GST SCN for Multiple Financial Years Permissible Under Section 73

The recent judgments from various High Courts, including the Andhra Pradesh High Court and the Bombay High Court, have brought to the forefront the issue of GST Audit and Tax Liability, specifically in relation to the permissibility of issuing composite or consolidated Show-Cause Notices (SCNs) and assessment orders that span multiple financial years or tax periods under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017. The Supreme Court of India has now stepped in, issuing notices in Special Leave Petitions filed by the Revenue, challenging the High Court judgments, and has tagged all related matters with the lead SLP, indicating that a definitive pronouncement on this critical issue of GST adjudication procedure is imminent.

Key Facts

• The Andhra Pradesh High Court in Sahiti Agencies v. Assistant Commissioner of Central Tax, M/s. Supraja Dairy Private Limited v. Assistant Commissioner of Central Tax, and Sri Ganesh Steels and Cements v. Additional Commissioner of Central Tax (GST-Appeals) has held that a single SCN or a single order of adjudication cannot lawfully cover more than one tax period.
• The Bombay High Court (Nagpur Bench) in M/s. Techops Infrastructure Pvt. Ltd. v. Additional Director, DGGI Nagpur Zonal Unit has also quashed a composite SCN spanning multiple financial years.
• The Supreme Court of India has issued notice in Special Leave Petitions filed by the Revenue, challenging the Andhra Pradesh and Bombay High Court judgments, and has tagged all related matters with the lead SLP (C) No. 6232/2026.
• The Union of India has disclosed that the Government is actively considering amendments to address this issue, with internal discussions already underway.

Statutory Context & Tax Analysis

The Central Goods and Services Tax Act, 2017 (CGST Act) governs the issuance of show-cause notices and passing of orders for short-payment, non-payment, erroneous refund, or wrongful availment of input tax credit under Sections 73 and 74. These sections require that for each ‘tax period’, the proper officer must issue a separate notice and adjudicate separately. A ‘tax period’ under Section 2(106) of the CGST Act means the period for which a return is required to be furnished, typically a month or a quarter. While an annual return is required under Section 44, assessment for financial year-wise is also a consideration. Rule 142(1A) of the CGST Rules, 2017 mandates that before the service of a formal show-cause notice under Section 73(1) or Section 74(1), the proper officer may communicate the ascertained tax, interest, and penalty to the taxpayer in Part A of Form GST DRC-01A. The Andhra Pradesh High Court in Sahiti Agencies has reiterated that assessments for periods prior to 2021 where this pre-SCN communication was not issued are vitiated and unsustainable.

Client Impact & Compliance Procedure

Taxpayers who have received composite SCNs or composite adjudication orders covering multiple financial years from GST authorities have strong grounds to challenge the same, based on the legal position laid down by the Andhra Pradesh and Bombay High Courts. However, given the contrary view of the Karnataka High Court and the Bombay HC reference to a larger bench, the matter is now sub judice before the Supreme Court of India, and the final legal position will be settled by the Supreme Court’s pronouncement. To comply with the current legal landscape, taxpayers should:

1. Consider challenging composite SCNs or composite orders before the appropriate High Court in writ jurisdiction, relying on the pro-assessee judgments of AP and Bombay HCs.
2. Note that the matter is pending before the Supreme Court and any final order passed pursuant to composite SCNs may be at risk of being set aside.
3. Monitor the Supreme Court proceedings actively, as any interim order or stay could have widespread impact across ongoing GST assessments.
4. Ensure that all records and returns are up-to-date, as the outcome of the Supreme Court’s decision may require fresh assessments or reassessments for each tax period.
5. File necessary forms, such as GST DRC-01A for pre-SCN communication, and maintain detailed records of tax payments, input tax credit availed, and other relevant documents to support their position in case of a challenge or reassessment.

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