A larger bench of the Bombay High Court will decide whether the Goods and Service Tax department can validly issue a single consolidated show‑cause notice (SCN) clubbing multiple financial years under Sections 73 and 74 of the CGST Act, 2017 [Rollmet LLP v UOI Ors. and connected petitions].
A division bench of Justices GS Kulkarni and Aarti Sathe referred the issue to a 3-judge bench on April 17 while hearing a batch of petitions led by Rollmet LLP and several other assessees from sectors such as real estate, banking, logistics, manufacturing and entertainment.
The petitions were filed challenging consolidated SCNs covering several financial years.
The core argument was that the CGST scheme is year‑wise, and that a single SCN bunching different years violates the limitation structure in Sections 73(10) and 74(10) and is therefore without jurisdiction.
Section 73(10) mandates a final order in non-fraud cases within three years of the annual return due date or erroneous refund date. Section 74(10) extends this outer limit to five years for fraud, wilful misstatement or suppression cases.
The petitioners relied on the ruling by the bench in Goa in Milroc Good Earth Developers v. Union of India, followed by the Nagpur bench rulings of Paras Stone Industries and Rite Water Solutions, which held that there is “no provision” in the CGST Act to club tax periods and therefore, consolidated SCNs are invalid.
They also cited similar views of the Madras, Kerala and Karnataka High Courts which emphasised that each financial year is a distinct unit for assessment and limitation.
The GST Department, however, pointed to contrary decisions of the Delhi High Court in Mathur Polymers and Ambika Traders, and of the Allahabad High Court in SA Aromatics, upholding consolidated SCNs that cover multiple financial years.
This is particularly relevant in cases involving fraudulent Input Tax Credit (ITC) where the transactions occurred over several years.
The bench interpreted Sections 73 and 74 as a self-contained "code" governing demand and recovery. Upon a plain reading, the Court found no indication that sub-section (10) of either Section 73 or 74 was intended to restrict or prohibit a consolidated SCN covering multiple periods.
The Court observed that treating the limitation provision as a bar on clubbing different periods would amount to ‘re‑writing’ the statute.
The judges noted the difference of opinions across High Courts and expressed grave doubt whether the Milroc judgment correctly reflects the legislative scheme.
Hence, it referred the issue to a larger bench.
[Read order]