Facts of the Case

This common judgment disposed of six connected intra-Court writ appeals (W.A. Nos. 1751/2024, 1590/2024, 7/2025, 407/2026, 495/2026 and 555/2026) filed by the Revenue under Section 4 of the Karnataka High Court Act against orders of a Single Judge who had quashed consolidated/common show cause notices issued under Sections 73 and 74 of the CGST Act, 2017 covering more than one financial year. The lead matter, W.A.No.1751/2024, concerned a show cause notice issued under Section 74 for the period July 2017 to March 2023 alleging fraud, wilful misstatement or suppression of facts, along with the supporting material. The Single Judge had held that Sections 73/74 are financial-year specific and that a notice spanning multiple financial years in one consolidated notice was impermissible, quashing the notices while reserving liberty to the Revenue to issue fresh, year-specific notices — relying on this Court's own earlier order in M/s. Bangalore Golf Club v. Assistant Commissioner of Commercial Taxes and the Madras High Court's ruling in M/s. Titan Company Limited v. Joint Commissioner of GST. The Revenue appealed.

Issues Involved

  1. Whether Sections 73 and 74 of the CGST Act confine adjudication to a single financial year, such that a consolidated show cause notice spanning multiple financial years is per se impermissible.
  2. What relief should follow for assessees whose show cause notices/Orders-in-Original are restored after having earlier succeeded before the Single Judge.

Petitioner's Arguments

  • (Revenue, as appellant) Counsel for the Revenue submitted that Sections 73 and 74 use the words "any period," which cannot be read restrictively to mean a single financial year, and that Sub-section (10) of both provisions — prescribing limitation with reference to financial year — protects the assessee on limitation but does not confine the scope of the notice itself to one financial year.
  • It was argued that Sections 73/74 do not prohibit multiple proceedings even within a single financial year, so reading in a financial-year restriction would amount to rewriting the provision.
  • Reliance was placed on the Delhi High Court's ruling in Mathur Polimers v. Union of India (2026) 154 GSTR 443 and Ambika Traders v. Commissioner, and the Allahabad High Court's ruling in SA Aromatics Pvt. Ltd. v. Union of India, all of which permitted consolidated notices spanning multiple financial years, with SLPs against the first two having been dismissed.
  • The Additional Government Advocate additionally argued that a writ challenge to a mere show cause notice was not maintainable given the availability of an efficacious statutory remedy, and that Rule 56 (requiring accounts to be maintained for each works contract) permits year-wise adjudication even under a single consolidated notice.

Respondent's Arguments

  • (Assessees, as respondents) The respondents defended the Single Judge's reasoning that Section 73(10)'s reference to financial year confines the scope of a valid notice to that year, relying on the Madras High Court's decision in Titan Company Limited.

Court Order / Findings

  • The Court undertook a conjoint reading of the statutory scheme — Sections 61 (scrutiny of returns), 62-64 (best-judgment and summary assessments), 65 (audit by tax authorities) and 66 (special audit), and 67 (inspection, search and seizure) — noting that none of these provisions confine the resulting Section 73/74 proceedings to a single tax period or financial year; audits under Sections 65 and 66, for instance, may span whatever period the Commissioner or nominated auditor considers appropriate, and their findings feed directly into Section 73/74 proceedings.
  • The Court held that wherever the legislature intended GST proceedings to be confined to a specific tax period, it said so expressly, and Sections 73 and 74 — using the words "any period" — impose no such single-financial-year restriction; the Single Judge's contrary conclusion amounted to an impermissible re-writing of the statute.
  • The orders of the Single Judge quashing the notices in W.A.Nos.1751/2024, 7/2025, 407/2026 and 555/2026 were set aside, the underlying writ petitions dismissed, and the show cause notices restored, with the respondents granted four weeks to reply, all merits contentions being left open.
  • In W.A.Nos.1590/2024 and 495/2026, where an Order-in-Original had already been passed pursuant to the (now-restored) notice, the Court restored the Order-in-Original as well but, recognising the appellate authority's limited power to condone delay and the time already spent in litigation, granted the respondents six weeks to file a statutory appeal without any objection on limitation.
  • The Court clarified that its observations were confined to the maintainability issue and were not an expression on the merits of any notice.

Important Clarification

  • A common/consolidated show cause notice under Section 73 or 74 of the CGST Act covering multiple financial years is legally valid; the words "any period" in these sections are not restricted to a single financial year, and the financial-year reference in Sub-section (10) only fixes the outer limitation period, not the permissible span of the notice.
  • Since audits under Sections 65 and 66 (and inspections under Section 67) are themselves not confined to a single tax period, and expressly feed into Section 73/74 proceedings, a multi-year consolidated notice arising from such an audit is consistent with the statutory scheme.

Sections Involved

  • Section 73, Central Goods and Services Tax Act, 2017 – recovery of tax not paid or short paid without allegation of fraud; held not confined to a single financial year.
  • Section 74, Central Goods and Services Tax Act, 2017 – recovery of tax not paid by reason of fraud, wilful misstatement or suppression; the provision under which the lead notice was issued.
  • Section 65, Central Goods and Services Tax Act, 2017 – audit by tax authorities, which may span any period the Commissioner directs.
  • Section 66, Central Goods and Services Tax Act, 2017 – special audit by a nominated chartered/cost accountant, similarly not confined to a specific period.
  • Section 4, Karnataka High Court Act, 1961 – the provision under which these intra-Court appeals were filed.

Decision – In Favour of

The decision is in favour of the Department — all six writ appeals were allowed, the Single Judge's orders set aside, and the consolidated show cause notices (and, in two matters, the resulting Orders-in-Original) restored, though assessees were given fresh, protected windows to respond or appeal.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Appeal No. 1751 of 2024 (T-RES) with W.A. Nos. 1590/2024, 7/2025, 407/2026, 495/2026 and 555/2026
Coram: Justice S.G. Pandit and Justice K.V. Aravind
Date of Order: 10.03.2026 (pronounced)

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