One Notice, Many Years: The GST Time Trap

A few questions in GST litigation have generated as much discussions across India’s High Courts as this:

“Can the tax department issue a single show-cause notice (SCN) that spans multiple financial years?”

What appears, on the surface, to be a technical procedural question, cuts far deeper into the architecture of GST legislation, the rights of assessed persons, and the structural integrity of the Central Goods and Services Tax Act, 2017 (CGST Act). The answer, which is still fiercely contested across courts from Chennai to Delhi, is now headed for definitive resolution before a larger bench of the honourable Supreme Court of India.

This is not merely a debate for tax practitioners. The outcome will determine how every GST proceeding is initiated, defended and adjudicated across the country. With a larger bench of the Bombay High Court now having referred five questions of law in M/s Rollmet LLP & Ors v. Union of India & Ors [WP No. 16848 of 2025, dated April 17, 2026] and with the Supreme Court already having passed a speaking order in M/s.Mathur Polymers v. Union of India [SLP (Civil) Diary No. 50279/2025], the stage is set for a foundational pronouncement on India’s GST demand and recovery design.

To appreciate the controversy, one must begin with the statutory text. Sections 73 and 74 of the CGST Acts are the primary provisions governing demand and recovery of tax. Section 73 governs non-fraud cases i.e., situations involving non-payment, short payment, or wrongful availment of Input Tax Credit (ITC) due to reasons other than fraud or wilful misstatement. Section 74 almost mirrors that framework but applies to cases involving fraud, wilful misstatement, or suppression of facts, prescribing harsher timelines and enhanced penalties.

At the heart of the dispute are sub-sections (1), (3), (4), and (10) of both section 73 as well as Section 74 of CGST Act 2017.

Sub-section (1) empowers the proper officer to issue a show-cause notice. Sub-section (3) permits the issuance of a statement for ‘any period’ beyond the period covered in the original notice, provided the grounds remain the same. Sub-section (4) deems such a statement to be a notice. Crucially, sub-section (10) mandates that the final adjudication order must be passed within three years (under Section 73) or five years (under Section 74) from the due date of the annual return for the ‘relevant financial year.’

The critical textual ambiguity apparently lies here. While sub-sections (3) and (4) of Section 73 & 74 of the CGST Act 2017, refer to ‘any period’, a phrase suggesting temporal flexibility, sub-section (10) anchors the outer limitation to a specific ‘financial year.’ The question before the courts were

Whether ‘any period’ permit a single consolidated SCN to sweep across multiple financial years, or does the year-specific limitation framework under sub-section (10) of Section 73 as well as Section 74 implicitly confine each SCN to a single financial year?

The controversy has produced a remarkable and unprecedented divergence across India’s High Courts too, in interpretation of the legislative intent. Two broad camps have emerged, with different school of thoughts each staking out well-reasoned, but irreconcilable positions, leading to unresolved litigation.

The Year-by-Year Camp: Madras, Karnataka, Kerala, Goa (Bombay HC):-

The first camp holds that the CGST Act treats each financial year as a discrete and independent unit for purposes of assessment, limitation, and adjudication. The decisions from this camp have been numerous and emphatic. The honourable Bombay High Court’s Goa Bench in the case of M/s.Milroc Good Earth Developers v. Union of India fired the opening salvo, holding that each financial year constitutes a distinct unit for Show Cause Notice purposes and that consolidated notices spanning multiple years are impermissible. The Nagpur Bench of the same court (Honourable Bombay High Court) followed suit in the case of M/s.Paras Stone Industries v. Union of India and Rite Water Solutions v. Union of India, reinforcing that the CGST Act contains no provision permitting the clubbing of tax periods across financial years.

The honourable Karnataka High Court, in a judgment dated October 2024 (reported as 2024 (9) TMI 1347), quashed a consolidated SCN issued for four financial years (FY 2017-18 to 2020-21) under Section 73, of the CGST Act 2017, directing the department to issue separate SCNs for each year. The court’s decision drew explicitly on the Supreme Court’s earlier ruling in State of Jammu & Kashmir v. Caltex (India) Ltd. [AIR 1966 SC 1350], which had laid down that assessments spanning different years must be treated separately. The court held while dealing with Sales Tax dispute that, the assessment order could be severed and the State could enforce the tax only in respect of receipts from sales occurring up to validated periods (which were validated by the Act itself), while the writ‑petition‑respondent could not be taxed for inter‑State sales after that cut‑off. This drew a clear line between validated and un‑validated periods in State‑level taxation of inter‑State fuel sales.

