Validity of Consolidated GST Show Cause Notices

The High Court of Karnataka delivered a landmark judgment settling the controversy surrounding the permissibility of issuing consolidated show cause notices under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017 covering multiple financial years or tax periods. 

The Division Bench categorically held that neither the CGST Act nor the Rules prohibit issuance of common show cause notices spanning several financial years, provided such proceedings remain within the statutory limitation framework prescribed under the Act. 

Reversing a series of Single Judge decisions which had quashed consolidated notices on the ground that GST proceedings are “financial year specific,” the Court held that the statutory phrase “any period” employed in Sections 73 and 74 is broad enough to permit proceedings covering multiple tax periods and multiple financial years. 

The ruling is expected to have far-reaching implications for GST investigations, anti-evasion proceedings, and adjudication practices across India.