In a significant judgment that will have far-reaching implications for GST administration and litigation, the Madras High Court, in Ms R A and Co vs. Additional Commissioner of Central Taxes (W.P. No. 17239 of 2025, decided on 21.07.2025), has categorically held that combined show cause notices (SCNs) and adjudication orders for multiple financial years are not permissible under GST law.

🔍 Background

The petitioner, a registered firm under GST, challenged the legality of a single show cause notice and a common adjudication order issued for six financial years (2017-18 to 2022-23), resulting in a tax demand of ₹30.13 crores along with interest and penalty.

The primary contention was that such "bunching" of years violates:

• Sections 73 and 74 of the CGST and SGST Acts, which prescribe timelines and procedures per financial year;

• Articles 14, 19(1)(g), and 265 of the Constitution, due to the arbitrariness and denial of due process.

⚖️ Key Findings of the Madras High Court

1. GST Requires Year-Specific Notices and Orders

The Court held that each financial year is a separate taxable unit, and therefore:

• SCNs must be issued per financial year;

• Adjudication orders must also follow suit, in line with Section 73(10) and 74(10) which prescribe 3 and 5-year limitations, respectively, from the date of filing of the annual return.

“There is a clear bar for ‘bunching of show cause notices’, i.e., issuance of single SCN for more than one financial year is impermissible in law.”

2. "Tax Period" Does Not Mean Multiple Financial Years

The Court examined the definition of “tax period” [Section 2(106)] and clarified:

• It refers to the period for which a return (monthly or annual) is required to be filed;

• SCNs based on annual returns must pertain only to that specific financial year;

• There is no statutory basis to extend this to cover multiple financial years in one notice.

3. Composite SCNs Violate Natural Justice

The Court identified multiple hardships resulting from such practice:

• Taxpayers are unable to apply for compounding under Section 138 for specific years;

• Cannot benefit from amnesty schemes for select years without settling the entire composite demand;

• Prejudice in appealing or contesting only specific years, forcing taxpayers into an "all or nothing" scenario.

4. Limitation Periods Are Year-Specific and Non-Extendable

Citing State of Jammu & Kashmir v. Caltex (India) Ltd. (AIR 1966 SC 1350), the Court reiterated that:

• Each assessment year can be easily separated and assessed individually;

• Limitation for adjudication runs independently for each year and cannot be clubbed.

5. Support from Previous Judgments

The judgment leaned on precedent, particularly:

• Titan Company Ltd. v. Joint Commissioner of GST & CE, (2024) 15 Centax 118 (Mad);

• Tharayil Medicals v. State Tax Officer (Kerala HC DB), reinforcing the same principle.

🧾 Final Verdict

The Madras High Court quashed the composite order in full, declaring it void for want of jurisdiction, and laid down the following mandates:

• SCNs and orders must be issued financial year-wise;

• There shall be no clubbing of demands across years;

• Departments must strictly adhere to the timeline and structure prescribed under Sections 73 and 74.

📌 Professional Takeaway

This decision is a milestone in upholding procedural safeguards under GST, and offers a powerful defense to taxpayers facing bulk SCNs covering multiple years.

✅ Action Points for Taxpayers:

• Challenge combined SCNs or orders relying on this judgment;

• Insist on year-wise notices for clarity, procedural fairness, and to preserve appellate rights;

• Seek relief on limitation where clubbing masks expired timelines for earlier years.

🧠 Conclusion

This ruling reaffirms that compliance with procedural discipline is not optional under GST. Both taxpayers and the Department must operate within the strict contours of the law — especially when the stakes run into crores.

For taxpayers under scrutiny or already served with combined SCNs, this judgment opens up a crucial window for strategic legal recourse and relief.

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