SCN Covering Multiple Financial Years Frustrates Limitation Period in GST Law
By Author | July 24, 2025
Madras High Court, GST Judgements
Court Holds Consolidated SCN Invalid
The Madras High Court, in R A and Co v. The Additional Commissioner of Central Taxes, South Commissionerate [W.P. No. 17239 of 2025, dated July 21, 2025], ruled that issuing a single show cause notice (SCN) for multiple financial years is impermissible under the GST Act. The Court held that such action renders the proceedings void ab initio.
Background of the Case
R A and Co (“the Petitioner”) challenged a single SCN and the resulting assessment order. The notice, issued by the Additional Commissioner of Central Taxes, South Commissionerate (“the Respondent”), covered six financial years (2017–18 to 2022–23).
The Petitioner argued that Sections 73 and 74 of the GST Act require a separate SCN for each financial year. The combined notice forced them to respond within a short period, limiting their ability to gather necessary evidence.
They also pointed out that clubbing years together creates difficulties when applying for amnesty schemes or settling disputes on a year-wise basis.
Respondent’s Justification
The Respondent relied on the phrase “any period” found in Sections 73 and 74. They argued that this language allows SCNs to cover multiple years. They further claimed that interpreting “tax period” as monthly or yearly allows consolidation, which reduces administrative burden.
According to them, accepting the Petitioner’s view would require the department to issue 12 separate notices per year, creating inefficiency.
Legal Issue
Can the tax authority issue a single SCN and assessment order for multiple financial years under Sections 73 and 74 of the GST Act?
Court’s Ruling
The Madras High Court answered no. Its key findings included:
- Section 73(3)/74(3) allows statements only for periods not covered under sub-section (1). Thus, a specific tax period must be identified.
- Notices must relate to monthly or yearly returns. They cannot span multiple years.
- Clubbing financial years into one notice violates the limitation structure in Sections 73 and 74.
- The limitation period applies individually to each financial year and must not be treated as continuous or overlapping.
- The term “any period” must be read alongside “tax period” as defined in Section 2(106).
- A composite SCN and assessment without year-wise breakdown is a jurisdictional error. Such an order violates Section 74(10) and Section 136 of the Act.
Supporting Precedents
In Titan Company Ltd. v. Joint Commissioner of GST & Central Excise [(2024) 15 Centax 118 (Mad.)], the Madras High Court held that issuing bunched notices for multiple years contravenes Section 73(10). It emphasized that each assessment year has a distinct three-year limitation period.
The Court noted that authorities cannot indirectly do what they are not allowed to do directly—i.e., bypass the statutory mandate for separate notices.
This principle also finds support in the Supreme Court’s decision in State of J&K v. Caltex (India) Ltd. [AIR 1966 SC 1350], where the Court confirmed that each financial year could be dissected and assessed separately.
Similarly, the Karnataka High Court in M/s Veremax Technologie Services Ltd. v. The Assistant Commissioner of Central Tax [2024-VIL-1028-KAR] quashed a consolidated SCN issued for four years. It directed issuance of separate notices per year, citing Section 73(10).
Conclusion
Each financial year must be treated as a distinct “tax period” for the purpose of issuing SCNs and making assessment orders. The Court’s interpretation aligns with Sections 73 and 74, which set year-specific limitation periods. Importantly, the term “any period” cannot be used to justify consolidated notices.
Bunching multiple years in a single SCN defeats procedural fairness and statutory safeguards under the GST law.
