Facts of the Case:

In this case, the petitioner challenged a show cause notice under Section 74 of the CGST Act, 2017, alleging suppression of taxable value and short payment of CGST. The impugned notice covered a composite period from April 2018 to March 2024, thereby clubbing multiple financial years into a single show cause notice. The petitioner contended that such consolidation of tax periods was impermissible under the CGST Act and contrary to the statutory scheme of assessment, limitation and recovery. Reliance upon Division Bench judgments of the Bombay High Court, which had categorically held that issuance of a single show cause notice for multiple financial years is without jurisdiction.

The respondents opposed the petition by relying upon a Delhi High Court judgment which permitted consolidated notices in cases involving allegations of fraud spread over multiple years and further argued that the said judgment had attained finality after dismissal of an SLP by the Supreme Court.

Issue:

Whether a single show cause notice under Section 74 of the CGST Act covering multiple financial years/tax periods is legally sustainable under the GST statutory scheme.

Held that:

The High Court held that clubbing of multiple financial years into a single show cause notice under Section 74 of the CGST Act is impermissible in law and suffers from lack of jurisdiction.

The Court followed its earlier Division Bench decisions in M/s. Milroc Good Earth Developers v. Union of India and Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST, wherein it was conclusively held that the GST framework mandates year-wise determination of tax liability, and consolidation of tax periods violates the statutory scheme.

The Court rejected the respondents’ reliance on the Delhi High Court judgment, holding that dismissal of the SLP in limine does not result in merger and does not override the binding precedents of the jurisdictional High Court. Since the Bombay High Court had subsequently taken a contrary view, the authorities within the State were bound to follow the same.

Accordingly, the impugned show cause notice dated 30.05.2025 was quashed and set aside, with liberty granted to the department to issue fresh notices strictly in accordance with Section 74, on a financial-year-wise basis, subject to limitation and other legal requirements.

Case Name:  M/s. Marfani Steel Impex, through its proprietor Mohammed Irfan Marfani Vs. The Principal Commissioner, Central Goods and Services Tax & Central Excise, Nagpur & Ors. dated 17.01.2026

To read the complete judgement 2026 Taxo.online 210