State Bank of India Vs Commercial Central Goods and Service Tax and Central Excise (Calcutta High Court)
Brief facts:
The issue in this case was related to one composite Show Cause Notice under Section 74 of the CGST Act covering Financial Years 2018-19 to 2023-24 alleging short payment of GST by SBI. The Show Cause Notice and the Order-in-Original upon challenge before the High Court, it was argued that Each Financial Year is independent and Separate limitation applies. Therefore one SCN covering six years is contrary to Section 74. By clubbing several years, the Department attempted to revive time-barred demands. This defeats Section 74(10). The Department argued that alternate appellate remedy exists and Limitation involves mixed question of fact and law and Writ jurisdiction should not be exercised.
Court’s Observations:
The high court observed that Every Financial Year is an independent unit. Section 74(10) repeatedly uses the words “for the financial year” and thus limitation is linked to each individual financial year. Composite SCN for multiple Financial Years is impermissible. Section 74 nowhere authorises clubbing of different financial years.
Each year carries its own limitation. One SCN for several financial years is contrary to the statutory scheme.The Court observed that by issuing one composite notice the Department attempted to bring within its fold earlier years which had already become time barred. The Department cannot achieve indirectly what it cannot do directly. Tax statutes require strict interpretation. Limitation prescribed by Parliament cannot be expanded administratively. Tax Period” is significant. The Court analysed Section 2(106) . Tax period means the period for which return is required to be filed. Returns are filed- monthly and annually. Hence notices must correspond to the relevant tax period. There is no statutory return covering multiple financial years. Therefore there cannot be a single SCN covering multiple financial years. The Court held that issuing one SCN covering several years was itself beyond jurisdiction. Consequently the SCN was invalid and Order-in-Original invalid. Finally the court held that Where an order suffers from patent jurisdictional error, existence of appellate remedy does not prevent exercise of writ jurisdiction and relied on i) Godrej Sara Lee Ltd and Whirlpool Corporation .
