The Karnataka High Court in Emmanuel Constructions (P.) Ltd. vs. Principal Secretary to the Govt. Finance Department held that issuing a single consolidated show cause notice (SCN) for multiple financial years is invalid under the CGST Act. The petitioner had received one SCN covering FY 2019-20 and 2020-21, but two different adjudicating officers passed separate demand orders based on the same notice. The Court found this procedurally impermissible, noting that each financial year must be independently examined and adjudicated under Section 73, which prescribes a specific timeline linked to the annual return of the relevant year. Since the consolidated SCN violated statutory requirements, both the SCN and resulting orders were quashed. However, the authority was permitted to issue fresh notices in accordance with law, and the period from the order to disposal of the writ was excluded from limitation under Section 73(10) of the KGST Act. The judgment aligns with earlier Karnataka decisions disallowing consolidated SCNs, though contrary views exist in other High Courts for cases involving fraud.
Facts:
M/s Emmanuel Constructions (P.) Ltd, (“the Petitioner”) received a single SCN in Form GST DRC-01 dated November 11, 2023, for two different FY 2019-20 and 2020-21. However, two different orders were passed by two different officers for the same SCN. The petitioner filed a writ petition challenging the validity of SCN and demand orders before the Hon’ble High Court of Karnataka. The petitioner submitted that two different officers, for two different financial years, passed demand orders on the basis of the same SCN, which is impermissible under the law and contrary to the provisions of the CGST Act.
Issue:
Whether the issuance of a single SCN for multiple financial years is valid under the CGST Act?
Held:
The Hon’ble High Court of Karnataka in W.P. 5827 OF 2025 (T-RES) held as under:
- Held that, the single consolidated SCN for different financial years are invalid. Hence, demand orders are also invalid.
- Directed that, the adjudicating authority has the liberty to issue a fresh notice to the petitioner and to proceed further in accordance with the law.
- Concluded that, the time period from the date of the order till the disposal of this writ petition will be excluded for the purpose of limitation under Section 73(10) of the Karnataka Goods and Services Tax, 2017 (“KGST Act”).
Hence, the Hon’ble High Court quashed the SCN and its respective demand orders.
Our Comments:
Section 73 of the CGST Act: Determination of tax [pertaining to the period up to Financial Year 2023-24 not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful-misstatement or suppression of facts:
73(10): The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
Recently, the Hon’ble High Court of Karnataka in the M/S. Veremax Technologie Services Limited Vs. The Assistant Commissioner of Central Tax Bengaluru, [W.P No. 15810 Of 2024 Dated September 04, 2025] held that single SCN cannot be issued for multiple financial years because particular action must be completed within a designated year, and that same is consolidated in section 73(10) of the CGST Act that prescribes a specific time limit for furnishing annual return for the Financial Year to which the tax due relates.
Whereas the Hon’ble Delhi High Court in Ambika Traders v. Addl. Commissioner, Adjudication DGGSTI [W.P.(C) 4853 of 2025, dated July 29, 2025] held that Section 74(3) and (4) of the CGST Act permit notices “for any period” or “such periods,” unlike Section 74(10) of the CGST Act, which uses the term “financial year.” Hence, an SCN notice can be issued for a period that could be more than one financial year. Also, fraudulent Input Tax Credit (“ITC”) often spans multiple years, and a consolidated SCN is permissible.
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