Bombay High Court Sets Aside GST Notices Issued For Multiple Financial Years Together

The Nagpur Bench of the Bombay High Court has set aside two GST show cause notices issued to AR Traders after finding that the tax department had wrongly combined multiple financial years into single proceedings.

A Division Bench of Jutsices Anil L. Pansare and Nivedita P. Mehta held that the GST law does not permit consolidation of multiple financial years in a single proceeding. The court said the notices issued to the firm did not follow the statutory framework governing tax periods and limitation.

AR Traders had challenged two show cause notices and a subsequent order issued by GST authorities in Nagpur. One notice covered the period from 2018–19 to 2023–24, while the other covered 2019–20 to 2023–24.

The department alleged suppression of taxable value and short payment of central GST but proceeded by issuing composite notices spanning several financial years.

The firm argued that this approach was not permissible under the GST law, which treats each financial year as a separate tax period. The tax department defended its action by relying on a Delhi High Court judgment that had upheld consolidated notices in cases involving allegations of fraud. It also submitted that the Supreme Court had declined to interfere with that ruling.

The Court rejected that argument. It clarified that dismissal of a special leave petition without examination on merits does not result in merger of the High Court judgment with that of the Supreme Court.

“True it is that the judgment of the Delhi High Court has attained finality, however, concept of merger of judgment will not apply here because the Hon'ble Supreme Court has dismissed the petition in limine and not on merit,” the court said.

The bench quashed the notices and the order against AR Traders while granting liberty to the department to issue fresh notices strictly in accordance with law, if otherwise permissible.

For Petitioners:  Advocate Kartik N. Shukul with Advocate Gaurav

For Respondent: Advocate Ketki Jaltare