Consolidated SCN Involving Multiple Assessment Years Can Be Issued Only When Common Period Of Adjudication Exists: Kerala High Court
Mehak Dhiman
20 Feb 2025 1:30 PM
The Kerala High Court stated that consolidated show cause notice involving multiple assessment years can be issued when common period of adjudication exists. “Issuing a consolidated show cause notice covering various financial/assessment years would cause prejudice to an assessee who would not get the full period envisaged for adjudication under the Statute, if that period...
The Kerala High Court stated that consolidated show cause notice involving multiple assessment years can be issued when common period of adjudication exists.
“Issuing a consolidated show cause notice covering various financial/assessment years would cause prejudice to an assessee who would not get the full period envisaged for adjudication under the Statute, if that period is circumscribed by the limitation period prescribed in relation to an earlier financial/assessment year” stated the Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S.
In this case, a show cause notice was issued to the assessee/respondent. The department/appellant had issued a single consolidated notice for six different financial years. The assessee/respondent has challenged the show cause notice through a writ petition.
The Single Judge, found force in the contention of the assessee that issuing a composite order covering all the financial years from 2017-18 to 2023-24 would prejudice the assessee in relation to its contentions for those assessment yeas where the time limit prescribed under Section 74(10) of the CGST Act would not expire by 07.02.2025, which was the last date for passing orders in respect of assessment year 2017-18.
The department has challenged the order passed by the Single Judge.
The statutory period available for an assessee to put forth its contentions against the show cause notice in an effective manner cannot be curtailed by an unnecessary act on the part of the Department in issuing a consolidated show cause notice that includes therein a financial/assessment year in relation to which the period for passing a final order expires earlier, noted the bench.
The bench opined that “where, in a situation such as the present, the proximate expiry of the limitation period under Section 74(10) is only in relation to one of the six financial/assessment years, the contentions of the assessee and the opportunity available to an assessee for adducing evidence in relation to the other years cannot be rendered illusory by forcing upon the assessee the period of limitation prescribed under Section 74(1) for passing the final order in relation to the earliest financial/assessment year [2017-18]”.
The bench further opined that a consolidated notice would also result in a consolidated adjudication order covering several financial/assessment years and in the event of it being adverse to the assessee, the fee/pre-deposit required to be paid by an assessee for preferring a statutory appeal would also be higher.
In view of the above, the bench dismissed the appeal.
Case Title: Joint Commissioner (Intelligence and Enforcement) v. M/s Lakshmi Mobile Accessories
Case Number: W.A.NO.258 OF 2025
Citation: 2024 LiveLaw (Ker) 124
Counsel for Appellant/ Department: Muhammed Rafiq
Counsel for Respondent/ Assessee: K.S. Hariharan Nair and Divya Ravindran