2026 Supreme(Online)(Kar) 24088

S.G. Pandit, K. V. Aravind, JJ
Commissioner of Central Tax, Bengaluru – Appellant
Versus
M/S Chimney Hills Education Society – Respondent
WRIT APPEAL No. 1751 OF 2024 (T-RES)|WRIT APPEAL No. 1590 OF 2024 (T-RES)|WRIT APPEAL No. 7 OF 2025 (T-RES)|WRIT APPEAL No. 407 OF 2026 (T-RES)|WRIT APPEAL No. 495 OF 2026 (T-RES)|WRIT APPEAL No. 555 OF 2026 (T-RES)

A consolidated show cause notice under Sections 73 and 74 of the CGST Act covering multiple financial years is permissible, as the provisions use the expression 'any period' and do not restrict proceedings to a single financial year.

Headnote:(A) Central Goods and Services Tax Act, 2017 (CGST Act) - Sections 2(106), 37, 38, 39, 44, 45, 49, 51, 52, 54, 59, 60, 61, 62, 63, 64, 65, 66, 67, 73, 74, 74A, 75 - Karnataka High Court Act, 1961 - Section 4 - Determination of tax - Show cause notice under Sections 73 and 74 of the CGST Act - Permissibility of consolidated/common show cause notice covering multiple financial years. (Paras 1, 25, 33, 34, 57)

(B) The provisions of Sections 73 and 74 of the CGST Act, while prescribing a limitation period for passing an order under sub-section (10) with reference to a financial year, do not control or restrict the scope of issuance of a show cause notice under sub-sections (1) of those sections. The expression 'any period' used in sub-sections (1) and (3) of Sections 73 and 74 is not defined under the Act and cannot be equated with 'tax period.' This expression cannot be rendered otiose or ignored. (Paras 33, 34)

(C) The reference to 'financial year' in sub-section (10) of Sections 73 and 74 merely provides a reference point for the commencement of the limitation period for passing an order and does not indicate that the proceedings under Sections 73/74 are confined to a single financial year. (Para 34)

(D) Sub-section (3) of Sections 73 and 74, which enables a proper officer to serve a statement containing details of defaults for 'such periods' other than those covered under the initial notice, indicates that the notice period is not confined to a single financial year. A contrary interpretation would render this sub-section unworkable. (Para 34) (E) The prescribed format for a show cause notice (Form GST DRC-01), which has columns for 'tax period' and 'financial year,' does not mandate that the notice be confined to a single financial year, as the relevant columns are not mandatory. (Para 35) (F) The argument that a consolidated notice would improperly extend limitation or cause prejudice regarding pecuniary jurisdiction is rejected. The limitation period under sub-section (10) applies to each financial year component within the notice, and the mechanism for determining pecuniary jurisdiction is flexible. (Paras 37, 39, 40, 41) (G) Appeal - Scope and ambit - An appellant court cannot add or omit words to a legislative provision. Interpreting a fiscal statute requires strict construction according to its plain language. (Para 34)

Facts of the case:
The Revenue (appellants) issued consolidated show cause notices under Sections 73 and/or 74 of the CGST Act to various assessees (respondents) covering multiple financial years (e.g., July 2017 to March 2023). The assessees challenged these notices before learned Single Judges of the High Court, arguing that Sections 73 and 74 are financial year-specific and that a common notice for multiple years is impermissible. The learned Single Judges quashed the notices, relying on the judgment of the Madras High Court in M/s. Titan Company Limited vs. Joint Commissioner of GST and the decision of the same Court in M/s. Bangalore Golf Club vs. Assistant Commissioner of Commercial Taxes. The Revenue appealed against these orders.

Findings of Court:
The Division Bench of the High Court allowed the appeals. It held that the learned Single Judges erred in quashing the show cause notices. The court found that there is no statutory bar under the CGST Act prohibiting the issuance of a consolidated/common show cause notice under Sections 73 and 74 covering multiple financial years. The court analyzed the scheme of the Act, particularly sections on returns, assessments, audits, and the specific language of Sections 73 and 74, concluding that proceedings under these sections are not confined to a single financial year. The court agreed with the interpretation of the Delhi, Allahabad, and Jammu & Kashmir High Courts and declined to follow the contrary views of the Bombay, Kerala, Madras, Andhra Pradesh, and Himachal Pradesh High Courts. The court restored the show cause notices. For cases where an Order-in-Original had already been passed, the respondents were given time to file statutory appeals, with directions to the appellate authority not to raise the plea of limitation given the pendency of the writ petitions.

