Court rules consolidated show cause notices for multiple tax periods as void ab initio, reaffirms writ jurisdiction despite alternative remedies.
In a significant ruling, the Bombay High Court, Aurangabad Bench, has declared that consolidated show cause notices issued for multiple financial periods under the Goods and Services Tax (GST) regime are void ab initio and beyond jurisdiction. The case, M/s Rithwik Projects Private Limited v. Union of India, was adjudicated by Justices Nitin B. Suryawanshi and Vaishali Patil-Jadhav, who emphasized that statutory provisions under the GST Act mandate separate assessments for each financial year, rendering any consolidated notices without jurisdiction.
The petitioner, M/s Rithwik Projects Private Limited, challenged the show cause notice dated June 29, 2022, and the subsequent order dated December 21, 2023, which demanded a GST payment of Rs. 2,54,40,532 for the period from July 1, 2017, to August 31, 2021. The court found these consolidated notices to be contrary to Sections 73(10) and 74(10) of the GST Act, which prescribe issuance of assessment orders within five years from the due date of the annual return. The court emphasized that each tax period must be assessed separately, thereby invalidating the consolidation of multiple tax periods in a single notice.
Moreover, the court addressed the argument regarding the existence of an alternative statutory remedy. It held that the availability of such remedies does not preclude the High Court's writ jurisdiction when the impugned notices are inherently void due to jurisdictional overreach. Citing previous decisions, the court reiterated that actions or orders issued without jurisdiction are nullities and cannot be enforced.
The judgment effectively quashed the impugned show cause notice, order, and subsequent recovery notice issued to Punjab National Bank regarding the petitioner’s account. However, the court granted liberty to the respondents to issue fresh notices in compliance with section 74 of the CGST Act for each respective financial year, provided it is permissible under the law.
This decision aligns with precedent cases, including the court’s judgment in M/s Milroc Good Earth Developers v. Union of India, which set a clear precedent against the consolidation of tax periods in GST assessments. Legal experts believe this ruling reinforces the necessity for tax authorities to adhere strictly to statutory provisions, ensuring assessments are conducted within the defined legal framework.
Bottom line:-
Goods and Services Tax (GST) - Consolidated show cause notices for multiple tax periods without jurisdiction are void ab initio and cannot be acted upon. Availability of statutory remedy does not bar writ jurisdiction where the impugned order and notices are without jurisdiction.
Statutory provision(s): Article 226 of the Constitution of India, Goods and Services Tax Act, 2017 Sections 73(10), 74(10), 122(2)(b)
