[Bombay High Court] Composite Show Cause Notice covering multiple Financial Years under Section 74 of the CGST Act, 2017 is without jurisdiction

Introduction:

In the matter of Paras Stone Industries v. Union of India[i], the Hon’ble Bombay High Court examined whether the tax authorities could issue a single, consolidated show cause notice (‘SCN’) under Section 74 of The Central Goods and Services Tax Act, 2017 (‘CGST Act’) covering multiple financial years by alleging suppression and short payment of tax. The Court held that such a composite notice is without jurisdiction, reaffirming that the statutory scheme under GST mandates separate adjudication for each tax period.

Brief Facts:

Paras Stone Industries challenged a SCN issued in September 2023 by the Deputy Director, Directorate General of GST Intelligence (DGGI), Nagpur. The impugned SCN was issued under Section 74 of the CGST Act and covered three financial years i.e., 2017–18, 2018–19, and 2019–20, alleging suppression of taxable value and consequent short payment of GST.

Contentions:

• The Petitioner contended that clubbing multiple financial years into a single notice was impermissible and contrary to the statutory framework of the CGST Act. Reliance was placed on binding Division Bench judgments of the Bombay High Court, including Milroc Good Earth Developers v. Union of India[ii] and Rite Water Solutions (India) Ltd. v. Joint Commissioner[iii], which held that consolidation of tax periods in a single SCN under Section 74 of the CGST Act is not permissible.
• The Revenue opposed the petition, relying on a contrary view of the Hon’ble Delhi High Court and raised a preliminary objection regarding maintainability on the ground of availability of an alternate statutory remedy.

Held:

• The Hon’ble Bombay High Court quashed the consolidated SCN, holding that there is no scope under Section 74 of the CGST Act to issue a composite notice covering multiple financial years.
• The Court rejected the objection regarding alternate remedy, observing that where proceedings are without jurisdiction, the existence of an appellate remedy does not bar the exercise of writ jurisdiction. It further held that authorities within the State of Maharashtra are bound by the judgments of the Bombay High Court, notwithstanding a contrary view taken by another High Court.
• While setting aside the impugned SCN, the Court granted liberty to the Department to issue fresh notices separately for each financial year, strictly in accordance with Section 74, if otherwise permissible in law.

Analysis:

The ruling reiterates that GST operates on a period-specific framework, requiring assessment, demand, and recovery to align with distinct tax periods as prescribed under the statute. By relying on its earlier Division Bench decisions, the Court underscored that limitation, adjudication timelines, and procedural safeguards under Sections 73 and 74 are inextricably linked to individual financial years. The judgment also reinforces the doctrine of judicial discipline, clarifying that authorities are bound by the law laid down by the jurisdictional High Court notwithstanding a contrary view of another High Court. Significantly, it emphasizes that jurisdictional defects go to the root of the proceedings, warranting writ intervention even where alternate statutory remedies are available.

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[i] [2026] 182 taxmann.com 643 (Bombay)[09-01-2026]

[ii] [2025] 179 taxmann.com 465/112 GST 596/[2026] 104 GSTL 45(Bom.)/[Writ Petition No. 2203/2025 decided on 9/10/2025]

[iii] [Writ Petition No. 466 of 2025, dated 28-11 2025]/ [Writ Petition No. 466/2025 decided on 28/11/2025]