The Madras High Court, in a significant ruling reported in [2026] 182 taxmann.com 771 (Madras), has held that issuance of a single composite show cause notice (SCN) and passing of one consolidated assessment order covering multiple financial years under Section 73 of the CGST Act, 2017 is legally impermissible.
The Court observed that each financial year constitutes a distinct tax period requiring separate adjudication proceedings. Therefore, clubbing liabilities of different years into one notice and one order renders the entire assessment without jurisdiction. Consequently, the impugned composite order and all consequential proceedings were quashed.
This decision reinforces the procedural safeguards under GST law and ensures year-wise compliance with statutory limitation and principles of natural justice.
Case Citation:
Instakart Services Private Limited v. The Additional Commissioner of Central Taxes
W.P. No. 31551 of 2025 (Madras High Court)
Decision dated: 19-01-2026
Facts of the Case
- The GST department issued a single composite show cause notice and one assessment order covering multiple financial years against the petitioner under Sections 73/74 for alleged tax liabilities.
Legal Issue
- Whether issuing one consolidated SCN/assessment order spanning several financial years is permissible under the GST law, or each financial year requires distinct proceedings and notices.
Court’s Key Findings
- Each Financial Year is a Separate ‘Tax Period’
- Under Section 2(106) CGST Act, a tax period refers to the period for which returns are filed — either monthly or annually.
- A financial year is, therefore, a distinct unit for adjudication and limitation purposes.
- Statutory Limitation Applies Year-Wise
- Sections 73(10) and 74(10) prescribe separate limitation periods for each financial year (e.g., 3 years under Section 73).
- Clubbing multiple years into one composite notice affects the computation of these limitation periods and is impermissible.
- Composite Notices Prejudice Taxpayer Rights
- Clubbed notices constrain an assessee’s ability to:
- Gather evidence year-wise within statutory time;
- Avail year-specific amnesty schemes;
- Apply for compounding under Section 138 for certain years;
- Contest some years and settle others separately.
- Clubbed notices constrain an assessee’s ability to:
- No Jurisdiction for Multi-Year Composite SCNs
- Because each year is an independent unit under GST law, issuances spanning more than one financial year are deficient and without jurisdiction.
- Rejection of Revenue’s Argument
- The department’s contention that the phrase “any period” permits block-year notices was rejected. The Court held it must be read with the definition of “tax period” and cannot justify clubbing separate financial years.
Judgment
- The High Court held that composite show cause notices covering multiple financial years and resultant assessment orders are without jurisdiction.
- Such notices and orders were quashed as they violate statutory provisions and procedural safeguards under the GST Act.
Rationale Behind the Decision
- Legal certainty & fairness: Each year’s liability must be separately determined to uphold the statutory scheme and principles of natural justice.
- Limitation integrity: Statutory limits are linked to due dates of annual returns; compressing years in one notice disrupts this regime.
Practical Implications
- GST authorities should issue separate SCNs and assessment orders for each financial year where liability is alleged.
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Taxpayers benefit from clear timelines and improved ability to respond and litigate on a year-specific basis.