2025 (1) TMI 401 - HC - GST

Issuance of a single consolidated show cause notice for more than one financial year - HELD THAT - The petitioner has not made out any case for grant of relief on the ground that Ext.P1 show cause notice is a consolidated notice for several years mentioned above. The judgment of the Karnataka High Court, in M/S. BANGALORE GOLF CLUB VERSUS ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, KORAMANGALA, BENGALURU 2024 (10) TMI 116 - KARNATAKA HIGH COURT relied on the judgment of the Madras High Court in TITAN COMPANY LTD., REPRESENTED BY ITS AUTHORIZED SIGNATORY MR. P. MANIVANNAN VERSUS THE JOINT COMMISSIONER OF GST CENTRAL EXCISE, THE ADDITIONAL COMMISSIONER OF GST CENTRAL EXCISE 2024 (1) TMI 619 - MADRAS HIGH COURT , where again the question considered was in relation to the proceedings under Section 73 of the GST Act. The court in M/s. Banglore Golf Club held ' 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 2019 to 2023-24.' Coming to the contention of the learned counsel for the petitioner, that the petitioner has been given a very short time to reply to the show cause notice which runs to 1622 pages (including the documents relied upon), some reasonable time must be permitted to the petitioner to file a reply to the show cause notice. Accordingly, it is directed that the time for filing a reply to Ext.P1 show cause notice shall be extended till 21.11.2024. Since the extension of time is at the request of the petitioner, any limitation for passing orders for any of the financial years will also stand extended by similar period i.e. the period from 21.10.2024 (last date for filing reply as per show cause notice) till 21.11.2024 will stand excluded.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether Sections 73 and 74 of the Central Goods and Services Tax (CGST) Act allow for the issuance of a single consolidated show cause notice covering multiple financial years.
Whether the issuance of a consolidated show cause notice violates the principles of natural justice by not providing adequate time for the petitioner to respond.
Interpretation of the term "period" as used in Sub Section (3) of Section 74 of the CGST Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of Consolidated Show Cause Notice

Relevant legal framework and precedents: The petitioner argued that Sections 73 and 74 of the CGST Act do not contemplate a single show cause notice for multiple financial years. Reliance was placed on judgments from the Madras High Court and Karnataka High Court, which dealt with similar issues under Section 73 of the CGST Act.
Court's interpretation and reasoning: The court noted that the wording of Sections 73 and 74 does not explicitly prohibit a consolidated notice. The court distinguished the present case from the precedents cited, which primarily dealt with Section 73 and issues of limitation.
Key evidence and findings: The court considered the arguments and precedents but found them not directly applicable to the current case under Section 74.
Application of law to facts: The court held that the issuance of a consolidated notice does not inherently violate the provisions of the CGST Act or cause prejudice to the petitioner.
Treatment of competing arguments: The court acknowledged the petitioner's reliance on prior judgments but found them distinguishable, emphasizing the different contexts and statutory provisions involved.
Conclusions: The court concluded that a consolidated show cause notice is permissible under Section 74 and does not contravene the Act.

Issue 2: Adequacy of Time to Respond

Relevant legal framework and precedents: The petitioner argued that the extensive documentation (1622 pages) and short response time violated principles of natural justice.
Court's interpretation and reasoning: The court agreed that reasonable time should be provided to ensure a fair opportunity to respond.
Key evidence and findings: The court noted the voluminous nature of the notice and documentation.
Application of law to facts: The court extended the deadline for the petitioner to file a reply, ensuring compliance with natural justice principles.
Treatment of competing arguments: The court balanced the need for timely proceedings with the petitioner's right to adequately respond.
Conclusions: The court directed an extension of the deadline for response, accommodating the petitioner's concerns.

Issue 3: Interpretation of "Period" in Section 74(3)

Relevant legal framework and precedents: The respondent contended that "period" in Section 74(3) does not restrict the notice to a single financial year.
Court's interpretation and reasoning: The court agreed with the respondent, interpreting "period" as not limited to a single financial year.
Key evidence and findings: The court found no statutory basis to restrict the term "period" to a single year.
Application of law to facts: The court upheld the validity of the consolidated notice based on this interpretation.
Treatment of competing arguments: The court found the respondent's interpretation consistent with the statutory language.
Conclusions: The court held that the term "period" allows for a broader interpretation, supporting the issuance of a consolidated notice.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "It is difficult to hold that the bunching of show cause notices is illegal and contrary to the provisions of Section 74 of the CGST Act."
Core principles established: The court established that the CGST Act permits the issuance of a consolidated show cause notice for multiple years under Section 74, provided it does not prejudice the taxpayer's ability to respond.
Final determinations on each issue: The court denied the petitioner's request to invalidate the consolidated notice but extended the deadline for the petitioner to respond, ensuring procedural fairness.

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