Dhanlaxmi Bank Limited Vs State of Kerala (Kerala High Court)
The writ petitions before the Kerala High Court raised a common issue concerning the validity of notices issued under Sections 73 and 74 of the CGST/SGST Act, 2017 in the form of composite notices covering multiple assessment years. The principal question for consideration was whether the officers concerned were competent to issue such composite notices for more than one financial or assessment year.
The petitioners relied on earlier Division Bench decisions of the Court in Lakshmi Mobile Accessories v. Joint Commissioner (Intelligence & Enforcement) and Tharayil Medicals v. The Deputy Commissioner, wherein it had been held that composite notices for multiple years under Section 74 of the CGST Act were unsustainable. In those decisions, the Court examined the statutory scheme and concluded that such notices caused serious prejudice to taxpayers.
In Lakshmi Mobile, the Division Bench observed that under Section 74(1), the proper officer must determine tax evasion or related factors in relation to each financial or assessment year individually. Since the time limit for adjudication under Section 74(10) varies depending on the due date for furnishing the annual return for each financial year, issuing a consolidated notice for multiple years could curtail the statutory period available for adjudication for later years. The Court emphasized that consolidated notices would prejudice assessees by forcing them to comply within the limitation period applicable to the earliest year covered in the notice.
