Smt R Ashaarajaa Vs Senior Intelligence Officer (Madras High Court)
The Madras High Court decided a batch of writ petitions challenging the practice of “bunching” show cause notices, namely the issuance of a single show cause notice or assessment order covering more than one financial year under Sections 73 and 74 of the Goods and Services Tax Act, 2017. Since the issue and relief sought were identical, all petitions were heard together and disposed of by a common order.
The petitioners contended that bunching show cause notices for multiple financial years is contrary to the GST Act, violates principles of natural justice, and causes serious prejudice. They argued that Sections 73 and 74 prescribe separate limitation periods for each financial year and require independent proceedings. Issuing a composite notice at the fag end of limitation for the earliest year forces assessees to respond for later years prematurely, making it difficult to gather evidence. They also highlighted practical hardships, such as inability to seek compounding under Section 138 for specific years, difficulty in availing amnesty schemes limited to certain years, and obstacles in contesting some years while settling others.
The petitioners relied on earlier judgments, including the Madras High Court’s decision in Titan Company Ltd., affirmed in appeal by consent, as well as decisions of the Karnataka and Kerala High Courts, and the Constitution Bench ruling of the Supreme Court in State of Jammu and Kashmir v. Caltex (India) Ltd., which held that assessments for different years are distinct and separable.
