• Dated 26^th August, 2025

Madras HC Nixes Mega-SCNs: Each Year Stands Alone

Brief Facts

The case revolves around a significant writ petition challenging the Department's move to issue a single GST Show Cause Notice (SCN) and a composite assessment order spanning six financial years from 2017–18 to 2022–23. Strikingly, the SCN was issued just three months before the limitation period for 2017–18 was set to lapse, effectively clubbing multiple years into one sweeping proceeding. This unusual bunching compelled the assessee to prepare responses for all six years under severe time pressure and brought into sharp focus a key legal question whether such mega-SCNs that span several years are permissible under the GST framework, which distinctly treats each financial year as its own "tax period" with separate timelines for limitation period.

Assessee's Contention

The assessee contended that the GST law mandates issuance of SCNs on a tax-period basis either monthly or annually, and that each financial year carries its own independent limitation period of three years for Section 73 and five years for Section 74. Clubbing multiple years in one SCN is contrary to the statutory framework and the decision in Titan Company Ltd. and Tharayil Medicals. The assessee also argued that the bunching of tax periods prejudices their ability to (i) apply for compounding under Section 138 of the CGST Act 2017 for selective years, (ii) avail amnesty schemes for particular years, and (iii) settle disputes for some years while contesting others. Furthermore, the issuance of the SCN at the fag end of the limitation period for the first year deprived them of adequate time to prepare an effective defence.

Department's Contention

The Department argued that Sections 73 and 74 of the CGST Act 2017 contain no explicit prohibition against issuing a single SCN for multiple financial years. They emphasised that the term "any period" in the provisions allows for the clubbing of years, just as month wise periods within a year are often clubbed. According to the Department, such an approach is both efficient and practical, avoiding multiplicity of proceedings. They contended that there is no prejudice to the assessee if the SCN is issued within the limitation period applicable to each year included in the notice.

Decesion:

The Madras High Court held that the term "any period" in Sections 73 and 74 must be understood as referring to the "tax period" defined in Section 2(106) of the GST Act, which can be either a month or a year, but never more than one financial year. The limitation of three years (for non-fraud cases) or five years (for fraud cases) applies separately to each financial year, and the limitation is neither continuous nor capable of being carried over. Issuing a composite SCN for multiple years frustrates the statutory limitation framework and deprives the assessee of year-specific defences. The Court relied on Titan Company Ltd., Tharayil Medicals, and State of J&K v. Caltex (India) Ltd. to reiterate that each assessment year is distinct and must be dealt with independently. The impugned order was quashed as being without jurisdiction, with a clear direction that SCNs and assessments must be issued separately for each financial year.

BTA Comment

This judgment reinforces the principle that the GST regime mandates strict adherence to the tax period concept when issuing SCNs and passing assessment orders. Clubbing multiple financial years in a single notice is not only procedurally flawed but also jurisdictionally invalid, exposing such orders to being quashed in writ proceedings. From a compliance perspective, tax authorities must ensure that each financial year is dealt with through an independent SCN and assessment order. For businesses, this ruling provides a strong defence where notices improperly bunch multiple years, and such defects can be challenged at the writ stage without waiting for appellate remedies.

Case Reference: R.A. AND CO. VS ADDITIONAL COMMISSIONER OF CENTRAL TAXES, SOUTH COMMISSIONERATE, CHENNAI. (2025) 33 Centax 66 (Mad.).

Author: Pritam Ghosh

Edited by: Shaily Gupta