The Delhi High Court ruled that issuing consolidated GST show cause notices for multiple financial years is legally permissible under Section 74 of the CGST Act. This decision came in response to challenges by JBN Impex Private Limited, Brilliant Metals Private Limited, and Progressive Alloys (India) Private Limited. The petitioners argued that combining several financial years into a single proceeding violated natural justice principles and limitation provisions under the CGST Act.
Despite references to favorable judgments from the Madras and Andhra Pradesh High Courts, the Delhi High Court maintained its stance, citing earlier rulings in cases such as Ambika Traders and Vallabh Textiles. The court noted that there is no statutory prohibition against issuing such consolidated notices and that these are not illegal merely because they encompass multiple years. The court emphasized that in cases of alleged fraudulent Input Tax Credit (ITC) utilization, consolidation might be necessary to illustrate the pattern and continuity of fraud comprehensively.
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The court further clarified that details of tax demands for each financial year were clearly identifiable in the notices and orders, ensuring no prejudice or violation of natural justice occurred. The Delhi High Court's decision reflects its consistent judicial view, even though other High Courts might interpret the law differently.
Order Date - 29 April 2026
Parties: JBN Impex Private Limited, Brilliant Metals Private Limited and Progressive Alloys (India) Private Limited Vs Additional Commissioner Adjudication CGST Delhi North and Joint Commissioner Adjudication CGST Delhi North
Facts -
- Petitioner JBN Impex Private Limited challenged GST show cause notices and adjudication orders issued for multiple financial years together, arguing that clubbing several years into one proceeding violated principles of natural justice and limitation provisions under the CGST Act.
- Petitioner Brilliant Metals Private Limited raised similar objections before the Court, contending that the tax authorities could not legally combine several financial years into one consolidated adjudication process under Section 74 of the CGST Act.
- Petitioner Progressive Alloys (India) Private Limited also approached the Court after relying on favourable judgments of the Madras High Court and Andhra Pradesh High Court, where consolidation of notices for multiple years had reportedly been disapproved.
- The petitioners argued that the issue was already pending before the Supreme Court in another matter and sought quashing of the impugned show cause notices and orders, along with a stay on their operation.
Issue -
- Whether Section 74 of the CGST Act permits the GST Department to issue consolidated show cause notices?
Order -
- The Court observed that it had already consistently ruled in earlier judgments such as Ambika Traders and Vallabh Textiles that there is no statutory prohibition under Section 74 of the CGST Act against issuing consolidated notices for multiple financial years. Therefore, such notices cannot be treated as illegal merely because several years are combined together.
- The Bench noted that in cases involving alleged fraudulent availment or utilization of Input Tax Credit (ITC), consolidated proceedings may actually be necessary. According to the Court, combining financial years helps authorities demonstrate the overall pattern, modality, and continuity of the alleged fraud in a comprehensive manner.
- The Court further clarified that even if other High Courts like the Madras High Court or Andhra Pradesh High Court had taken a different interpretation, the Delhi High Court was not persuaded to depart from its own consistent judicial view already expressed in earlier binding precedents.
- The Court also emphasized that the details of tax demands for each financial year were separately identifiable within the notices and orders. Hence, the petitioners could not successfully argue that consolidation caused prejudice or violated principles of natural justice.
