Facts of the Case

The petitioner challenged an Order-in-Original dated 26.08.2024 passed by the GST authorities covering the financial years 2017-18, 2019-20, and 2020-21 through a single assessment order. The order was passed pursuant to a show cause notice under Section 74 of the Central Goods and Services Tax Act, 2017, and demanded tax along with interest under Section 50, penalty equivalent to the tax under Section 74, and general penalty under Section 125.

The petitioner contended that issuing one composite assessment order for multiple financial years was contrary to the provisions of the GST law and beyond the jurisdiction of the authorities. The petitioner also raised several additional grounds challenging the assessment.

Issues Involved

  1. Whether a single assessment order under the CGST Act can validly cover multiple financial years.
  2. Whether a composite show cause notice and assessment order violate Sections 73 and 74 of the CGST Act.
  3. Whether the impugned assessment order was liable to be quashed on this ground alone.
  4. Whether fresh proceedings could be initiated separately for each assessment year after setting aside the composite assessment.

Petitioner’s Arguments

  • The petitioner submitted that the assessment order covering more than one financial year was illegal and contrary to the statutory scheme of the CGST Act.
  • It was argued that separate proceedings are required for each assessment year and a consolidated assessment is impermissible.
  • The petitioner relied upon the provisions governing assessments under Sections 73 and 74 of the CGST Act.
  • Apart from this principal ground, the petitioner also raised several other challenges to the validity of the assessment proceedings.

Respondent’s Arguments

  • The respondents defended the assessment order passed by the GST authorities.
  • The Revenue supported the validity of the assessment proceedings initiated under Section 74 of the CGST Act.
  • However, the respondents addressed the submissions made by the petitioner regarding the legality of the composite assessment order before the High Court.

Court Order / Findings

The Andhra Pradesh High Court observed that an earlier Division Bench of the Court had already considered the issue and held that a single show cause notice or a single composite assessment order cannot be issued for more than one tax period or more than one financial year, depending upon the relevant statutory period under the GST law.

Since the petitioner pressed this principal legal ground, the Court decided the writ petition solely on this issue without examining the remaining grounds.

Accordingly, the High Court:

  • Set aside the assessment order dated 26.08.2024.
  • Remanded the matter to the GST authorities.
  • Permitted the authorities to initiate fresh assessment proceedings separately for each assessment year.
  • Directed that all coercive recovery actions, including attachment proceedings initiated pursuant to the impugned order, shall stand set aside.
  • Clarified that the period from the date of the impugned assessment order until receipt of the High Court's order shall be excluded while computing limitation for fresh proceedings.
  • Closed all pending miscellaneous applications.

Important Clarification

This judgment reiterates that GST authorities cannot issue a composite assessment order covering multiple financial years under the statutory assessment provisions. Separate assessment proceedings must be undertaken for each relevant assessment year in accordance with Sections 73 and 74 of the CGST Act. Although the assessment order was quashed, the Court preserved the Revenue's liberty to commence fresh proceedings independently for each assessment year, subject to limitation as modified by the Court.

Sections Involved

  • Article 226 of the Constitution of India
  • Section 74 of the Central Goods and Services Tax Act, 2017
  • Section 50 of the Central Goods and Services Tax Act, 2017
  • Section 125 of the Central Goods and Services Tax Act, 2017
  • Sections 73 and 74 of the Central Goods and Services Tax Act, 2017

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785408804_2422compressed.pdf

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