The court in M/s. Pramur Homes and Shelters v. Union of India [December 11, 2025] took the same view, holding that composite notices cause serious prejudice to assesses by denying them year-specific defences and by potentially impacting their rights under Sections 128 and 138 of the CGST Act, 2017 relating to waiver of penalties and compounding of offences.

The honourable Madras High Court has consistently towed the same line. In the dispute of  M/s. Titan Company Ltd. v. Joint Commissioner of GST, the court ruled against consolidation of multiple tax periods. In M/s. RA & Co. v. Additional Commissioner of Central Taxes, Chennai [2025 (7) TMI 1401], the honourable Madras High Court declared that a single SCN covering six financial years (FY 2017-18 to 2022-23) was void ab initio. The court reasoned that Section 73(3) permits a statement for ‘periods other than those covered under sub-section (1)’, which presupposes that the original notice must first be anchored to a specific tax period and one that cannot exceed a financial year. Similarly, in Smt. R. Ashaarajaa v. Senior Intelligence Officer [W.P. Nos. 29716, 29720, 29726 & 34137 of 2024, order dated July 21, 2025], the honourable Madras court once again held that year-wise clubbing violated statutory requirements, prejudiced taxpayer rights, and defeated the limitation framework.

Similarly, the honourable Kerala High Court in M/s. Tharayil Medicals v. Deputy Commissioner, Audit Division-IV [2025 (4) TMI 1152] similarly ruled that a composite SCN is impermissible, a position reaffirmed in M/s. Lakshmi Mobile Accessories and subsequently cited with approval by multiple courts. The bottom line is that the honourable Courts were concerned that

The limitation is year-specific and defences may differ across years; aggregation can obscure time-barred claims and weaken precise rebuttal.

The Composite Proceedings Camp: Delhi, Allahabad:-

On the flip side, the honorable Delhi High Court has consistently taken the contrary view, and its decisions have been the primary source of alternate opinions. In M/s. Vallabh Textiles v. Additional Commissioner Central Tax, GST Delhi East [2025 (4) TMI 1154], the court held that a consolidated SCN for multiple financial years is permissible under Section 74, particularly where fraud is involved. The court’s reasoning rested on the language of Sections 74(3) and 74(4), which use ‘for any period’ and ‘for such periods’ broader expressions that, the court found, indicate legislative intent to accommodate multi-year proceedings. Further, in M/s. Ambika Traders v. Additional Commissioner, Adjudication DGGSTI, CGST Delhi North [W.P.(C) 4853/2025, order dated July 29, 2025], the court went further, finding that where fraudulent ITC spanning over Rs. 83 crores were alleged a consolidated notice was not merely permissible but ‘essential’ to exposing the illegal modus operandi and gratification. The court distinguished the CGST context from the Caltex judgment, reasoning that the fraud context under GST justifies a different interpretative approach.

It is not out of place to discuss this judgement here. The Caltex judgment that is referred here to (via Pre-GST‑era precedent) is the case against State of Jammu & Kashmir v. Caltex (India) Ltd., AIR 1966 SC 1350, which the GST‑era courts now apply by analogy to composite or multi‑year show‑cause notices (SCNs). The important points the court held were

• Assessments relating to different financial years must be treated as distinct proceedings and that each assessment year requires a separate assessment order.
• A single assessment order spanning multiple years was treated as jurisdictionally defective because tax liability is inherently tied to individual years and limitation runs separately for each.
• The Court emphasised that the limitation statute (then the Sales Tax Act) contemplates separate time‑bars for each year; therefore, clubbing years into one order frustrates the limitation scheme.
• The reasoning is that each tax period/financial year has its own return, liability, limitation period, and defence, so “bunching” years into one SCN deprives the assessee of proper year‑wise opportunity and undermines limitation.

In short, the ruling from the Caltex judgment, as invoked in GST decisions, is that assessment or SCN proceedings must be Tax period‑wise (year‑wise) and a single composite proceeding covering multiple financial years is invalid; this reasoning has now been directly applied to quash multi‑year GST show‑cause notices.

Now, returning back to the Composite Proceedings school of thought, the Allahabad High Court and Delhi High Court’s ruling in M/s. SA Aromatics v. Union of India also upheld consolidated SCNs across multiple financial years, completing the pro-consolidation bloc. The conceptual foundation of this camp is the Delhi High Court’s view in M/s. Mathur Polymers v. Union of India [W.P. 11289/2025, order dated August 26, 2025] that sub-section (10) of Section 73 as well as Section 74 as a limitation provision, governs the passing of the final order, not the structure of the SCN itself. In other words, the limitation clock applies to adjudication ie., the order stage and not to the notice stage. It can be construed accordingly.   If the department passes year-wise orders within the prescribed limitation, the fact that a single consolidated notice-initiated proceedings is irrelevant. The bottom line in this opinion is that

• The statute thus permits breadth in inquiry but insists on discipline in adjudication the distinction between the reach of investigation and the architecture of the notice across financial years.

