Introduction
Under the GST framework, statutory provisions relating to demand and recovery—particularly Sections 73 and 74 of the Central Goods and Services Tax Act, 2017—contemplate the issuance of notices for specified tax periods, subject to defined limitation periods and procedural safeguards. Further, A Show Cause Notice (SCN) is one of the most critical procedural safeguards within the GST framework and forms the legal foundation for any demand, penalty, or adverse action proposed by the tax authorities. Its importance lies not merely in statutory compliance, but in upholding the principles of natural justice, transparency, and fair hearing that are integral to tax administration.
In the assessment / investigation proceeding, Show Cause Notice (SCN) acts like the foundation for proposed action against Taxpayer, as well as indicates the conclusion of initial proceeding of investigation. However, in the recent practice, tax authorities have often clubbed several assessment years or tax periods into a single notice to streamline enforcement and reduce administrative burden.
Taxpayers, on the other hand, have challenged this approach on grounds that it obscures period-wise allegations, complicates rebuttal, and in certain instances circumvents limitation provisions. Consequently, High Courts across jurisdictions have delivered varied rulings based on factual matrices, statutory interpretation, and the extent of prejudice caused to the assessee. The absence of a uniform judicial position has made the issue a contentious and evolving area of GST jurisprudence, warranting a closer analytical examination of legislative intent, procedural propriety, and judicial trends.
Background
Various basis of validity of bunching of Show cause notices is originated from the provision of Sec 73 and 74 of CGST act 2017, and corresponding provision of State GST Acts.
Relevant provision of the act are as below,
Sec 73(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised for any reason, other than the reason of fraud or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder.
74(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.
Sec 74A (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilised, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty leviable under the provisions of this Act or the rules made thereunder:
From the plain reading of sub-section (1) of Section 73/74/74A of the GST Act, the person chargeable with tax, which has not been paid, etc., requiring him to show cause as to why he should not pay the amount specified in the notice, along with the interest and penalty, for various situations mentioned therein.
Whereas, in Sub-Section (2) of above sections, it has been stated that the proper officer shall issue notice under Sub-Section (1) i.e. show cause notice, prior to the time limit fixed under Sections 73(10)/74(10)/74A (10) of the GST Act for issuance of order. said time limits are
1. In case of Sec 73, at least three months prior to issuance of order i e 30 months from due date for the annual return or 30 months from payment of erroneous refund.
2. In case of Sec 74, at least six months prior to issuance of order i e 54 months from due date for the annual return or 54 months from payment of erroneous refund.
3. In case of Sec 74A, at least 12 months prior to issuance of order i e 42 months from due date for the annual return or 42 months from payment of erroneous refund.
Section 73(10)/74(10)/74A(7) of the GST Act specifically provides the time limit for issuance of order under respective sections same are as follows
1. In case of Sec 73, at three years from due date for the annual return or three years from payment of erroneous refund.
2. In case of Sec 74, at Five years from due date for the annual return or Five years from payment of erroneous refund.
3. In case of Sec 74A, within 12 months from the date of issuance of show cause notice.
It is important to note that, Sub-Section (3) of the above provisions also requires a statement is required to be served to the subsequent tax periods and the issuance of such statement shall deemed to be a notice under Section 73(1)/74(1)/74A(1) of the GST Act for the respective years.
Thus, it is clear that at first instance, the notice shall be issued, under Section 73(1)/74(1)/74A(1), for a tax period, and on the basis of the notice, Statement may be issued for sub-sequent Tax periods, and it will act as Show cause notice for the sub-sequent tax period.
A conjoint reading of Section 73(1),(3)&(4)/74(1),(3)&(4) makes it clear that “any period” is nothing but the “tax period”. Thus, based on the “tax period”, the show cause notice, under Section 73/74 of GST Act, can be issued by the Department, and tax period is defined as per Sec 2 (106) “tax period” means the period for which the return is required to be furnished.
A reading of the above Sections would show that “tax period” means the period, for which, the return is required to be furnished. Therefore, based on the filing of returns frequency, the tax period will be determined. Therefore, based on the monthly return, notice, under Section 73/74, can be issued, for any particular month. Likewise, based on the annual returns, notice, under Section 73/74, can be issued for the entire financial year or otherwise, as decided by the department.
