Paras Stone Industries Vs Union of India (Bombay High Court)
The petitioner challenged a show cause notice issued in September 2023 under Section 74 of the Central Goods and Services Tax Act, 2017, alleging suppression of taxable value and short payment of tax for the financial years 2017-18, 2018-19, and 2019-20. The notice was issued by the Directorate General of GST Intelligence, Nagpur, by clubbing multiple financial years into a single proceeding. The principal contention was that such consolidation of different tax periods under a single notice is impermissible under the CGST Act and amounts to a lack of jurisdiction.
The Court noted that this issue was already settled by earlier Division Bench judgments, including Milroc Good Earth Developers and Rite Water Solutions, which categorically held that the CGST framework contemplates assessment and recovery separately for each tax period or financial year. These decisions clarified that Sections 73 and 74 prescribe limitation and assessment with reference to individual financial years, leaving no scope for composite or consolidated show cause notices covering multiple years.
The respondents relied on a Delhi High Court decision permitting consolidated notices in cases involving allegations of fraud across multiple years. However, the Court rejected this argument, holding that authorities within the State are bound by the judgments of the jurisdictional High Court, particularly where such judgments were rendered after the Delhi High Court decision and had taken a contrary view. The Court also noted that the Supreme Court had neither stayed nor overruled the Bombay High Court decisions on the issue.