The Supreme Court Enters:- Mathur Polymers and the Article 141 effect:-

The pivotal moment in this litigation came when M/s. Mathur Polymers filed a Special Leave Petition before the Supreme Court challenging the Delhi High Court’s judgment. In SLP (Civil) Diary No. 50279/2025, the Supreme Court dismissed the SLP through a speaking order, finding no ground to interfere with the honorable Delhi High Court’s findings permitting issuance of notice across financial years. This dismissal has become the epicentre of the litigation.

The Revenue had argued before the honourable Bombay High Court and this contention travelled to the Supreme Court which insisted that this speaking dismissal constitutes a declaration of law under Article 141 of the Constitution. Essentially Article 141 of the Constitution of India envisages to establish the binding authority of Supreme Court rulings on all other courts within the territory of India. It acts as the constitutional foundation for the doctrine of precedent (stare decisis), ensuring legal uniformity, consistency, and stability across the judicial system under which all courts in India are bound by the law declared by the Supreme Court and ensure judicial discipline. The honourable Bombay High Court, in the case of M/s. Rollmet LLP, acknowledged this as a ‘significant legal issue’ that merits examination by a larger bench. The Court drew on the Supreme Court’s own ruling in Kunhayammed v. State of Kerala to indicate that a speaking dismissal of an SLP may carry Article 141 weight, thereby binding all High Courts to follow the Delhi HC position.  This argument, if accepted by a larger bench, could extinguish the contrary view held by five or more honourable High Courts at a stroke not by fresh reasoning, but by the gravitational pull of a Supreme Court speaking order.

In M/s Rollmet LLP & Ors v. Union of India & Ors [WP No. 16848 of 2025, Bombay High Court, April 17, 2026], a Division Bench referred five substantial questions of law to a larger bench. The petitioners were a diverse group of Taxpayers from real estate, banking, logistics, manufacturing and entertainment sectors a cross-section that underscores the nationwide significance of this issue. The Division Bench declined to follow the co-ordinate honourable Bombay High Court bench decision in M/s. Milroc, expressing ‘grave doubt’ about whether M/s. Milroc ruling is correctly reflected the legislative scheme. It noted the clear cleavage of judicial opinion between the Bombay (Goa), Kerala, Madras, Karnataka, and Andhra Pradesh High Courts on one side, and the Delhi and Allahabad High Courts on the other. Five questions of law are required to be answered by the larger bench:

• First: Whether the operation of sub-section (1) of Section 73/74, read with sub-section (3), is in any manner controlled or restricted by sub-section (10), so as to bar a consolidated SCN for multiple financial years?
• Second: Whether sub-section (10) per se prohibits the issuance of a single consolidated SCN for multiple financial years or tax periods?
• Third: Whether the Milroc decision which ruled that a single consolidated show‑cause notice under Sections 73/74/74A of the CGST Act, clubbing multiple financial years into one SCN, is impermissible and without jurisdiction; proceedings must be year‑wise (tax‑period‑wise) correctly reflects the legislative scheme under Sections 73 and 74?
• Fourth: What is the legal effect of the Supreme Court’s speaking order in Mathur Polymers under Article 141 of the Constitution?
• Fifth: Whether the GST Policy Wing Circular dated September 16, 2025 which clarified that consolidation does not alter year-wise limitation has statutory force?

The reference to a larger bench triggers the inevitable upward trajectory to the Supreme Court, where the matter is likely to be settled with binding, pan-India effect.

The real-world consequences of this debate are significant and often underappreciated. When a consolidated SCN bundles six financial years as was the case in M/s. RA & Co. before the honourable Madras court the taxpayer faces a dramatically expanded liability exposure. Defences that may be time-barred for earlier years are submerged within the aggregate demand. The assessee cannot clearly identify which specific transactions, invoices, or credits are being challenged for which year, making year-specific rebuttal practically impossible unless the allegations are supported with clear and distinct workings.

