GST Update

Desk of CA. Praveen Sharma – 1028 Series (CAPS) 

Bombay High Court IN THE CASE OF Rithwik Projects Pvt. Ltd. v. Union of India & Ors.

In a significant ruling, the Bombay High Court held that the GST Department cannot issue a single Show Cause Notice (SCN) covering multiple financial years under Sections 73 or 74 of the CGST Act, 2017.

In the case of Rithwik Projects Pvt. Ltd. v. Union of India & Ors., the department had issued one consolidated SCN for the financial years 2017–18 to 2021–22, proposing a demand of around ?2.54 crore towards GST, interest, and penalty.

The taxpayer challenged the notice, arguing that each financial year is a separate tax period under the GST law and requires an independent SCN. Accepting this contention, the High Court relied on its earlier decisions and observed that clubbing multiple financial years in a single notice is contrary to the statutory scheme of the CGST Act.

Accordingly, the Court quashed the consolidated SCN, the adjudication order, and the recovery proceedings arising from it. However, it granted liberty to the department to issue fresh, separate year-wise notices, if permissible under law and within the prescribed limitation period.

The judgment reinforces that GST authorities must follow the statutory procedure while initiating proceedings, and taxpayers cannot be subjected to a consolidated notice for multiple financial years.

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Regards
CAPS