Desk of CA. Praveen Sharma – CAPS Series 

In a significant ruling, the Bombay High Court in the case of Hakikatrai and Sons, Akola examined the validity of a consolidated GST show cause notice issued for multiple financial years. The notice alleged suppression of taxable value and short payment of tax for the period from 2018-19 to 2022-23.

The petitioner challenged the notice on the ground that GST law treats each financial year as a separate tax period, and therefore, issuing a single notice covering multiple years is not legally sustainable. It was argued that such consolidation goes against the structure of GST returns and assessment mechanisms.

The department, on the other hand, justified its action by stating that in cases involving alleged fraud or wrongful availment of input tax credit, a consolidated notice is practical and necessary, especially where transactions are interconnected across years.

The Court analyzed the framework of GST law and observed that tax liability, returns, and compliance obligations are designed year-wise. Combining multiple financial years in one notice may disturb this statutory structure and create procedural inconsistencies.

The Court also noted that while there may be differing views from other High Courts, the decisions of the Bombay High Court would prevail within its jurisdiction and had clearly held against such consolidated notices.

Accordingly, the High Court set aside the show cause notice. However, it granted liberty to the tax authorities to issue fresh notices separately for each financial year, subject to the provisions of law.

This judgment reinforces the importance of following proper procedure and respecting the financial year-wise framework under GST law.

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CAPS