In ITC disputes particularly, where transaction patterns often follow a recurring structure, a consolidated notice may artificially extend the shadow of limitation. A demand for FY 2017-18 that would ordinarily be time-barred under Section 73(10) by 2021 can be ‘rescued’ within a composite notice stretching to FY 2022-23, where the limitation clock has not yet expired. If limitation is not independently assessed for each year within the consolidated demand, the department effectively revives extinguished liabilities a result that strikes at the heart of statutory protection afforded to taxpayers.

There are also downstream consequences for the exercise of rights under Sections 128 and 138 of the CGST Act, relating to waiver of penalty and compounding of offences. As the honourable Karnataka High Court observed in M/s. Pramur Homes, consolidated notices can misclassify the taxpayer’s eligibility under these provisions, since the quantum of the ‘offence’ would be determined on a bundled basis rather than year-wise potentially disqualifying the taxpayer from benefits they would otherwise be entitled to for individual years.

The Calibrated Middle Path: What the Supreme Court is expected to find ?

The answer that emerges from a careful reading of the statute is neither a blanket permission nor a categorical prohibition. The CGST Act, read holistically, points toward a structured framework that accommodates cross-period inquiry while preserving year-specific discipline in adjudication.

The language of sub-sections (3) and (4) of both Sections 73 and 74 using ‘for any period’ and ‘for such periods’ does indicate that the legislative scheme permits extension of proceedings beyond the period of the original notice. This is particularly meaningful in fraud cases under Section 74, where the modus operandi of wrongful ITC availment typically transcends individual financial years. Requiring a separate SCN for each year in such cases would indeed render enforcement administratively unworkable.

At the same time, the year-specific limitation framework under sub-section (10) of Section 73 as well as Section 74 are not merely a procedural convenience. It reflects a considered legislative choice to protect taxpayers from open-ended exposure. Each year’s demand must be tested against its own limitation clock. A consolidated SCN cannot revive a time-barred claim, merge distinct years into an undifferentiated liability, or permit the limitation for an earlier year to be reckoned from the return date of a later year.

The ‘sameness of grounds’ condition in sub-sections (3) and (4) is equally important and must be applied rigorously. Real continuity in transaction pattern, legal issue, or fraudulent design is required before extension to other periods is permitted. Broad similarity of the nature of the dispute will not suffice. And crucially, adjudication orders must record year-wise findings, undertake separate computations, and independently assess limitation for each financial year covered. The absence of such segmentation is not merely a procedural lapse but strikes at the validity of the demand itself.

Few important land mark case laws referred above have been tabulated below for the sake of convenience.

(2025) SCC OnLine Bom‑Goa; commonly cited as Milroc Good Earth Developers v. UoI (Bom. Goa, 2025).

Titan Company Ltd. v. Joint Commissioner of GST & Central Excise, 2024 (1) TMI 619 – Madras HC, W.P. 33164 of 2023.

2025 (4) TMI 1152 – Kerala HC; also reported as 2025‑TIOL‑828‑HC‑KER‑GST.

Karnataka HC; 2024 (10) TMI 116 (Karnataka HC).

W.P. No. 15810 of 2024, Karnataka HC (2025 (3) TMI 456

2025 (7) TMI 1401 – Madras HC.

2025 (12) TMI … (Karnataka HC);.

2025 (4) TMI 1154 – Delhi HC.

W.P.(C) 4853/2025 – Delhi HC (reported in various TMI/online digests).

SLP (Civil) Diary No. 50279 of 2025 cited in practice as Mathur Polymers v. UoI, SLP (C) Diary 50279/2025.

W.P. No. 16848 of 2025, Bombay HC, order dated 17‑04‑2026 (reported in online digests as 2026 (4) TMI).

Before bidding adieu……

The question before India’s honorable courts is deceptively simple in its framing but profound in its implications.

Can the Tax Authorities compress years of liability into a single notice for administrative convenience?

The CGST Act’s answer, if properly read, is: yes, for inquiry, but no, for the discipline of adjudication, as we had discussed supra.

The M/s. Rollmet LLP case reference and the Supreme Court’s likely engagement with the questions framed therein, will determine not just the procedural architecture of GST enforcement but the constitutional balance between efficiency of Tax administration and taxpayer protection. The judgment will settle whether limitation under Sections 73 and 74 is a genuine safeguard or a clause that can be circumvented by the mere device of aggregation. The honourable Supreme Court’s larger bench must affirm a principle that the legislature encoded but left ambiguous, that proceedings may travel across time, but liability must be determined precisely, distinctly, and within the limits the statute prescribes for each year. That distinction between the reach of inquiry and the discipline of adjudication is not merely interpretive. It is foundational to the rule of law in tax administration.

Jai hind !!!!!!