Facts of the Case

The petitioner, M/s. Katyayani Constructions, a registered partnership firm, challenged an assessment order dated 01.12.2025 passed by the Assistant Commissioner of Central Tax covering the financial years 2019-20, 2020-21, and 2021-22 through a single composite assessment order under the GST Acts.

The petitioner also challenged the consequential order issued under Section 74 on the grounds that it was unsigned, lacked physical or digital signature, was issued without satisfying the statutory requirements for invoking Section 74, and was otherwise arbitrary, illegal, and contrary to law. However, during the hearing, the petitioner primarily pressed the legal issue that a single assessment order covering multiple financial years is impermissible under the GST law.

Issues Involved

  1. Whether a single assessment order under the GST Acts can legally cover multiple financial years.
  2. Whether such a composite assessment order violates Sections 73 and 74 of the CGST/APGST Act, 2017.
  3. Whether the impugned assessment order was liable to be set aside on this legal ground alone.

Petitioner's Arguments

The petitioner contended that:

  • The assessment order covered multiple financial years through a single order, which is contrary to Sections 73 and 74 of the GST Act.
  • The proceedings under Section 74 were initiated without fulfilling the statutory conditions required for invoking that provision.
  • The consequential order lacked both a physical and digital signature, rendering it invalid.
  • The impugned order was arbitrary, without jurisdiction, violative of the principles of natural justice, and liable to be quashed.
  • Since the assessment itself was fundamentally illegal, the order deserved to be set aside irrespective of the merits of the tax demand.

Respondent's Arguments

The respondents defended the assessment proceedings and opposed the writ petition. However, in view of the settled legal position already laid down by the Division Bench of the Andhra Pradesh High Court regarding composite assessment orders, the Court examined the maintainability of such an assessment primarily on that issue.

Court Order / Findings

The Andhra Pradesh High Court observed that a Division Bench of the Court had already decided in W.P. No.11028 of 2025 & batch that:

  • A single show cause notice or
  • A single composite assessment order

cannot be issued for more than one tax period where separate assessment periods are contemplated under the GST law.

The Court held that:

  • An assessment order covering multiple financial years is contrary to Sections 73 and 74 of the GST Act.
  • Since the petitioner pressed this legal ground, it was unnecessary to examine the remaining grounds raised in the writ petition.
  • The impugned assessment order dated 01.12.2025 was therefore set aside.

The matter was remanded to the tax authorities with liberty to initiate fresh assessment proceedings separately for each assessment year in accordance with law.

The Court further directed that the period between the issuance of the impugned assessment order and receipt of the High Court's judgment shall be excluded while computing limitation for fresh proceedings.

No order was passed as to costs.

Important Clarification

This judgment reiterates an important procedural safeguard under the GST regime:

  • Separate assessment proceedings must ordinarily be undertaken for each assessment year or relevant tax period.
  • Composite assessment orders covering multiple financial years are unsustainable where the statutory framework requires separate assessments.
  • Tax authorities remain at liberty to issue fresh proceedings individually for each assessment year after complying with the provisions of the GST Act.
  • The decision primarily addresses the procedural validity of the assessment order and leaves other substantive issues open for consideration in fresh proceedings.

Sections Involved

  • Section 73 – Determination of tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilized (other than fraud cases)
  • Section 74 – Determination of tax involving fraud, wilful misstatement or suppression of facts
  • Article 226 of the Constitution of India
  • Principles of Natural Justice

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785408815_2423compressed.pdf

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