K.P Salih Vs Assistant Commissioner of Central Tax and Central Excise (Kerala High Court)
Summary: The Kerala High Court considered a batch of writ petitions challenging composite notices and orders issued under the CGST Act covering multiple assessment years. The petitioners contended that such composite proceedings were legally unsustainable in view of the Division Bench decisions in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 KHC OnLine 149] and Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner, Thrissur [2025 KHC OnLine 467]. The Division Bench decisions had held that composite notices and orders covering multiple assessment years were not permissible under the scheme of the CGST Act.
The respondents, in W.P.(C) Nos. 19658/2025, 19831/2025 and 22396/2025, opposed the relief by relying upon the Constitution Bench judgment of the Supreme Court in The State of Jammu and Kashmir and Others v. Caltex (India) Ltd [1965 SCC OnLine SC 168 : (1966) 17 STC 612]. It was submitted that the observations in Caltex had not been brought to the notice of the Division Bench while deciding Lakshmi Mobiles Accessories and Tharayil Medicals.
The Kerala High Court rejected this contention. The Court examined the Caltex decision and held that it could not be applied to the cases before it. First, Caltex had been decided under the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005, whose statutory scheme was different. Secondly, the competence of an officer to issue a composite notice covering multiple assessment years was not the issue considered in that case.
The Court explained that, in Caltex, the Supreme Court was dealing with a challenge concerning the effect of an assessment covering different periods and whether the assessment, being bad for one portion, necessarily became invalid throughout. The Supreme Court found that transactions relating to the relevant period were separable for assessment purposes. According to the Kerala High Court, those observations arose from the peculiar facts and circumstances of that case and did not determine the general power of an officer to issue a composite notice or composite order.
In contrast, the Division Bench in Lakshmi Mobiles Accessories and Tharayil Medicals had specifically considered whether composite notices and orders could be issued for multiple assessment years under the CGST Act. After analysing the relevant provisions and the scheme of assessment under the CGST Act, the Division Bench had reached the conclusion that such composite notices were not permissible. The Kerala High Court therefore held that the observations in Caltex, rendered under a different enactment and in different factual circumstances, could not displace the principles laid down by the Division Bench in the GST cases.
Applying those principles, the Court held that the impugned composite notices and orders issued for multiple assessment years in the present batch of cases were not legally sustainable. Accordingly, all the writ petitions were disposed of by quashing the impugned notices and orders.
However, the Court did not prevent the tax authorities from taking fresh proceedings. Liberty was granted to the respondents to initiate fresh proceedings by issuing separate demand notices for the relevant assessment years. The Court also clarified that the period from the date on which the respective notices/orders were issued until the date of receipt of the certified copy of the judgment would be excluded while computing the limitation period for initiating proceedings under the relevant provisions.
Cases Discussed
- Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories, [2025 KHC OnLine 149] — followed on the issue of the legal sustainability of composite GST notices and orders covering multiple assessment years. The supplied judgment records that the Division Bench analysed the CGST Act and its assessment scheme and concluded that such composite notices are not permissible.
- Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner, Thrissur, [2025 KHC OnLine 467] — followed on the issue of composite notices and orders for multiple assessment years, which the Division Bench had found legally unsustainable under the CGST Act.
- The State of Jammu and Kashmir and Others v. Caltex (India) Ltd, [1965 SCC OnLine SC 168 : (1966) 17 STC 612] — distinguished because it arose under a different enactment and did not decide the general competence of an officer to issue a composite notice or order covering multiple assessment years.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
In all these cases, the challenge is raised by the respective petitioners, against the composite notices and orders issued under the provisions of the CGST Act, for multiple assessment years. According to the petitioners such a composite notice is not legally sustainable in view of the principles laid down by a Division Bench of this court in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 KHC OnLine 149] and Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner, Thrissur [2025 KHC OnLine 467]. In the said decisions, issuance of composite notices and orders was found to be not legally sustainable.
2.The learned standing counsel appearing for the respondents in W.P.(C) Nos.19658/2025, 19831/2025 and 22396/2025, filed a statement opposing the reliefs sought in these writ petitions by placing reliance upon the observations made by the Constitution Bench of the Honourable Supreme Court in The State of Jammu and Kashmir and Others v. Caltex (India) Ltd [1965 SCC OnLine SC 168: (1966) 17 STC 612]. It was pointed out by the learned standing counsel for the respondents that, the observations made in the said decision were not brought to the notice of the Division Bench of this Court while deciding Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 KHC OnLine 149] and Tharayil Medicals (M/s.), Thrissur v. Deputy Commissioner, Thrissur 2025 KHC OnLine 467].
3.I have carefully gone through the observations in the Caltex (India) Ltd‘s case (supra) and find that the observations therein cannot be made applicable to the cases at hand. Firstly, the said decision was rendered under the provisions of the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005, where the scheme of the Act was different. Secondly, the observations relied on by the learned Standing Counsel for the respondents would indicate that, the competence of the officer to issue a composite notice for multiple assessment years was not exactly the question considered in the said decision.
4.In the said decision, while challenging the judgment passed by the High Court, among other contentions, the State also raised a contention that, the High Court committed an error in taking the view that, the taxing authorities were not entitled to levy sales tax for the period from January 1, 1955 to September 6, 1955, because the assessment was a composite one relating to the entire period from January 1, 1955 to May, 1959, and the assessment which was bad in part, has infected throughout and must be treated as invalid. This contention was accepted by the Honourable Supreme Court and held that, the assessee will not be entitled to any benefit with regard to the transaction of sales between January 1, 1955 to September 6, 1955. Thus, even though the Honourable Supreme Court found that the assessment was bad for the period from January 1, 1955 to May, 1959, the reasons that prompted the High Court to arrive at that conclusion, was not applicable to the period from January 1, 1955 to September 6, 1955. The Honourable Supreme Court also found that, as far as the transactions relating to the said period are concerned, the same are separable for the purpose of assessment. Therefore, it can be seen that, the observations made therein, were with respect to the peculiar facts and circumstances of the case existed therein and it did not deal with the general power of the officer concerned to issue a composite notice or composite order.
5.On the other hand, in Lakshmi Mobiles Accessories and Tharayil Medicals‘s cases (supra) the Division Bench of this Court specifically raised this as an issue and answered the same after analysing the various provisions under the CGST Act and the scheme for assessment. After doing such exercise, this Court came to a definite conclusion that such composite notices are not permissible. On the other hand, in Caltex (India) Ltd‘s case (supra), such an issue was never raised and the questions were considered in the factual circumstances of that case, that too under a completely different enactment.
6.Therefore, I am of the view that, the observations made in the Caltex (India) Ltd‘s case (supra) cannot be made applicable to the facts and circumstances of this case. In such circumstances, I am not inclined to accept the contentions raised by the learned Standing Counsel for the respondents.
7.As observed above, in the light of the principles laid down by this Court in Lakshmi Mobiles Accessories and Tharayil Medicals‘s cases (supra), the issuance of composite notices and composite orders are not legally sustainable. In all these cases, the impugned notices and orders are composite, and were issued for multiple assessment years. Hence in the light of the principles laid down by this Court, an interference is required. Accordingly, all these writ petitions are disposed of, quashing the impugned notices and orders, granting liberty to the respondents, to initiate fresh proceedings after issuing fresh demand notices separately for the relevant assessment years. However, it is clarified that the period from the date on which the respective notices/respective orders are issued, till the date of receipt of the certified copy of this judgment shall be excluded, while computing the period of limitation for initiating proceedings under the relevant provisions.
