Bombay High Court Invalidates Composite GST Show Cause Notices Clubbing Multiple Financial Years Under Section 74

In a landmark development concerning GST litigation and adjudication, the Bombay High Court has reinforced the statutory mandate that tax assessments must correspond strictly to individual financial years. The ruling in the case of Speedways Logistics Pvt. Ltd. Vs Union of India serves as a critical precedent, clarifying that revenue authorities cannot issue a consolidated Show Cause Notice (SCN) covering multiple financial years under Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act).

This judgment highlights the judiciary's insistence on strict adherence to the limitation periods prescribed under the law, ensuring that the rights of the assessee to a fair defense are not compromised by administrative convenience.

Factual Matrix of the Case

The dispute arose when the assessee, Speedways Logistics Pvt. Ltd., approached the High Court challenging the legality of a Show Cause Notice issued by the Joint Commissioner, CGST Audit Commissionerate, Nagpur.

The specifics of the impugned notice are as follows:

  • Date of Notice: 24 September 2025.
  • Statutory Provision: Section 74 of the CGST Act, 2017.
  • Period Covered: A composite period spanning from April 2019 to March 2023.
  • Allegations: The revenue authorities alleged that the assessee had suppressed taxable values, resulting in short payment of tax, and had wrongfully availed Input Tax Credit (ITC).

The core grievance of the assessee was procedural. They contended that the action of the department to club multiple financial years into a single adjudication proceeding was legally unsustainable and contrary to the scheme of the GST framework.

The primary question of law before the Bombay High Court was whether Section 74 of the CGST Act, 2017 permits the issuance of a single, consolidated SCN for distinct tax periods spanning several financial years.

Arguments by the Assessee

The legal counsel for the assessee argued that the GST architecture is fundamentally structured around the concept of a "Financial Year." They submitted that the limitation periods for adjudication are inextricably linked to the due dates of annual returns for each specific year.

To substantiate this claim, the assessee relied heavily on the precedent set by the Division Bench of the Bombay High Court (Goa Bench) in the case of Milroc Good Earth Developers Vs. Union of India & Ors. [Writ Petition No. 2203/2025 decided on 9/10/2025].