No Mandate to Issue Consolidated SCN Covering Multiple AYs Under CGST Act; Separate SCN Upheld for Each AY

Case Details: Joint Commissioner (Intelligence & Enforcement) v. Lakshmi Mobile Accessories - [2025] 171 taxmann.com 214 (Kerala)

Judiciary and Counsel Details

• Dr. A.K. Jayasankaran Nambiar & Easwaran S., JJ.
• Muhammed Rafiq, Special Government Pleader for the Appellant.
• K.S. Hariharan Nair & Smt. Divya Ravindran, Advs. for the Respondent.

Facts of the Case

The assessee, a registered person under the GST Act, was engaged in business activities and duly filed GST returns. However, the proper officer issued a show-cause notice alleging suppression of turnover and demanded differential tax, interest, and penalties for six financial years (2017-18 to 2023-24). The assessee, contending that the proper officer was proceeding hastily and intended to issue a composite order covering multiple years without allowing adequate opportunity for response, filed a writ petition before the Kerala High Court. The primary contention was that the issuance of a consolidated show-cause notice was procedurally flawed, and the assessee had been denied the right to cross-examine witnesses whose statements formed the basis of the notice. The Single Judge ruled in favor of the assessee, directing the proper officer to issue separate show-cause notices and ensure due process.

Aggrieved by the order of the Single Judge, the Revenue filed an intra-court appeal, arguing that a consolidated determination was permissible and that the Single Judge erred in directing separate proceedings for each financial year.

High Court Held

The Hon’ble High Court held that Section 74 of the CGST Act does not mandate a consolidated show-cause notice covering multiple assessment years. The provision requires the proper officer to assess whether the preconditions for tax evasion exist for each financial year separately. The Court further observed that since the limitation period for adjudication under Section 74 depends on the due date for filing annual returns for each year, separate show-cause notices should be issued for each relevant year. Moreover, the Court held that denying the assessee the opportunity to cross-examine witnesses relied upon in the show-cause notice constituted a violation of the principles of natural justice. Consequently, the matter was remanded for fresh adjudication with explicit directions to ensure procedural compliance.

List of Cases Reviewed

• Judgment Dated 28.01.2025 IN W.P(C). NO. 2911 OF 2025 Of High Court of Kerala, (Para 8) affirmed.

List of Cases Referred to

• CIT v. Simon Carves Ltd. – [(1976) 4 SCC 435 (para 8).