The Court observed that the language used in Sections 73(1), 73(3), and 73(4) (and corresponding provisions under Section 74) employs expressions such as “any period” and “such periods,” which indicate that the legislature did not intend to confine the issuance of SCNs to a single financial year or tax period. In particular, Section 73(3) permits issuance of a statement for periods other than those covered in the original notice, and Section 73(4) deems such statements to be notices, thereby reinforcing the view that multiple periods can be covered within the same adjudicatory framework.

The Court further emphasized the conceptual distinction between “assessment” and “adjudication” under the GST regime. While assessment is return-based and linked to a specific tax period or financial year, proceedings under Sections 73 and 74 are adjudicatory in nature and arise from disputes relating to specified amounts of tax, input tax credit, or refunds. Such adjudication is not necessarily confined to the boundaries of a single tax period and may legitimately extend across multiple periods, especially in cases involving complex transactions or allegations such as fraudulent availment of input tax credit, where patterns can only be discerned over a span of time.

On the issue of limitation, the Court clarified that Sections 73(10) and 74(10) deal with the time limit for passing the adjudication order and do not impose any restriction on the issuance of the show cause notice itself. The limitation for each financial year remains distinct and must be independently satisfied, even if a consolidated notice is issued. Therefore, the existence of a limitation period for passing orders cannot be interpreted as an embargo on the power of the proper officer to issue a composite SCN.

While the petitioners relied on decisions such as Milroc Good Earth Developers and other High Court rulings which held that clubbing of financial years is impermissible, the Court noted that there exists a contrary line of authority, including decisions of the Delhi High Court and the Allahabad High Court, which uphold the validity of consolidated notices. These judgments reason that the use of the expression “period” instead of “financial year” is deliberate and that adjudication proceedings are meant to address disputes relating to specified tax liabilities rather than being confined to return periods. The Court also took note of the dismissal of the Special Leave Petition against the Delhi High Court’s decision in Mathur Polymers by the Supreme Court through a speaking order, and referred to the principle laid down in Kunhayammed v. State of Kerala to indicate that such an order may have a binding effect in terms of declaration of law.

Additionally, the Court referred to a clarification issued by the GST Policy Wing stating that consolidation of proceedings does not extend or alter the limitation period for individual financial years, and that each year continues to be governed by its own statutory timeline. It was also observed that assessees retain the right to raise objections on limitation for each year, and the proper officer is bound to consider such objections while adjudicating the matter.

In light of the conflicting judicial opinions and the importance of the issue, the Court refrained from giving a final ruling and instead referred the matter to a Larger Bench for authoritative determination. The questions referred include whether limitation provisions restrict the issuance of consolidated SCNs, whether such notices are permissible under the statutory scheme, the effect of Section 160 of the CGST Act, the correctness of the decision in Milroc Good Earth Developers, and the binding nature of the Supreme Court’s order in Mathur Polymers. Pending such determination, the Court directed that interim orders granted in similar matters shall continue to operate.