Facts of the Case

M/s. Vedu Infrastructure Private Limited was served with an Order of Assessment dated 18.08.2025 in Form GST DRC-07, passed by the Assistant Commissioner, State Tax, Chittoor-II Circle, covering a sweeping period from FY 2021-22 to 2024-25 in a single, composite order. The petitioner separately challenged the underlying inspection authorisation in Form GST INS-01, alleging it was issued without preparing a preliminary report or establishing 'reasons to believe' as mandated under Section 67(1) read with Rule 139(1), and also challenged the consolidated show cause notice in Form GST DRC-01 for covering multiple financial years without complying with the personal hearing mandate under Section 75.

Issues Involved

  1. Whether a single assessment order or show cause notice can validly cover more than one financial year (or tax period) under Sections 73 and 74 of the GST Act.
  2. Whether the inspection conducted under Section 67(1) read with Rule 139(1), allegedly without a preliminary report or established reasons to believe, vitiated the entire proceedings.
  3. Whether the consolidated assessment order deserved to be set aside, leaving the Department free to initiate fresh, year-wise proceedings.

Petitioner's Arguments

  • The petitioner contended that the consolidated assessment order for four financial years (2021-22 to 2024-25) violated Sections 73, 74 and 75 read with Rule 142, and was arbitrary, in violation of Article 14, since a single composite order for multiple years denies year-wise scrutiny and defence.
  • It was further urged that the inspection authorisation itself was defective for want of a preliminary report and documented 'reasons to believe' as required under Section 67(1) read with Rule 139(1) and CBIC Instructions on inspection procedure, and that no personal hearing — mandatory under Section 75 — had been afforded before the consolidated order was passed.

Respondent's Arguments

  • The order does not record a detailed rebuttal from the Department; the matter was disposed of on the basis of a settled Division Bench precedent directly covering the core multi-year bunching issue.

Court Order / Findings

  • The Court noted that a Division Bench of the same High Court, in W.P.No.11028 of 2025 & batch, had already held that a single show cause notice or a single composite assessment order cannot be passed for more than one tax period — whether a month (where assessment precedes the due date for filing the annual return) or a year (where that due date has passed).
  • Applying this binding precedent, the Court set aside the impugned composite assessment order dated 18.08.2025, which spanned FY 2021-22 to 2024-25 in a single order, holding it fell foul of the settled rule against clubbing multiple tax periods into one assessment.
  • The writ petition was disposed of, leaving it open to the respondents to initiate fresh proceedings for each assessment year separately, with the period from the impugned order's date till receipt of the Court's order excluded for limitation purposes, and no order as to costs.

Important Clarification

  • A single GST assessment order (or show cause notice) cannot validly cover more than one tax period — one month if assessment precedes the annual return due date, or one financial year once that due date has passed — under Sections 73 and 74.
  • This principle, already settled by a Division Bench in W.P.No.11028 of 2025 & batch, is being consistently applied across the Andhra Pradesh High Court to quash sweeping multi-year composite assessments.
  • Quashing on this ground leaves the Department free to reinitiate correctly segregated, year-wise assessments, with the intervening period excluded from limitation.

Sections Involved

  • Section 73 and Section 74 of the Central Goods and Services Tax Act, 2017 – govern determination of tax, held to require period-wise (not multi-year composite) notices and orders.
  • Section 67(1) of the CGST Act, 2017 read with Rule 139(1) of the CGST Rules – govern the requirements for authorising an inspection, separately challenged in this petition.
  • Section 75 of the CGST Act, 2017 – mandates personal hearing before an adverse order, also invoked in the challenge.

Decision – In Favour of

In favour of the assessee — the multi-year composite assessment order was quashed, though the Department may reinitiate correctly segregated, year-wise proceedings.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case No.: Writ Petition No. 29122/2025
Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice Subhendu Samanta
Date of Order: 05.11.2025

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