Summary: In the case of M/s. Uno Minda Limited (Seating Division) v. The Joint Commissioner of GST and Central Excise, the Madras High Court ruled that a single Show Cause Notice (SCN) cannot be issued for multiple assessment years (AYs). The SCN, which demanded additional GST payments due to alleged misclassification of two-wheeler seats, covered the period from November 2017 to October 2023. The court found that there was no willful misstatement by the petitioner, thus deeming the SCN without jurisdiction. It directed that the SCNs be split for each assessment year to allow the petitioner to benefit from an upcoming Amnesty Scheme that would waive interest and penalties. The court emphasized that each assessment year has a separate limitation period, reinforcing the principle established in previous judgments that separate SCNs must be issued for different periods. This decision is aligned with the provisions of Section 73 of the CGST Act, which governs tax determination and outlines distinct timelines for tax-related assessments.
The Hon’ble Madras High Court in the case of M/s. Uno Minda Limited (Seating Division) v. The Joint Commissioner of GST and Central Excise [Writ Petition No. 27776 of 2024 and WMP Nos. 30288 &30287 of 2024 dated September 23, 2024] sets-aside bunching of Show Cause Notice (“SCN”) issued for various AYs to split the SCNs for each AYs, allowing the Assessee to avail benefit of Amnesty Scheme proposed to be launched during November 2024, that would waive interest as well as penalty on tax liability.
Facts:
M/s. Uno Minda Limited (Seating Division) (“the Petitioner”) was engaged in sale of two-wheelers. The Joint Commissioner (“the Respondent”) served a Show Cause Notice dated July 25, 2024 (“the Impugned SCN”) was issued along with the summary Show Cuse Notice dated August 05, 2024 under section 74 of the CGST Act starting from November 15, 2017 to October 31, 2023 (“the Impugned Period”).
The Impugned SCN demanded differential amounts stating that the Petitioner was engaged in misclassification of two-wheeler seats under Customs Tariff Heading (“CTH”) 9401 instead of CTH 8714 and the same resulted in alleged short payment of GST @18% instead of GST @ 28% for the period between July, 2017 and October, 2023.
Hence, aggrieved by the Impugned SCN, the Petitioner filed the present writ petition.
Issue:
Whether a single SCN cannot be issued for multiple periods?
Held:
The Hon’ble Madras High Court in Writ Petition No. 27776 of 2024 and WMP Nos. 30288 &30287 of 2024 held as under:
- Observed that, there was no willful misstatement made by the Petitioner and hence the Impugned SCN was without jurisdiction and the two-wheeler seats manufactured by the Petitioner are appropriately classifiable under CTH 9401 and not under CTH 8714.
- Relied on, Titan Company Ltd., v. the Joint Commissioner of GST & Central Excise, Salem [2024- VIL-19-MAD] wherein the Madras High Court sets aside the bunching of SCNs issued for separate years.
- Noted that, the deposit amount made by the Petitioner as tax liability to the extent of Rs.1,24,74,14,950/- shall not be claimed to be refunded. Further, if the Respondent is issuing separate SCN for six assessment years, the Petitioner will not raise the issue of limitation. However, the Petitioner’s intention is that only in the event of separate SCNs being issued, the Petitioner will pay the tax liability and avail the AMNESTY scheme, which is proposed to be launched by the Respondent from November 2024 and would get the benefit of waiver of interest as well as penalty.
- Held that, the bunching of SCNs issued for separate years, in the present case, the Impugned SCN may be split up regarding assessment years and separate notices may be issued for each and every assessment year separately in order to avail AMNESTY Scheme, which is proposed to be launched during November 2024. Hence, the writ was disposed and Impugned SCN was set aside.
Our Comments:
Section 73 of the CGST Act governs “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 wilful-misstatement or suppression of facts.” Section 73(10) of the CGST Act states that the proper officer shall issue the order under 73(9) of the CGST Act within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund.
The GST Council in its 49th meeting recommended that it may not be desirable to extend the timelines in such a manner so that it may lead to bunching of last date of issuance of SCN/order made under Section 73 and 74 of the CGST Act for a number of financial years and they have extended the limitation period specified under Section 73(10) of the CGST Act, separately for each financial year and accordingly, the time limit is extended.
Therefore, issuing bunching of SCN is against the spirit of provisions of Section 73 of the CGST Act and the Constitution Bench of the Hon’ble Apex Court in the decision reported in The State of Jammu and Kashmir and Ors. v. Caltex (India) Ltd. [(1966) 17 STC 612 (SC)] has held that where an assessment encompasses different assessment years, each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said law was laid down keeping in mind that each and every Assessment Year will have a separate period of limitation and the limitation will start independently and that is the reason why the Hon’ble Supreme Court has held that each assessment year could be easily split up and dissected and the items can be separated and taxed for different periods. The said principle would apply to the present case as well.
The limitation period of three years would be separately applicable for every assessment year and it would vary from one assessment year to another. It is not that it would be carried over or that the limitation would be continuing in nature and the same can be clubbed. The limitation period of three years ends from the date of furnishing of the annual return for the particular financial year.
Similar, judgment was passed by the Hon’ble High Court of Karnataka in the case of M/s Bangalore Golf Club v. Assistant Commissioner of Commercial Taxes [Writ Petition No. 16500 of 2024 (T-RES)] and in the case of M/s Veremax Technologies Services Limited v. The Assistant Commissioner of Central Tax [Writ Petition No. 15810 of 2024 dated September 4, 2024].
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