Case Law Details
Floor Gardens Vs Assistant Commissioner (Kerala High Court)
Composite GST Show Cause Notices (SCNs) Quashed as Multiple Financial Years Cannot Be Clubbed: Kerala HC
The petitioner challenged Ext.P1 consolidated Show Cause Notice issued by the respondents covering multiple financial years, namely 2017-2018 to 2021-2022, along with Ext.P2 Summary Show Cause Notice and the consequential summary orders marked as Exts.P5 and P6.
The principal challenge was that the issuance of a single composite show cause notice for multiple assessment years was not legally sustainable. The petitioner relied upon the Division Bench decisions of the Kerala High Court in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 KHC OnLine 249] and Tharayil Medicals v. Deputy Commissioner, Audit Division-IV [2025 VIL 356 KER], wherein such composite notices covering multiple assessment years had been held to be legally unsustainable.
After hearing the petitioner and the respondents, the Kerala High Court found merit in the petitioner’s contention, observing that the Division Bench had indeed recorded such a finding in the decisions relied upon.
In view of the principles laid down in those judgments, the Court held that interference was warranted. Accordingly, the writ petition was disposed of by quashing Ext.P1 consolidated Show Cause Notice issued for the financial years 2017-2018 to 2021-2022, Ext.P2 Summary Show Cause Notice, and the consequential summary orders contained in Exts.P5 and P6.
The Court granted liberty to the respondents to issue separate show cause notices for the relevant assessment years. It further directed that, while computing the period of limitation for initiating fresh proceedings, the period from the date of issuance of the composite notice until the date of receipt of the certified copy of the judgment shall be excluded.
The petitioner’s counsel also pointed out a separate contention regarding limitation with reference to the date of issuance of DRC-01. According to the petitioner, although the show cause notice had been issued in 2023, the summary of the notice was issued only on 06.02.2025, and DRC-07 was also issued on the same date. The Court clarified that the exclusion of time granted in the judgment would not deprive the petitioner of the right to pursue this contention regarding the validity of the notice.
Cases Discussed:
- Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories, 2025 KHC OnLine 249
- Tharayil Medicals v. Deputy Commissioner, Audit Division – IV, 2025 VIL 356 KER
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This writ petition is submitted by the petitioner challenging Ext.P1 consolidated Show Cause Notice which was issued by the respondents for multiple financial years namely, 2017-2018 to 20212022, Ext.P2 Summary Show cause notice and Exts.P5 and P6 consequential summary orders. The main challenge raised against the sustainability of the same is that, issuance of a composite notice for multiple assessment years was found to be not legally sustainable as per the decision rendered by this Court in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories [2025 KHC OnLine 249] and Tharayil Medicals v. Deputy Commissioner, Audit Division – IV [2025 VIL 356 KER]
2. After hearing the learned counsel for the petitioner and the learned Standing Counsel for the respondents, I find merits in the said submission, in view of the fact that, such a finding was indeed entered into by the Division Bench of this Court in the decisions referred to above.
3. In such circumstances, in the light principles laid down by this Court in the above referred judgments, an interference is required. Accordingly, this writ petition is disposed of, quashing Ext.P1 consolidated Show Cause Notice which was issued by the respondents for multiple financial years namely, 2017-2018 to 20212022, Ext.P2 Summary Show cause notice and Exts.P5 and P6 consequential summary orders, granting liberty to the respondent to issue separate notices for the relevant assessment years. However, the period from the date of issuance of composite notice till the date of receipt of certified copy of the judgment shall be excluded while computing the period of limitation for initiating fresh proceeding.
As it is pointed out by the learned counsel for the petitioner that the petitioner has raised a specific question with regard to the period of limitation with reference to the date of issuance of DRC-01 and, according to him, even though the show cause notice was issued in the year 2023, the summary of the notice was issued only on 06.02.2025, and on the same date itself, DRC-07 was also issued. Therefore, it is clarified that the exclusion of the time granted by this Court will not take away the right of the petitioner to pursue the aforesaid contention with regard to the validity of the notice issued.
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