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Court Quashes Consolidated GST Show Cause Notices – Mandates Year-wise Separate Notices

In a significant order that impacts GST administration practices, the High Court has set a crucial precedent regarding the issuance of show cause notices under GST. The Court, while hearing the petition of M/s Chimney Hills Education Society, has quashed consolidated show cause notices that covered multiple financial years (2017-2023), citing them as fundamentally flawed.

Key Highlights:

  1. The Court held that clubbing/consolidating tax demands for multiple financial years in a single show cause notice is impermissible under the GST law.
  • Following the precedent set in M/s Bangalore Golf Club case and relying on M/s Titan Company Ltd.’s case (Madras High Court), the Court emphasized that each assessment year must be treated independently.
  • The judgment references Section 73(10) of the CGST Act, which mandates specific time limits for each financial year.
  • While quashing the notices, the Court has reserved the right for tax authorities to issue separate notices for each assessment year.

Conclusion:

The Court’s order emphasizes that tax authorities must adhere to the procedural requirements of the GST law by issuing individual notices for each financial year, ensuring that the limitation periods and separate assessments for each year are respected. The decision aligns with prior judgments that reinforce the necessity for distinct actions for each assessment year under the GST framework.

SW Point of View: The decision reflects a growing judicial emphasis on procedural propriety in tax matters and establishes a clear framework for future GST proceedings, ensuring that tax demands are raised and contested in a more organized and year-specific manner. This development is expected to bring more clarity and efficiency to GST compliance and enforcement mechanisms across the country.

Source: 2024 (11) TMI 518 – KARNATAKA HIGH COURT

Aagam Jain, Indirect Tax

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