In M/s Milroc Good Earth Developers v. Union of India & Others, the Bombay High Court at Goa considered a significant jurisdictional issue under the CGST Act, 2017—whether tax authorities are legally permitted to issue a single, consolidated show cause notice by clubbing multiple financial years into one proceeding.

The petitioners, real estate developers engaged in construction and redevelopment projects, were issued show cause notices invoking Sections 74(1) and 74A of the CGST Act, demanding GST, interest, and penalties for a combined period spanning Financial Years 2017-18 to 2023-24. The notices alleged tax liability on construction services rendered to landowners, reversal of input tax credit under Section 17 read with Rule 42, and liability under the reverse charge mechanism on transfer of development rights (TDR).

Instead of addressing the merits of the tax demands, the petitioners challenged the notices on a pure question of law, contending that the statutory scheme of the CGST Act does not permit consolidation or bunching of multiple financial years into a single show cause notice. It was argued that the Act recognises “tax period” as a distinct unit linked to the filing of returns, and each financial year constitutes a separate and independent period for assessment, limitation, and adjudication.

After an exhaustive analysis of the statutory framework—including the definitions of assessment, return, and tax period, along with the scheme governing filing of monthly and annual returns, assessment, limitation, and recovery—the High Court held that the CGST Act mandates year-wise determination of tax liability. The Court observed that Sections 73, 74, and the newly introduced Section 74A prescribe distinct limitation periods linked to the relevant financial year, and issuance of composite notices frustrates this limitation scheme.

The Court relied upon and approved the legal principles laid down by multiple High Courts, including:

  • R.A. & Co. v. Additional Commissioner of Central Taxes (Madras High Court)
  • Titan Company Ltd. v. Joint Commissioner of GST
  • Tharayil Medicals v. Deputy Commissioner (Kerala High Court)
  • State of Jammu & Kashmir v. Caltex (India) Ltd. (Supreme Court)

These decisions consistently recognise that each assessment year is a separate unit and that clubbing multiple years into one proceeding results in jurisdictional overreach and prejudice to the assessee.

Rejecting the preliminary objection on maintainability, the Court held that when the issue raised is jurisdictional, the assessee cannot be compelled to respond to an inherently invalid show cause notice. Consequently, the impugned consolidated show cause notices were held to be without authority of law and were quashed in their entirety.

The judgment conclusively affirms that GST authorities cannot issue composite show cause notices covering multiple financial years, and that any such action violates the statutory scheme, limitation provisions, and principles of fair adjudication under the GST law.

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