73(1) or 74(1), provided it falls within the individual limitation parameters.
  • No Bar on Consolidated Orders: Similarly, the Proper Officer is fully empowered to pass a consolidated adjudication order for multiple financial years under Sections 73(9) and 74(9).
  • Doctrine of Severability: If a consolidated notice covers a time-barred year along with valid years, the entire proceeding does not fail. The court applied the doctrine of severability, stating that each financial year is a separate cause of action and time-barred portions can simply be stripped out without invalidating the rest.
  • Assessment vs. Adjudication: The Court clarified that "Assessment" under Chapter XII (which is administrative/inquisitorial) is distinctly segregated from "Demand and Recovery" under Chapter XV (which is adversarial, carries heavy penalties, and addresses elements like fraud or suppression). Hence, assessment structures do not restrict demand notices.
  • Relegation to Appellate Remedies: Answering the jurisdictional question against the petitioners, the High Court declined to evaluate the factual merits and directed all three petitioners to approach their statutory appellate forums (Sections 107 and 112) within 30 days, shielding them from limitation exclusions during this period.

Important Clarification

  • The Gauhati High Court explicitly parted ways with the contrary interpretations of the Kerala and Madras High Courts. It aligned directly with the Division Benches of the Delhi, Allahabad, and Karnataka High Courts, emphasizing that administrative compilation does not automatically translate to a lack of statutory jurisdiction or cause existential prejudice under Article 14.

Section Involved

  • Section 2(11): Definition of Assessment.
  • Section 39 & 44: Filing of monthly returns and annual returns.
  • Section 73: Determination of tax not paid, short paid, or ITC wrongly availed for reasons other than fraud.
  • Section 74: Determination of tax not paid, short paid, or ITC wrongly availed by reason of fraud, willful misstatement, or suppression.
  • Section 75: General provisions relating to the determination of tax.
  • Section 107 & 112: Appeals to Appellate Authority and Appellate Tribunal.

Link to download the order - https://mytaxexpert.co.in/uploads/1783060470_324compressed.pdf

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