Madras HC: Clustering Show Cause Notices Goes Against the Spirit of Section 73 of CGST Act
Validity of Clustering Show Cause Notices: In a recent judgement in case of Titan Company Ltd vs Joint Commissioner of GST & Central Excise (W.M.P.No.32855 of 2023), the Madras High Court highlighted that clustering show cause notices (SCNs) goes against the spirit of Section 73 of the Central Goods and Service Tax Act, 2017 (CGST Act).
Representing the petitioner, N. L. Rajah Senior Counsel argued that the issuance of clustered show cause notices (SCNs) on September 28, 2023, covering five assessment years from 2017-18 to 2021-22, violates Section 73 of the CGST Act. This section specifically addresses findings related to unpaid taxes, emphasizing the need for separate adjudication for each fiscal year.
Pointing to Sub-section 10 of Section 73, it was emphasized that any order determining unpaid taxes must be issued within three years from the due date of filing the annual return for the relevant fiscal year. Thus, the limitation for concluding proceedings and issuing orders is three years from the last date for filing the annual return.
The senior standing counsel representing the respondents argued that Section 73 does not explicitly prohibit clustering show cause notices (SCNs), and therefore, the petitioner’s plea lacked legal basis.
After hearing both sides, Justice Krishanan Ramaswamy delivered the verdict, stating, “I find fault in the process of issuing bunching of show cause notices and the same is liable to be quashed.” The court also directed the respondent to address the petitioner’s representation for splitting up the SCNs for each year separately.
Furthermore, the court ordered an extension for the adjudication order concerning the Assessment Year 2017-18, taking into account the period of stay granted by the court. Additionally, all proceedings related to the matter were directed to be deferred until the petitioner’s representation is disposed of.
The ruling underscores the importance of adhering to the procedural requirements outlined in the Section 73 of CGST Act and ensures fair treatment for taxpayers while issuing SCNs.
To Access the Recent Notice of SC to Govt asking Clarification on Validity of Anti-Profiteering Provisions under GST CLICK HERE
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