Case Law Details
X L Interiors Vs Deputy Commissioner (Intelligence) (Kerala High Court)
The Kerala High Court considered a writ petition challenging a composite show cause notice issued for financial years 2018–19 to 2022–23 under the Central Goods and Services Tax Act, 2017. The petitioner also sought a direction to mandate separate adjudication orders for each year. Earlier, the Court had permitted the tax authority to proceed only for the year 2017–18 due to the impending limitation deadline, and an order for that year was subsequently passed. For the remaining years, the issue was whether a composite order could be issued. Referring to a binding Division Bench decision, the Court held that composite orders for multiple years are not legally valid when determining tax under Sections 73 or 74 of the Act, as such an approach may prejudice determination. Accordingly, the Court directed the competent authority to pass separate orders for each financial year covered by the show cause notice, after granting an effective opportunity of hearing. The writ petition was disposed of with these directions.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Petitioner is challenging Ext.P1 composite show cause notice issued for the years 2018-19 to 2022-23. Petitioner has also sought for a direction to pass separate orders for each of the financial years covered by the notice.
2. When the matter came up for consideration on 31.01.2025, on noticing that the period of limitation for the year 2017-18 expires by 05.02.2025, this Court permitted the Tax Officer to proceed in accordance with law, as relating to 2017-18 alone and directed to await further orders from this Court regarding the remaining periods.
3. During the course of arguments, it was submitted that the order determining tax, pursuant to Ext.P1 composite show cause notice, for the year 2017-18, has already been issued, while for the remaining years, orders from this Court are awaited.
4. A Division Bench of this Court had, in Joint Commissioner v. M/s.Lakshmi Mobile Accessories [2025:KER:9253] held that composite orders are not legally valid while determining short payment of tax under Section 73 or Section 74 of the CGST Act. In view of the above categoric finding of the Division Bench of this Court, it is clear that the respondents are not entitled to pass a composite order in respect of the different years for which show cause notice has been issued. Since the determination of tax due will be seriously prejudiced by such composite orders, it is necessary that the Tax Officer pass separate orders in respect of the years covered by Ext.P1 composite notice.
Accordingly, the Competent Authority amongst the respondents is directed to pass separate orders in respect of each of the years covered by Ext.P1 show cause notice, after granting an effective opportunity of hearing, in accordance with law.
The writ petition is disposed of as above.
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