Instakart Services Private Limited Vs Additional Commissioner (Madras High Court)
Issuance of consolidated GST SCN/ order for multiple financial years is impermissible, and must be quashed
The Madras High Court has ruled that issuing a consolidated Goods and Services Tax (GST) Show Cause Notice (SCN) and a single subsequent order covering multiple financial years is legally invalid and impermissible under the CGST Act, 2017. In the case of Instakart Services Private Limited v. The Additional Commissioner, the court addressed a ₹37 crore GST demand that aggregated liabilities for the period from July 2017 to March 2023 into a single proceeding. The petitioner successfully argued that this practice, often termed “bunching,” contravenes procedural fairness, violates the statutory limitation framework, and amounts to a jurisdictional overreach by the tax authorities. The Court emphasized that the GST Act and its provisions, including those related to adjudication under Section 74, mandate that SCNs and orders must be based on a defined “tax period,” which is typically a single financial year or the period covered by specific returns. Aggregating periods undermines the taxpayer’s ability to contest allegations and prevents the proper application of year-specific limitation rules.
This decision aligns the Madras High Court with the prevailing view established by other judicial precedents, including those from the Kerala High Court and the Karnataka High Court, which have similarly struck down consolidated notices for multiple assessment years. The courts maintain that Section 74(10) and procedural rules require annual or tax-period-wise proceedings to ensure that taxpayers have a proper opportunity to individually contest the allegations and that the correct limitation period for each year is scrupulously followed. As a result, the Madras High Court quashed both the consolidated assessment order and the subsequent rectification order issued to Instakart Services Private Limited. Crucially, the Court did not extinguish the tax liability itself but granted liberty to the Revenue to initiate and pursue separate proceedings for each financial year involved, provided all legal and procedural requirements are strictly adhered to. This ruling reinforces the necessity for GST authorities to follow the statute’s granular, period-specific approach to adjudication.
