Facts of the Case

M/s Hotel Pai Vista, a unit of Pai Vaibhav Hotels India Pvt. Ltd. registered under GSTIN 29AAACP9282G3ZZ, was issued a show cause notice in Form DRC-01 (SCN No.12/2025-26 BLZU dated 20.06.2025) covering a sweeping period from FY 2018-19 to 2023-24, followed by an Order-in-Original dated 03.12.2025 confirming the demand. The petitioner challenged the SCN as void ab initio for impermissibly bunching six separate financial years into a single composite notice under Section 73/74 of the CGST/KGST Act. The Karnataka High Court found the controversy identical to the issue it had already decided in M/S Pramur Homes And Shelters Vs. The Union of India (WP No.33081/2025, decided 11.12.2025), which had comprehensively examined and answered the question of clubbing multiple tax periods in one SCN.

Issues Involved

  1. Whether clubbing or consolidating multiple tax periods/financial years into a single, composite show cause notice under Section 73 or 74 of the CGST/KGST Act, 2017 is legally permissible.
  2. Whether the show cause notice issued to the petitioner for FY 2018-19 to 2023-24, and the consequential Order-in-Original, deserve to be quashed on this ground.
  3. Whether liberty should be reserved to the Department to initiate fresh, properly segregated proceedings for each tax period.

Petitioner's Arguments

  • The petitioner contended that the show cause notice, spanning six financial years in a single composite document, was void ab initio, being contrary to the statutory scheme of Section 73/74 which contemplates assessment on a period-by-period basis.
  • Reliance was placed squarely on the Court's own recent decision in Pramur Homes And Shelters, which had already answered the identical legal question in favour of the taxpayer.

Respondent's Arguments

  • Although several contentions were urged by both sides, the Court found the controversy directly and squarely covered by its decision in Pramur Homes And Shelters, and proceeded on that basis rather than separately re-arguing the point.

Court Order / Findings

  • The Court reproduced the two questions framed and answered in Pramur Homes And Shelters: first, that clubbing/consolidation/bunching of multiple tax periods or financial years in a single composite show cause notice under Section 73/74 of the CGST/KGST Act is illegal, invalid, impermissible and without jurisdiction or authority of law; and second, that a show cause notice spanning multiple financial years accordingly warrants quashing, with liberty reserved to the Department to initiate fresh proceedings in accordance with law.
  • Applying this binding reasoning, the Court held that the impugned show cause notice dated 20.06.2025, covering multiple tax periods/financial years from 2018-19 to 2023-24 in a single composite notice, was illegal, invalid, impermissible and without jurisdiction, and that the consequential Order-in-Original dated 03.12.2025 deserved to be quashed as well.
  • The petition was allowed, the impugned SCN and order-in-original along with all further proceedings, orders and notices pursuant thereto were quashed, and liberty was reserved to the respondents to initiate fresh, appropriately segregated proceedings, with the petitioner entitled to contest any such fresh proceedings in accordance with law.

Important Clarification

  • A single, composite show cause notice under Section 73 or 74 of the CGST/KGST Act that clubs multiple financial years or tax periods together is illegal and without jurisdiction — each tax period must be independently assessed through its own notice.
  • This principle, first laid down in Pramur Homes And Shelters, is now being consistently applied by the Karnataka High Court to quash similarly structured multi-year composite notices across different taxpayers.
  • Quashing on this jurisdictional ground still leaves the Department free to reinitiate correctly segregated, period-wise proceedings against the same taxpayer.

Sections Involved

  • Section 73 of the CGST/KGST Act, 2017 – governs determination of tax not paid for reasons other than fraud, held to require period-wise notices.
  • Section 74 of the CGST/KGST Act, 2017 – governs determination of tax involving fraud or wilful suppression, subject to the same bunching prohibition.
  • Form GST DRC-01 – the statutory show cause notice format found to have impermissibly spanned multiple financial years.

Decision – In Favour of

In favour of the assessee — the multi-year composite show cause notice and resultant order were quashed, though the Department may reinitiate correctly segregated proceedings.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No. 38277 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 17.12.2025

Link to Download the Order

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