Now, it would be apposite to extract the definition of the word “return” in terms of Section 2(97) of the GST Act, which reads as follows:
Sec 2(97) “return” means any return prescribed or otherwise required to be furnished by or under this Act or the rules made thereunder;
So, Taxpayer is required to file monthly return as well as annual return (on the basis of turnover requirement) and issuance of show cause notice should be strictly based on the tax periods, which is determined based on filing of returns. For the purpose of issuance of show cause notice, includes, “monthly tax period” or “yearly tax period” and the GST Act will not permit for issuance of show cause notice beyond such period, unless return for larger period is prescribed and required to be filed by the taxpayer.
However, the practice is followed by the revenue under various cases, and concern raised in the high court by way of Writ, high court have interpreted the issue and concluded as below,
the Constitution Bench of the Hon’ble Apex Court AIR 1966 SC 1350, State of Jammu and Kashmir and Others v. Caltex (India) Ltd has held that where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said law was laid down keeping in mind that each and every Assessment Year will have a separate period of limitation and the limitation will start independently and that is the reason why the Hon’ble Supreme Court has held that each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said principle would apply to the present case as well.
In case of TITAN COMPANY LTD. Vs The Joint Commissioner of GST & Central Excise (W.P.No. 33164 of 2023-Madrs High Court) court observed that, by issuing bunching of show cause notices for five Assessment Years starting from 2017-18 to 2021-22, the respondents are trying to do certain things indirectly which they are not permitted to do directly and the same is not permissible in law. If the law states that a particular action has to be completed within a particular year, the same has to be carried out accordingly. The limitation period of three years would be separately applicable for every assessment year and it would vary from one assessment year to another. It is not that it would be carried over or that the limitation would be continuing in nature and the same can be clubbed. The limitation period of three years ends from the date of furnishing of the annual return for the particular financial year
In case of R A And Co Vs The Additional Commissioner Of Central Taxes (WP. 17239 of 2025- Madras High Court), court observed that,
(i) The GST Act permits only for issuance of show cause notice based on the tax period. Therefore, if the annual return is filed, the entire year would be considered as a tax period and accordingly, the show cause notice shall be issued based on the said annual returns.
(ii) If show cause notice is issued before the filing of annual returns, the same can be issued based on the filing of monthly returns;
(iii) If show cause notice is issued after the filing of annual returns or after the commencement of limitation, the said notice shall be issued based on the annual returns with regard to the relevant financial year.
(iv) No show cause notice can be clubbed and issued for more than one financial year since the same is impermissible in law.
(v) In this case, without any jurisdiction, the impugned order came to be passed for more than one financial year, which is impermissible in law and hence, the same is liable to be quashed. Accordingly, the impugned order stands quashed based on the aspect of clubbing of impugned assessment order for more than one financial year.
In case of Tharayil Medicals Vs The Deputy Commissioner (WA NO. 627 OF 2025 Kerala HC) Kerala High Court observed that, There is yet another reason why we should hold that separate show-cause notices are issued for different assessment years. There may be cases where proceedings are initiated in the guise of a show cause notice under Section 74 wherein, on facts, the case of the assessee will fall under Section 73 of the CGST/SGST Act. We find that insofar as the time limit prescribed under Section 73 (10) of the CGST/SGST Act is concerned, it is three years instead of five years and further, the aspect of fraud, willful misstatement and suppression do not arise for consideration in proceedings under Section 73. Thus, by issuing a composite notice, the assessing authority, cannot bypass the mandatory requirement of Section 73 to complete the assessment by falling back on a larger period of limitation under sub-section (10) of Section 74. If such a recourse is permitted, then certainly the said action would be a colourable exercise of the power conferred by the statute and will offend express provisions of the CGST/SGST Act qua limitation. This reason would also prompt us to hold that in cases where the assessing officer finds that an assessee is liable to be proceeded either under Section 73 or under Section 74 for different assessment years, a separate show cause notice has to be issued. Still further, since proper officer need to issue a show cause notice prior to 6 months to the time limit prescribed under sub-section (10) of Section 74, if a composite notice is issued, the assessee will be prejudiced inasmuch as the availability of a lesser period to submit a proper and meaningful explanation. This also is a strong indicative factor which would prompt us to hold in favour of the assessee. Further review petition filed against the order by the revenue was also dismissed by court.
In case of Uno Minda Limited (Seating Division) vs The Joint Commissioner of GST and Central Excise (W.P.No.27776 of 2024 & WMP.Nos.30287 & 30288 of 2024)-Madras High court set aside the show cause notice clubbing the multiple years, and directed to the revenue for issuance of yearwise Show cause notice, which will enables taxpayer benefit of Amnesty scheme proposed.
