Milroc Good Earth Developers Vs Union of India (Bombay High Court)
The Bombay High Court considered two writ petitions raising a common issue regarding whether proceedings under the CGST Act, 2017 can be initiated through consolidated show cause notices covering multiple financial years. In the first petition, the petitioner challenged a show cause notice issued under Sections 74(1) and 74A of the CGST Act for the period from FY 2017-18 to FY 2023-24 involving demands relating to GST on construction services, reversal of input tax credit, and liability under the reverse charge mechanism. In the second petition, the petitioner challenged an order confirming GST demand, interest, and penalty for FY 2017-18 to FY 2022-23 based on a consolidated show cause notice. The petitioners argued that under the GST scheme, assessment and returns are linked to a “tax period,” which is defined as the period for which returns are required to be furnished, and therefore separate financial years cannot be clubbed together for assessment purposes.
The Court examined the statutory scheme of the CGST Act, including provisions relating to returns, assessment, annual returns, payment of taxes, and determination of tax under Sections 73, 74, and 74A. It observed that the Act contemplates assessment and determination of tax liability for each tax period and each financial year separately. The Court noted that limitation periods under Sections 73(10) and 74(10) are independently prescribed for each financial year based on the due date for furnishing annual returns. It held that consolidated notices covering multiple financial years would frustrate the statutory limitation scheme and prevent assessees from raising year-specific defences.
