Delhi HC Upholds Consolidated GST Show Cause Notices for Multiple Financial Years

Consolidated SCNs and Delhi High Court GST ruling 

The Hon’ble Supreme Court of India, on September 1, 2025, dismissed as not pressed the Special Leave Petition (Civil) No. 23774 of 2025 filed by Ambika Traders. The Delhi High Court, in Ambika Traders v. Additional Commissioner, Adjudication, DGGSTI, CGST Delhi North Writ Petition (Civil) No. 4853 of 2025, had earlier adjudicated on two significant issues under the Goods and Services Tax (GST) regime. 

Case Background

Ambika Traders, a sole proprietorship dealing in metal scrap, was accused of availing fraudulent Input Tax Credit (ITC) amounting to ₹83.76 crores over multiple financial years (2017–18 to 2021–22). The Directorate General of GST Intelligence (DGGI) issued a consolidated Show Cause Notice (SCN) covering these years, alleging that the firm had engaged in fraudulent practices by claiming ITC against invoices from non-existent suppliers. An Order-in-Original was passed affirming the demand along with penalties. Ambika Traders challenged the following aspects:

1. Consolidated SCN for Multiple Financial Years: The petitioner contended that issuing a single SCN for multiple years was impermissible under Section 74 of the Central Goods and Services Tax (CGST) Act.
2. Denial of Cross-Examination: The petitioner argued that the refusal to allow cross-examination of witnesses violated principles of natural justice. 

Delhi High Court’s Findings 

1. Consolidated SCN for Multiple Financial Years

The Delhi High Court also looked into the issue of whether a single SCN can cover more than one financial year. The Court noted that under Section 74(3) and Section 74(4) of the CGST Act, the words “for any period” and “for such periods” show that the law allows a notice to include multiple financial years, especially when it involves wrongly or fraudulently availed ITC. Therefore, the Court held that a consolidated notice for several years is valid, as long as it is clear, specific, and follows the principles of natural justice.

The Court observed that the nature of ITC is such that cases of fraudulent availment or utilization often cannot be proved without linking transactions across different financial years. For example, the purchase may appear in one financial year, while the corresponding supply is recorded in the next. It is only when these transactions are examined together — and found to involve fake firms or fabricated entries, that the fraud can be clearly identified.

The Court noted that a single instance of availing or using ITC in one financial year may not be enough to prove fraudulent activity. Only when a series of transactions is examined and investigated together, and a consistent pattern is found, can fraudulent availment or utilization of ITC be established. The Court also emphasized that the use of the words “period” and “periods” in Section 74 of the CGST Act, instead of terms like “financial year” or “assessment year” , is intentional and important, as it allows authorities to look beyond a single financial year while identifying such patterns.

Moreover, a Co-ordinate Bench of this Court vide order dated 3rd October, 2024 in W.P.(C) 13855/2024 titled ‘M/s Vallabh Textile Through Its Authorized Representative v. Additional/Joint Commissioner, CGST Delhi East Commiserate & Ors.’, has held as under:

1. “ The instant writ petition seeks to assail the validity of a Show Cause Notice [“SCN”] dated 29 May 2024 and which raises issues pertaining to Financial Years [“FYs”] 2017-18 to 2021-22.
2. The principal ground of challenge which was addressed before us was with respect to the action of the respondents who have proceeded to issue a consolidated notice for the aforesaid period.
3. On an ex-facie perusal of Section 74 of the Central Goods & Services Tax Act, 2017 [“CGST”]/Delhi Goods & Services Tax Act, 2017 [“DGST”], we find ourselves unable to sustain that challenge in the absence of any prohibition that may have been statutorily engrafted in this respect. That in any case would not constitute a jurisdictional challenge warranting the writ petition being entertained against a SCN.
4. Insofar as FY 2017-18 is concerned, it was the submission of learned counsel for the writ petitioner that the same would not sustain bearing in mind the provisions contained in Section 74(10) of the CGST Act, 2017/DGST Act, 2017. Insofar as that question is concerned, we leave it open to the writ petitioner to initiate appropriate proceedings independently.
5. Bearing in mind the well settled principles which govern situations and contingencies in which a SCN challenge may be entertained by a Court under Article 226 of the Constitution, we find no ground to entertain the instant writ petition.
6. It shall, subject to the aforesaid observation, stand dismissed.”

Through this decision, the Coordinate Bench of the Court clarified that a single consolidated show cause notice (SCN) covering multiple financial years is permissible under Section 74 of the CGST Act. Therefore, this argument cannot be used as a valid ground for filing or maintaining a writ petition.

2. Denial of Cross-Examination

The Delhi High Court held that the impugned order is an appealable order under Section 107 of the CGST Act, and therefore, the Petitioner has an effective appellate remedy available. The Court further observed that the claim regarding denial of cross-examination was misplaced, as proceedings arising from a SCN cannot be treated as mini-trials. The statements relied upon were those of the Petitioner’s proprietor, suppliers, or purchasers, some of whom had already appeared before the Department.

The Court also reiterated that the right to cross-examination is not absolute, referring to its earlier decision in M/s Vallabh Textiles v. Additional Commissioner, Central Tax GST, Delhi East & Ors. [(2025: DHC: 2559-DB)]. In the present case, the Court noted that no prejudice was caused to the Petitioner, since all documents relied upon by the Department were recovered from the Petitioner’s own premises, and the Petitioner was already aware of the status of the concerned suppliers and purchasers. 

Conclusion: 

Dismissal of a non-pressed SLP is usually treated as a procedural dismissal, not a substantive adjudication on merits. No express decision on the correctness of the High Court ruling is made by the Supreme Court in such cases. The High Court ruling remains binding as precedent within its territorial jurisdiction, but it is not explicitly affirmed by the Supreme Court.

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