IN case of S J Constructions vs. The Assistant Commissioner and Others (W.P.No.11028/2025) of AP High Court, court observed that, Section 74(3) is in pari-materia with Section 73(3). However, subsection (4) of Section 74 does not contain the term “such tax period”. This non mention would not, in our opinion, make any difference to the aforesaid interpretation. Apart from this, there are certain other provisions, which would also have to be considered. Any interpretation of an Act should not result in some of the other provisions becoming otiose or reduced in scope. As rightly pointed out by the Hon’ble High Court at Madras, the right of a registered person to obtain benefit under Section 128 of APGST Act as well as the right to invoke the remedy of appeal against the orders of assessment either under Section 73 or under Section 74 would get impacted if a common order is permitted to be issued in relation to more than one assessment / financial year.
In case of Milroc Good Earth Developers v. Union of India & others (W.P.No.2203/2025) Bombay High Court concluded that, The Act of 2017, therefore involve a definite tax period, based on the filing of the Return, which can be either monthly or annual Return and if the assessment is based on annual Return, the tax period shall be the relevant financial year. In the light of the statutory scheme, we find that there is no scope for consolidating various financial years/tax period which is attempted by the impugned Show Cause Notices assailed in the Petition.
In case of ICAD School of Learning Pvt. Ltd. Vs Union of India (Writ Petition No. 736 of 2026), court has categorically pointed out the fact that, “Time limit operate year by year. Section 73(10) and 74(10) of the CGST Act fix the time limit to issue an assessment order within three years (Section 73) or five years (Section 74) from the last date for filing annual return for the year to which the tax dues relate. VI] Consolidation would collapse these years, specific steps and grounds, harming the tax payers’ ability to respond year by year and violating the explicit year wise structure of the statute. These niceties, in our view, were not considered by the Delhi High Court” Similar view was also taken in case of Speedways Logistics (P.) Ltd. v. Union of India (WRIT PETITION NO. 7419 OF 2025) by Bombay High Court.
Some other judgements, passed by the high court in favour of taxpayer are as below,
- Veremax Technologie Services Limited Vs The Assistant Commissioner Of Central Tax (W PNO. 15810 OF 2024-Karanataka High Court)
- Bangalore Golf Club Vs Assistant Commissioner Of Commercial Taxes (W P NO. 16500 OF 2024- Karanataka High Court)
- Batch Writs of R Ashaarajaa Vs The Senior Intelligence Officer (W.P.Nos.29716, and other Writs).-Madras High Court
- Lexington Soft Private Limited vs. Additional Commissioner GST & Central Excise (W.P.No.28856 of 2025). Madras High Court
- Instakart Services Private Limited vs The Additional Commissioner Chennai South Commissionerate (W.P.No.31551 of 2025 & W.M.P.Nos.35344 & 35345 of 2025)- Madras High Court
- M/S.KAL Media Services Pvt Ltd vs The Joint Commissioner Of Central Taxes Audit Ii Commissionerate (W.P.No.33124 of 2025 & W.M.P.Nos.37209 & 37210 of 2025)-Madras High Court.
Interestingly, CBIC while interpretation the Terms “Tax period”, “Any period” as referred for the section 73 and 74, pointed that,
3.1 The Act mandates the issuance of show cause notice under section 73(1) or section 74(1), as applicable, where any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised. Further the phrase “financial year” is used in section 73(10) and section 74(10) of the CGST Act which prescribes time limit to issue order under the respective provisions. The limitation period under section 73(10)/74(10) applies individually to each period covered.
3.2 It is submitted that sections 74(3) and 74(4) use the language “for any period” and “for such periods”, respectively and similar language is used in section 73 of the CGST Act. Under sections 73(4) and 74(4), the Act provides that if such a notice has already been issued for certain periods and demand arises for new periods on the same grounds, a statement suffices for the additional periods serving as a deemed notice. Therefore, it would be incorrect to say that each period necessarily requires a fresh SCN in every case. The law deems the statement as a valid notice, fulfilling the principles of due process. Thus, it can be said that consolidated or clubbed SCNs covering multiple tax periods on identical grounds are not only permissible but envisaged by the statute itself to avoid multiplicity of proceedings.
Further, based on the language used in the said provisions, it can be inferred that a notice can be issued for a period which could be more than one financial year and that the proper officer is expressly empowered to issue SCNs for “any period” as he deems fit within the four corners of law and there is no express bar in the statute which supports the prayer made by the Petitioner before the Hon’ble Court. Moreover, each tax period covered in the SCN is subject to its own limitation period as prescribed under sections 73(10) and 74(10).
