The Bombay High Court addressed a legal challenge involving a show cause notice issued under Section 74 of the CGST Act to M/s Paras Stone Industries. The notice, which alleged suppression of taxable value, consolidated proceedings for multiple financial years (2017–18, 2018–19, and 2019–20) into a single document. The petitioner argued that GST law requires separate proceedings for each tax period, and the consolidation was beyond the jurisdiction of the authorities. They supported their stance with previous judgments from the Bombay High Court that deemed such composite notices under Section 74 as impermissible.
The central issue was whether a consolidated show cause notice for multiple financial years under Section 74 is legally valid. The Court ruled that the statutory scheme of GST does not allow for the consolidation of different financial years in a single notice. It emphasized that assessment, limitation, and recovery provisions are specific to each financial year. The Court rejected the department's reliance on a contrary decision from the Delhi High Court, affirming that authorities must adhere to the jurisdictional High Court's rulings.
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Consequently, the High Court quashed the impugned notice, declaring it issued without proper jurisdiction. However, the Court granted the department the liberty to issue fresh notices for each financial year, provided it is otherwise permissible by law.
Parties: M/s Paras Stone Industries Vs. Union of India & Ors.
Order Date: 09 January 2026
Facts –
- The petitioner challenged a show cause notice issued under Section 74 of the CGST Act alleging suppression of taxable value.
- The impugned notice covered multiple financial years (2017–18, 2018–19 and 2019–20) through a single consolidated proceeding.
- The petitioner contended that GST law mandates separate proceedings for each tax period, and clubbing of years was without jurisdiction.
- Reliance was placed on earlier Division Bench judgments of the Bombay High Court holding that composite notices under Section 74 are impermissible.
Issue –
- Whether a consolidated show cause notice under Section 74 of the CGST Act covering multiple financial years is legally sustainable.
Order –
- The High Court held that the GST statutory scheme does not permit consolidation of different financial years in a single show cause notice under Section 74.
- The Court reiterated that assessment, limitation, and recovery provisions under GST are financial year specific.
- The reliance placed by the department on a contrary Delhi High Court decision was rejected, as authorities are bound by the jurisdictional High Court.
- The impugned show cause notice was quashed and set aside as being without jurisdiction.
- Liberty was granted to the department to re-issue fresh notices year-wise, if otherwise permissible in law.
