Facts of the Case

The petitioner, Pohtireddy Venkata Reddy, was a registered person under the GST law. The petitioner was served with an Order-in-Original dated 24.09.2025 bearing DIN3724092549061 by the first respondent.

The impugned Order-in-Original covered four financial years, namely:

  • Financial Year 2021-22
  • Financial Year 2022-23
  • Financial Year 2023-24
  • Financial Year 2024-25

The petitioner challenged the Assessment Order and Summary of Orders dated 24.09.2025 passed under Section 74, as well as the Show Cause Notice and Summary of Notice in Form GST DRC-01 dated 16.06.2025 issued under Section 74 for the period from 2021-22 to 2024-25.

The dispute also involved the subsequent attachment of the petitioner’s bank account, recovery of an amount of Rs. 65,10,000 on 24.03.2026, and retention of a lien in respect of the remaining demand arising from the impugned order.

The petitioner contended that the authorities had passed a composite order for four financial years without properly considering the explanation submitted and had invoked Section 74 in relation to the issue of differential tax of 6% on works contract services provided to the State Government.

The petitioner challenged the proceedings as illegal, arbitrary, without jurisdiction, vitiated by procedural irregularity due to clubbing adjudication for four years into one proceeding, and violative of the principles of natural justice.

Issues Involved

The principal issues before the High Court were:

  1. Whether a single Show Cause Notice under Section 74 of the GST Act can validly cover more than one financial year.
  2. Whether a single composite Order-in-Original or assessment order can be passed for multiple financial years.
  3. Whether clubbing separate tax periods or assessment years into one consolidated adjudication proceeding is consistent with Sections 73 and 74 of the GST Act, 2017.
  4. Whether the impugned composite assessment order dated 24.09.2025 covering Financial Years 2021-22 to 2024-25 was liable to be set aside.
  5. Whether fresh proceedings could be initiated separately for each assessment year.
  6. Whether relief could be granted subject to the petitioner depositing 20% of the disputed tax.
  7. How amounts already paid or recovered after passing of the impugned order should be treated.
  8. How the limitation period should be computed upon remand for fresh proceedings.

Petitioner’s Arguments

The petitioner raised various grounds of challenge but primarily pressed the contention that a single assessment order covering more than one financial year violated the scheme and provisions of Sections 73 and 74 of the GST Act, 2017.

The petitioner’s principal submissions were that:

  • The Order-in-Original dated 24.09.2025 impermissibly covered four financial years from 2021-22 to 2024-25.
  • A composite assessment order for multiple financial years was contrary to Sections 73 and 74 of the GST Act.
  • Separate tax periods and financial years could not be clubbed into one consolidated adjudication proceeding in the manner adopted by the respondents.
  • The proceedings suffered from procedural irregularity because adjudication for four years had been combined in a single proceeding.
  • The petitioner’s explanation had not been properly considered.
  • Invocation of Section 74 in relation to the issue concerning differential tax of 6% on works contract services provided to the State Government was challenged.
  • The proceedings were alleged to be illegal, arbitrary, without jurisdiction, and violative of the principles of natural justice.

On these grounds, the petitioner sought setting aside of the impugned composite order and consequential relief concerning recovery and bank account attachment.

Respondents’ Arguments

The learned Government Pleader for Commercial Tax appeared for Respondent Nos. 1 to 4, while learned counsel appeared for Respondent No. 5, Union of India.

The judgment records that the Court heard the petitioner’s counsel, the learned Government Pleader for Commercial Tax, and counsel appearing for the Union of India.

The final adjudication proceeded primarily on the petitioner’s principal challenge concerning the legality of a composite Order-in-Original covering multiple financial years. The Court disposed of the writ petition on this specific ground and left the petitioner’s other grounds of challenge open.

Court’s Findings

The High Court noted that the petitioner was a registered person who had been served with the Order-in-Original dated 24.09.2025 and that the order covered the period from Financial Year 2021-22 to Financial Year 2024-25.

The Court further recorded that the petitioner, despite raising various grounds, pressed the principal ground that a single assessment order issued for more than one financial year violated Sections 73 and 74 of the GST Act, 2017.

The High Court relied upon an earlier Division Bench decision of the same Court in W.P. No. 11028 of 2025 & batch, wherein the question had already been considered.

The Court reiterated the principle that:

A single Show Cause Notice or a single composite assessment order cannot be passed in relation to more than one tax period of a month where assessment is undertaken before the due date for filing the annual return, or for more than one year where the due date for filing the annual return has been reached.

Accordingly, the High Court accepted the petitioner’s principal challenge against the composite Order-in-Original covering multiple financial years.

Court Order / Final Decision

The High Court disposed of the Writ Petition with the following directions:

  1. The impugned Order dated 24.09.2025 was set aside.
  2. The matter was remanded back to the respondents.
  3. The respondents were granted liberty to initiate fresh proceedings separately for each assessment year.
  4. The relief was made subject to the condition that the petitioner deposit 20% of the disputed tax within six weeks.
  5. The deposit of 20% would abide by the decision in the subsequent order of assessment.
  6. Any payment already made or any amount recovered from the petitioner after passing of the impugned orders would be adjusted against the required 20% deposit.
  7. For limitation purposes, the period from the date of issuance of the impugned assessment order until the date of receipt of the High Court’s order would be excluded.
  8. There was no order as to costs.
  9. Pending miscellaneous applications, if any, stood closed.

Important Clarification

The High Court disposed of the writ petition specifically on the ground that the impugned Order-in-Original was a composite assessment order covering multiple financial years.

Although the petitioner had raised several other grounds—including objections concerning invocation of Section 74, differential tax of 6% on works contract services supplied to the State Government, alleged non-consideration of the explanation, bank account attachment, recovery proceedings, jurisdictional objections, procedural irregularity, and violation of natural justice—the Court did not finally adjudicate those grounds.

Those other grounds were expressly left open.

Therefore, the judgment is particularly significant for the legal principle governing:

  • separate adjudication for separate tax periods or financial years;
  • invalidity of a single composite Show Cause Notice or assessment order covering impermissibly clubbed tax periods;
  • fresh year-wise proceedings after remand;
  • conditional relief based on deposit of 20% of disputed tax;
  • adjustment of amounts already paid or recovered; and
  • exclusion of the specified intervening period for limitation purposes.

Sections Involved

·         Section 73 of the GST Act, 2017

·         Section 74 of the GST Act, 2017

·         Article 226 of the Constitution of India

·         Section 151 of the Code of Civil Procedure, 1908

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783497310_1468compressed.pdf

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