CBIC also has referred the Landmark judgement of State of Jammu and Kashmir and others vs Caltex (India) Ltd, The Hon’ble Supreme Court held that “Where a single assessment covers multiple periods, some of which are constitutionally valid and others not, the valid portion can be upheld and enforced independently”……”where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods”. Hon’ble court supported its reasoning by referring to earlier decisions such as State of Bombay v. United Motors (India) Ltd., AIR 1953 SC 252 and Bengal Immunity Co. v. State of Bihar, AIR 1955 SC 661, where it was affirmed that partial validation or taxation for specific periods is constitutionally permissible, even if another portion of the same assessment stands invalidated.
Further, Various high courts have interpreted the provisions beyond the word of Act and drawn some interesting conclusions, same are as below,
in case of X.L. Interiors v. Deputy Commissioner (Intelligence), SGST Department, Ernakulam [W.P.(C) No. 35156 of 2024, Kerala High Court], where court held that issuance of a consolidated Show Cause Notice (SCN) under Section 74 of the CGST Act for multiple financial years is “not illegal”. The Kerala Bench emphasized that Sub-section (3) of Section 74 refers to a ‘period’ rather than a particular financial year, permitting authorities to club multiple years in a single SCN. This approach reflects the legislative intention and practical necessity, recognizing that GST frauds, particularly involving wrong or fraudulent Input Tax Credit (ITC) claims, often span multiple financial years and require holistic examination.
IN case Ambika Traders Through Vs Additional Commissioner (W.P.(C) 4853/2025, CM APPL. 22194/2025 & CM APPL. 22195/2025) delhi High court held that, Insofar as the issue of consolidated notice for various financial years is concerned, a perusal of Section 74 of the CGST Act would itself show that at least insofar as fraudulently availed or utilized ITC is concerned, the language used in Section 74(3) of the CGST Act and Section 74(4) of the CGST Act is “for any period” and “for such periods” respectively. This contemplates that a notice can be issued for a period which could be more than one financial year. Similar is the language even in Section 73 of the CGST Act.
In case of Vallabh Textiles Vs Additional Joint Commissioner (W.P.(C) 13855/2024- Delhi High Court)- dismissed the writ due to lack of jurisdiction.
Similar conclusion is drawn by Delhi high court in case of
- M/S RAGHUNATH ENTERPRISES vs ADDITIONAL COMMISSIONER, CGST, DELHI NORTH (W.P.(C) 5352/2025 & CM APPL. 24389/2025).
- M/s. Mathur Polymers v. Union of India & Others (W.P.(C) 2394/2025 & CM APPL. 11289/2025) SLP Agaist the order dismissed by Supreme Court vide order dated SLP (CIVIL) Diary No. 50279/2025.
So, as on the date some decisions are in favour of Taxpayer, whereas some are in favour of revenue and by the time, article get published, some more will get pronounced or clarification will come from department. to sum up the conclusion on the issue of consolidation of Notice, Most courts are stressing that the “tax period” (month or financial year) is the basic unit under GST and should normally be treated separately. Even though Sections 73 and 74 use the words “any period,” many High Courts have clarified that this cannot be used to ignore the year-wise limitation rules or the taxpayer’s right to properly defend each year’s case. In simple terms, administrative convenience cannot override legal safeguards and principles of natural justice.
Some court rulings (especially from the Delhi and Kerala High Courts) have taken a slightly different view. They have indicated that where the issue is identical across years—such as in continuing fraud or the same ITC irregularity—a combined notice may not automatically be illegal, provided the taxpayer is not prejudiced and limitation for each year is respected.
Conclusion.
The legality of issuing a single Show Cause Notice covering multiple financial years under GST is still a developing issue. While the law uses flexible wording like “any period,” most High Courts are leaning towards a year-wise and tax-period-wise approach, especially where limitation and taxpayer rights may be affected. The consistent judicial message is clear: ease of administration cannot come at the cost of statutory protection and fair hearing.
Until the Supreme Court settles the matter or the law is amended, both taxpayers and tax authorities need to act cautiously. Taxpayers should closely review any composite notices for limitation or jurisdictional defects. On the other hand, the Department should adopt a balanced approach that respects both enforcement needs and legal safeguards.
[i] Ref- Circulars CGST F. No. CBIC-20010/67/2025-GST/994 15-09-2025
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