Composite Assessment or Show Cause Notices for Multiple Years under the GST Act Are Impermissible
The Andhra Pradesh High Court, in the case of S J Constructions v. The Assistant Commissioner and Others, ruled that issuing a single show cause notice or a composite assessment order that covers more than one tax period or financial year is impermissible under the GST Act, 2017. The petitioner had challenged consolidated orders related to multiple financial years, arguing that the GST framework mandates proceedings to be conducted separately for each tax period, as implied by the structure of the Act, including Sections 73 and 74. The court acknowledged a divergence in judicial opinions, noting that the Delhi and Bombay High Courts had permitted such composite proceedings, while the Madras, Karnataka, and Kerala High Courts had taken the opposite view. Adopting the reasoning of the latter, the Andhra Pradesh High Court held that clubbing multiple periods undermines a taxpayer’s statutory rights, particularly concerning the independent right to appeal and the period-wise penalty reliefs available under the Act. Consequently, the court quashed the impugned composite assessment and demand orders, clarifying that the Revenue is at liberty to initiate fresh, period-wise proceedings, provided they are done within the extended limitation period. This judgment aligns with the judicial view emphasizing the importance of distinct proceedings for each statutory tax period to preserve procedural fairness and compliance with the legislative scheme.
Facts:
S J Constructions (“the Petitioner”) is a registered person under the GST Act who received composite assessment orders and show cause notices clubbing different assessment years into a single order/notice. The impugned orders related to multiple financial years were challenged on the grounds of improper clubbing, lack of signature, and missing Document Identification Number (DIN).
The Assistant Commissioner and Others (“the Respondent”) passed consolidated assessment orders and issued composite show cause notices for more than one tax period, contending administrative convenience and no bar in the statutory language.
The Petitioner contended that the GST Act requires each tax period to be considered separately, and clubbing multiple years/ periods into a single order is contrary to Sections 73 and 74 and restricts the statutory right of appeal and other appellate and penalty reliefs available period-wise.
The Respondent contended that the scheme of the Act permits consolidated proceedings, relying on contrary views of the Delhi and Bombay High Courts, emphasizing that “any period” in Section 73 can mean any length of period.
Aggrieved, the Petitioner sought relief by writ petition on the grounds that their fundamental rights and statutory protections were compromised by clubbed proceedings.
Issue:
Whether a single show cause notice or composite assessment order can be validly issued in relation to more than one tax period or financial year under the GST Act, 2017?
Held:
The Hon’ble Andhra Pradesh High Court in W.P. Nos. 11028, 11206, 17671, 20792 of 2025 held as under:
- Observed that, the Madras, Karnataka, and Kerala High Courts have held that a single composite notice or order for more than one tax period or financial year is impermissible under GST law.
- Noted the contrary view of the Delhi and Bombay High Courts, which allowed composite proceedings.
- Adopted the reasoning of the Madras High Court in Titan Company Ltd. v. Joint Commissioner of GST & Central Excise [2023 124 GSTR 449] and the Kerala High Court in Joint Commissioner Intelligence Enforcement v. Lakshmi Mobile Accessories [W.A. No. 627/2025] rejecting the Delhi HC view in Ambika Traders Through Proprietor Gaurav Gupta vs. Additional Commissioner, Adjudication DGGSTI CGST, Delhi North [W.P.(C) 4853/2025, CM APPL. 22194/2025 & CM APPL. 22195/2025].
- Held that, statutory language, particularly “such tax periods,” must be interpreted to mean each period returned-wise or financial year and not a consolidated period.
- Noted that, allowing composite orders would impact the statutory right to independent appeal and period-wise penalty waiver under Section 128 of the CGST Act.
- Set aside all composite orders and show cause notices, granting liberty to Revenue to initiate fresh period-wise proceedings within extended limitation.
Our Comments:
This judgment fortifies the developing judicial consensus against composite GST proceedings covering multiple years in a single order or notice, aligning with the Madras HC view in Titan Company Ltd. v. Joint Commissioner of GST & Central Excise [2024 124 GSTR 449 (Mad)] which mandates separate show cause notices and orders per tax period after referring to the judgment of a Constitution Bench of the Hon’ble Supreme Court in State Jammu & Kashmir and Ors., v. Caltex India Ltd. [(2024) 124 GSTR 449 (Mad)]. These courts emphasize that “tax period” and “return” in the Act refer to distinct monthly/yearly periods and that combining years undermines statutory appellate rights and penalty reliefs.
On the other hand, the Delhi High Court in Ambika Traders v. Addl. Commissioner [W.P.(C) 4853/2025 order dated July 29, 2025] has upheld composite orders, focusing on the meaning of “any period” under Section 73. The instant Andhra Pradesh HC judgment diverged, finding that the Madras approach by reading Section 73(3) with 73(4) better preserves statutory intent and taxpayer rights.
Relevant Provisions:
Section 73(3) & 73(4) of the CGST Act:
“Section 73. Determination of tax, pertaining to the period up to Financial Year 2023-24, not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.-
(3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax.
(4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice.”
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