Issuance of single consolidated show-cause notice u/s 73/74 of Central Goods and Services Tax Act, 2017 for multiple financial years – Issue referred to larger bench of High Court
In a recent judgment, a Division Bench of High Court referred to Larger Bench the issue of the issuance of a single consolidated show-cause notice under Section(s) 73/74 of the Central Goods and Services Tax Act, 2017 combining multiple financial years.
ABCAUS Case Law Citation:
5117 (2026) (04) abacus.in HC
In the instant case, the primary issue was the issuance of a single consolidated show-cause notice under Section(s) 73/74 of the Central Goods and Services Tax Act, 2017 (the CGST ACT) combining multiple financial years.
The Petitioners’ contention was that the consolidated notice is against the mandate of Section 73(10) and 74(10) of the CGST Act, inasmuch as the statutory scheme requires period-wise self-assessment and a year-wise limitation, thereby rendering a composite show-cause notice without jurisdiction.
It was contended that the co-ordinate Bench of the High Court at Goa has held that there is no provision in the CGST Act to club various tax periods in issuance of a show cause notice, hence, a consolidated show cause notice issued to the petitioners by clubbing the different periods/financial years, was held to be invalid and without jurisdiction. It was further contended that, such view of the Division Bench was followed by a co-ordinate Bench of High Court at Nagpur
The Petitioners also submitted that a similar view is taken by the Kerala, Madras and Karnataka High Courts. However, the Delhi High Court and Allahabad High Court has taken a different view and categorically held that a consolidated show-cause notice for various financial years can be issued and there is no jurisdictional error on the part of the designated officer in issuing such show-cause notice.
The Hon’ble High Court observed that against the decisions of the Delhi High Court was challenged before Hon’ble Supreme Court which dismissed the SLP preferred against the said decision as the Petitioners therein did not wish to press the aforesaid petition. Further, the Supreme Court in another case dismissed the Special Leave Petition preferred by the Petitioner observing that. “we find no good ground and reason to interfere with the impugned judgment/order passed by the High Court.”
The Hon’ble High Court observed that once the Supreme Court has found that there was no good ground and reason to interfere with the impugned order passed by the Delhi High Court, certainly the following principles of law as laid down by Supreme Court would become applicable,
“If the order refusing leave to appeal is a speaking order i.e. gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.”
The Hon’ble High Court rejected the contentions of the petitioners that the show cause notice under sub-section (1) of Sections 73 and 74 would be required to be issued, keeping in mind the period of limitation as prescribed under subsection (10) and/or it is wholly impermissible to club different periods in a show cause notice issued under subsection (1). This prima facie would in fact be a wrong reading of provisions of sub-section (1) of Sections 73 and 74.
The Hon’ble High Court further observed that the issuance of a single consolidated show-cause notice for multiple financial years will give the Department a handle to issue show-cause notices, especially in cases of fraudulent / wrongful availment of ITC, beyond the limitation period. The single consolidated show-cause notice for multiple financial years could not be issued being the anxiety of the Petitioner was also not correct, considering the statement issued by the GST Policy Wing by its document dated 16th September 2025.
In view of the divergent views of the High Courts, the Hon’ble High Court referred the following questions of law, for consideration of the Larger Bench:
(1) Whether the operation of sub-section (1) of Section 73/74 of the CGST Act read with the provisions of sub-section (3) is in any manner controlled by the provisions of sub section (10), so as to create an embargo, on the department to issue a consolidated show cause notice for different years ? (2) Whether the provisions of sub-section (10) of Section 73/74 of the CGST Act per se prohibits the issuance of single consolidated show cause notice for multiple financial years/tax periods? (3) What is the effect of Section 160 of the CGST Act on the proceedings initiated by the proper officer under Section(s) 73/74 of the CGST Act by issuance of a consolidated show cause notice for different periods? (4) Whether the decision of the Division Bench in Milroc Good Earth Developers v/s Union of India & Ors., when it holds that the proper officer lacks authority to club various financial years/tax periods, in issuing a single consolidated show cause notice under Section 73(1) & (3)/74(1) & (3) of CGST Act lays down the correct position in law? (5) In terms of Article 141 of the Constitution of India, what is the legal position as brought about in the order of the Supreme Court in the case of Mathur Polymers (supra) ?
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