2024 (12) TMI 656 - HC - GST

Challenge to SCN and summary of SCN issued by the respondent u/s 74 of the Central Goods and Services Tax Act, 2017, for several financial years - case of the petitioner is that the respondent could not have issued one single notice for the entire period between January-2018 and August-2022 - Whether the respondent can issue one show cause notice for several financial years? - HELD THAT - The Co-ordinate Bench of this Court, while examining the similar situation in M/S. VEREMAX TECHNOLOGIE SERVICES LIMITED VERSUS THE ASSISTANT COMMISSIONER OF CENTRAL TAX BENGALURU. 2024 (9) TMI 1347 - KARNATAKA HIGH COURT has held ' This Court has reviewed the judgment of the Madras High Court and the scope of inquiry under Section 73 of the CGST Act. Based on the established legal principles and the precedent set by the Hon'ble Apex Court, this Court finds that the respondent erred in issuing a consolidated show cause notice for multiple assessment years, spanning from 2017-18 to 2020-21.' Though in the summary of the show cause notice there is segregation of the liability in respect of each financial year, in the light of the judgment of the Coordinate Bench of this Court and for the reasons stated above, it does not come to the rescue of the respondent. Thus, it is appropriate to set aside the impugned show cause notices, reserving the liberty to the respondent to issue appropriate show cause notices for each financial year and proceed against the petitioner. The show cause notice issued by the respondent (vide Annexure-A) to the writ petition is hereby set aside - the summary of the SCN issued by the respondent (vide Annexure-B) to the writ petition is hereby set aside - Petition disposed off.

Summary

Issues:
1. Can the respondent issue one show cause notice for several financial years?

Detailed Analysis:
The petitioner, involved in the restaurant business and registered under the Central Goods and Services Tax Act, 2017, challenged a show cause notice alleging erroneous Input Tax Credit availed from January 2018 to August 2022. The petitioner contended that separate notices should have been issued for each financial year, citing past court decisions supporting this argument. The respondent, however, defended the consolidated notice, stating no legal prohibition against it and detailing the erroneous claims and penalties in the summary notice.

The primary issue before the court was whether the respondent could issue a single show cause notice covering multiple financial years. Citing a previous decision in a similar matter, the court highlighted that each financial year's liability constitutes a distinct cause of action due to varying tax rates, interests, and penalties. The court emphasized that notices for different years could have different time limitations, justifying the need for separate notices.

The court analyzed the impugned show cause notice, clarifying that it indeed covered the entire period from January 2018 to August 2022. Despite the summary segregating liabilities by financial year, the court relied on precedent and held that a consolidated notice was impermissible. Consequently, the court set aside the show cause notices, granting the respondent the liberty to issue separate notices for each financial year and proceed lawfully against the petitioner.

In the final order, the court explicitly set aside the original show cause notice and its summary, reserved the respondent's right to issue separate notices for individual financial years, and disposed of the writ petition, thereby concluding the legal proceedings on this matter.