Case Law Details
Eskay Trans. Vs Joint Director (Madras High Court)
The Madras High Court quashed a show cause notice dated 06.06.2025 issued to the petitioner after holding that it wrongly clubbed multiple financial years (2018–2025) into a single notice, which is without jurisdiction and impermissible under the GST Act. The Court relied on its earlier common order dated 21.07.2025, which held that show cause notices must be issued separately for each financial year based on the relevant tax period or annual return. It reiterated that no single show cause notice can cover more than one financial year. Accordingly, the Court set aside the impugned notice, directed the respondents to immediately de-freeze the petitioner’s bank account upon production of the order, and granted the authorities liberty to initiate separate proceedings for each financial year in accordance with law.
The Madras High Court allowed the writ petition challenging Show Cause Notice No. 003/2025 dated 06.06.2025, holding that the notice was issued without jurisdiction because it clubbed multiple financial years (2018–2025) into a single show cause notice, which is impermissible under the GST Act. The Court noted that both parties agreed that the issue had already been settled by its common order dated 21.07.2025 in a batch of writ petitions. In that decision, the Court had held that a show cause notice must be issued based on the relevant tax period, and where annual returns have been filed, the notice should relate to the concerned financial year. If issued before the filing of annual returns, it may be based on monthly returns. However, a single notice cannot be issued for more than one financial year, as such clubbing is not permitted by law. Applying the earlier ruling, the Court concluded that the impugned notice covering 2018–2025 was without jurisdiction and therefore liable to be quashed. The Court quashed the show cause notice, directed the respondents to de-freeze the petitioner’s bank account immediately upon production of the order, and granted the authorities liberty to commence separate proceedings for each financial year.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition has been filed challenging the Impugned Show Cause Notice No.003/2025 dated 06.06.2025 issued by the first respondent.
2. Mr. Rajnish Pathiyil, learned Senior Panel Counsel and Mrs.Revathi Manivanna, learned Senior Standing Counsel, takes notice on behalf of the respondents 1 & 2, respectively. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
3. When this writ petition was taken up for hearing, the learned counsel for the petitioner and the learned Senior Panel Counsel appearing for the first respondent would submit that the issue involved in the present petition is with regard to the bunching of show cause notice, i.e., issuance of single show cause notice for more than one financial year.
4. Further, they would submit that the aforesaid issue has already been decided by this Court vide common order dated 21.07.2025 passed in W.P.Nos.29716 of 2024, etc., batch, wherein it has been held as follows:
“28. (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 these cases, without any jurisdiction, the impugned show cause notices/orders came to be issued/passed for more than one financial year, which is impermissible in law and hence, the same is liable to be quashed. Accordingly, the impugned show cause notices/orders stand quashed based on the aspect of clubbing of show cause notices for more than one financial year.”
5. Therefore, considering the submissions made by the learned counsel for the petitioner and by following the aforesaid order dated 21.07.2025 passed in W.P.Nos.29716 of 2024, etc., batch, this Court holds that in this case, without any jurisdiction, the impugned show cause notice came to be issued for more than one financial year, viz., 20182025, which is impermissible in law and hence, the same is liable to be quashed.
6. Accordingly, this Court passes the following order:
(i) The impugned show cause notice dated 06.06.2025 is quashed.
(ii) The respondents are directed to de-freeze the bank account of the petitioner immediately upon production of a copy of this order, if any.
(iii) The respondents are granted liberty to initiate separate proceedings, against the petitioner, for each financial year.
With the above directions, this writ petition is disposed of. No cost. Consequently, the connected miscellaneous petitions are also closed.
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