The Himachal Pradesh High Court addressed a case involving M/s Ekta Enterprises and the State of Himachal Pradesh regarding the issuance of a composite intimation and show-cause notice under the CGST Act. The petitioner received a Form DRC-01A intimation on June 20, 2024, covering multiple financial years from 2017-18 to 2023-24 under Section 74(5). This was followed by a composite show-cause notice in Form DRC-01 on August 5, 2024, under Section 74(1), which did not consider the petitioner's reply to the initial intimation.
The petitioner argued that the issues across different financial years were distinct and unrelated, making it inappropriate to combine them into a single notice. They cited judicial precedents that disallow composite GST proceedings when subject matters differ across tax periods. The core issue was whether such composite notices for multiple financial years with differing subject matters were legally valid under Section 74 of the CGST Act.
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The High Court ruled that separate intimations and show-cause notices must be issued for each financial year when the subject matters differ. It found the composite DRC-01A and DRC-01 to be procedurally unsustainable, without assessing the tax demand's merits. Consequently, the intimation and notice, along with all related proceedings, were quashed. However, the Court allowed tax authorities to initiate fresh proceedings by issuing separate notices if necessary. It also clarified that the limitation period would not be a barrier due to the writ petition's pendency, provided new actions are taken within the prescribed timeframe.
Parties: M/s Ekta Enterprises v. State of Himachal Pradesh & Anr.
Order Date: 02 January 2026
Facts –
- The petitioner was issued a composite intimation in Form DRC-01A dated 20.06.2024 covering multiple financial years from 2017-18 to 2023-24 under Section 74(5) of the CGST Act.
- Subsequently, a composite show-cause notice in Form DRC-01 dated 05.08.2024 was issued under Section 74(1), without considering the petitioner’s reply to the earlier intimation.
- The petitioner contended that the issues involved across different financial years were distinct and unrelated, and therefore could not be clubbed into a single notice.
- Reliance was placed on recent judicial precedents holding that composite GST proceedings are impermissible where subject matters differ across tax periods.
Issue –
- Whether composite intimation and show-cause notice under Section 74 of the CGST Act, covering multiple financial years involving different subject matters, are legally sustainable?
Order –
- The High Court held that where subject matters differ across financial years, separate intimations and show-cause notices must be issued for each year.
- Without examining the merits of the tax demand, the Court found the composite DRC-01A and DRC-01 to be procedurally unsustainable.
- Accordingly, the intimation dated 20.06.2024 and SCN dated 05.08.2024, along with all consequential proceedings, were quashed and set aside.
- Liberty was granted to the tax authorities to initiate fresh proceedings in accordance with law, by issuing separate notices, if required.
- The Court clarified that limitation shall not operate as a bar due to pendency of the writ petition, provided fresh action is taken within the prescribed time.
