The Karnataka High Court has ruled on a case involving M/s Pramur Homes and Shelters, a real estate developer registered under the CGST Act, which challenged a single composite show cause notice issued by the tax authorities. This notice, dated September 30, 2025, covered five financial years from 2019–20 to 2023–24 and proposed a demand of over ₹11.86 crore for alleged wrongful GST liability. The petitioner argued that GST laws require year-wise assessment and limitation, and consolidating multiple years in a single notice was prejudicial and amounted to jurisdictional overreach.
The primary issue was whether a single consolidated show cause notice under Section 74 of the CGST/KGST Act, covering multiple financial years, is permissible. The High Court determined that the GST statutory framework operates on a financial-year basis for returns, assessment, input tax credit, and limitation. It noted that the limitation under Sections 73 and 74 is independent for each financial year and cannot be circumvented by combining multiple years into one notice. The court found that such consolidation could lead to misuse of extended limitation periods and violated principles of natural justice.
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Consequently, the court quashed the impugned show cause notice dated September 30, 2025, as being issued without jurisdiction. However, it allowed the department the liberty to issue separate show cause notices for each financial year in compliance with the law.
Parties: M/s Pramur Homes and Shelters v. Union of India & Ors.
Order Date: 11 December 2025
Facts
- The petitioner, a real estate developer registered under the CGST Act, was issued a single composite show cause notice dated 30.09.2025 under Section 74 covering five financial years from 2019–20 to 2023–24.
- The notice proposed a demand of over ₹11.86 crore alleging wrongful GST liability relating to development rights, real estate transactions, and sale of properties.
- The petitioner challenged the notice directly before the High Court contending that GST law mandates year-wise determination and limitation.
- It was argued that consolidation of multiple years caused serious prejudice and amounted to jurisdictional overreach.
Issue
- Whether issuance of a single consolidated show cause notice under Section 74 covering multiple financial years is permissible under the CGST/KGST Act?
Order
- The High Court held that the GST statutory framework is fundamentally structured on a financial-year basis for returns, assessment, input tax credit, and limitation.
- It observed that limitation under Sections 73 and 74 runs independently for each financial year and cannot be diluted by clubbing multiple years into one notice.
- The Court further held that such consolidation enables misuse of extended limitation and violates principles of natural justice.
- The impugned show cause notice dated 30.09.2025 was quashed as being without jurisdiction. Liberty was reserved to the department to issue separate show cause notices for each financial year in accordance with law.
