Commissioner of Central Tax Vs Chimney Hills Education Society (Karnataka High Court)
The Karnataka High Court Division Bench considered whether a common or consolidated show cause notice (SCN) under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017 could cover multiple tax periods or financial years. The Revenue had filed intra-Court appeals under Section 4 of the Karnataka High Court Act, 1961 against orders of the learned Single Judge quashing consolidated SCNs. The appeals involved similar facts and common questions of law, although the financial years differed.
For convenience, the Court examined the facts in W.A.No.1751/2024. The Revenue had issued a Section 74 SCN covering July 2017 to March 2023, alleging fraud, wilful misstatement or suppression of facts, with the foundational material enclosed. The assessees challenged the SCN under Article 226 of the Constitution, contending that Sections 73 and 74 were financial-year specific and that a notice covering multiple financial years was impermissible. The learned Single Judge accepted the contention, quashed the SCNs and reserved liberty to the Revenue to issue fresh notices, relying on M/S. BANGALORE GOLF CLUB VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES and M/S. TITAN COMPANY LIMITED VS. JOINT COMMISSIONER OF GST.
The Revenue argued that Sections 73 and 74 use the expression “any period” and do not restrict proceedings to a single financial year. It submitted that sub-section (10) prescribes limitation but does not make the proceedings themselves financial-year specific. Reliance was placed on MATHUR POLIMERS VS. UNION OF INDIA, AMBIKA TRADERS VS. COMMISSIONER and M/S. SA AROMATICS PVT. LTD., AND ANOTHER VS. UNION OF INDIA AND OTHERS. The Revenue also submitted that the statutory provisions concerning regular assessment, demands and recovery were not confined to one financial year.
