Tharayil Medicals Vs Deputy Commissioner (Kerala High Court)
Kerala High Court rules composite GST show cause notices covering multiple assessment years are impermissible under Section 74 of the Act, citing distinct time limits; Kerala HC: Composite GST SCNs for Years Invalid; Kerala High Court Declares Composite GST Notices for Multiple Years Invalid; Court Emphasizes Year-Specific Proceedings Under Section 74 of GST Act
KOCHI: In a ruling impacting tax administration under the Goods and Services Tax (GST) regime, the Kerala High Court has held that tax authorities cannot issue a single show cause notice (SCN) under Section 74 of the CGST/SGST Act covering multiple assessment years. The court found that the structure and time limitations prescribed in the Act necessitate separate proceedings for each financial year.
The judgment was delivered in an intra-court appeal filed by Tharayil Medicals challenging a decision of a single judge. The appellant, Tharayil Medicals, had received a composite SCN dated August 5, 2024, from the Deputy Commissioner. This notice initiated proceedings under Section 74(10) of the GST Act for five assessment years simultaneously: 2017-2018, 2018-2019, 2019-2020, 2020-2021, and 2021-2022.
The basis for the SCN was the alleged application of incorrect HSN codes by Tharayil Medicals across these years, leading to an incorrect calculation of the tax rate. The notice proposed a reassessment and demanded a total tax amount of Rs. 21,13,080/-, comprising equal parts of CGST and SGST.