Issues: Whether it is permissible to issue a consolidated/common show cause notice under Sections 73 and 74 of the CGST Act covering multiple financial years or multiple tax periods?

Ratio Decidendi: The court ruled that a consolidated show cause notice covering multiple financial years is permissible under Sections 73 and 74 of the CGST Act. The expression 'any period' in these sections cannot be read as being restricted to a single financial year or tax period. The provisions do not contain a prohibition against such notices. Interpreting them to be confined to a financial year would require adding words to the statute, which is impermissible. The limitation period under sub-section (10) and the pecuniary jurisdiction of officers are issues to be addressed at the time of adjudication and do not preclude the issuance of a consolidated notice. Result : All writ appeals allowed. Impugned orders of the learned Single Judges set aside. The writ petitions are dismissed. The show cause notices are restored. Respondents are granted time to file replies or statutory appeals as directed.

(PER: HON'BLE MR JUSTICE S.G.PANDIT)

Since facts involved in all the above appeals are similar and as they raise common questions of law, with the consent of learned counsel for the parties, these appeals are heard together and disposed of by this common judgment. It is noticed that though common questions are involved, the financial years involved are different which would not make any difference.

2. The above intra-Court appeals are filed under Section 4 of the Karnataka High Court Act, 1961 by the Revenue, respondent before the learned Single Judge questioning order of the learned Single Judge quashing common/consolidated show cause notices issued under Section 73 and 74 of the Central Goods and Services Tax Act, 2017 (for short, ‘the Act’) covering more than one tax period or financial years. The parties shall be referred to hereinafter as per the rank they hold before this Court.

3. For convenience, the facts in W.A.No.1751/2024 is taken up for discussion.

4. The facts in brief are that, the appellants/Revenue issued a show cause notice under Section 74 of the Act for the period from July 2017 to March 2023 alleging defaults committed by the respondents. In other words, the allegations related to fraud, willful misstatement or suppression of facts. It is also noticed that the material forming the foundational basis for issuance of the show cause notice was also enclosed, calling upon the respondents to submit their reply.

5. Aggrieved by the show cause notice, the respondents approached this Court under Article 226 of the Constitution of India basically on the ground that, under the Act, Sections 73 and 74 are financial year specific and that show cause notice relating to period beyond financial year or for multiple financial years is impermissible. The learned Single Judge held that the issuance of a common/consolidated show cause notice for multiple financial years is impermissible and quashed the show cause notices reserving liberty to the appellants/Revenue to issue fresh show cause notices, placing reliance on the order dated 07.08.2024 in M/S. BANGALORE GOLF CLUB VS. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES¹ of this Court and the decision of the Madras High Court in

W.P.No.16500/2024 DATED 07.08.2024

M/S. TITAN COMPANY LIMITED VS. JOINT COMMISSIONER OF GST²

6. The Revenue aggrieved by the said order of the learned Single Judge, is in appeal.

7. Heard learned standing counsel Sri.Aravind V. Chavan and learned counsel Sri.M.Unnikrishnan for appellants/Revenue, learned Additional Advocate General Shri Aditya Vikram Bhat for State, learned senior counsel Sri.A.Shankar for learned counsel Sri.Pranay Sharma.Y, learned senior counsel Sri.K.K.Chythanya for learned counsel Sri.E.I.Sanmathi, learned counsel Sri.M.N.Shankare Gowda, learned counsel Sri.Bharat B. Raichandani for caveator/respondent No.1 and learned counsel Sri.Sandeep Huilgol for intervening applicants in I.A.No.2/2026 to I.A.No.5/2026 in W.A.No.407/2026,

W.P.No.33164/2023

learned counsel Sri.Vinay.N., learned counsel Sri.P.B.Harish for respondents/ assessees. Perused the appeal papers.

8. Learned senior standing counsel Sri.Aravind V. Chavan for appellants/Revenue referring to Sections 73 and 74 of the Act submits that it would not restrict initiation of proceedings to a single financial year. Similarly, he submits that the procedure prescribed for regular assessment under Chapters IX and XII as well as proceedings under Chapter XV with regard to demands and recovery is also not restricted to a single financial year. Further, learned counsel for Revenue would submit that Sections 73 and 74 of the Act uses the word “any period” and when the legislature has used consciously the expression “any period”, it would be impermissible to read it as restrictive one, restricting it to a single financial year.

9. It is further submitted that, Sub-Section (10) of Sections 73 and 74 of the Act protects the interest of the assessee by prescribing limitation and use of financial year i

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