Consolidated GST Notices Across Financial Years: Key Takeaways from Rollmet LLP Vs Union of India

1. Background of the Dispute

A series of writ petitions came up before the Bombay High Court in which various assessees questioned the legality of single consolidated show-cause notices issued under Section 73 and Section 74 of the Central Goods and Services Tax Act, 2017 (“CGST Act”).

These notices bunched together multiple financial years in one proceeding. The core controversy is:

  • Can the GST authorities validly issue one composite notice covering several financial years?
  • Or must a separate notice be issued for each financial year, in line with the structure of Section 73(10) and Section 74(10) which prescribe year-wise limitation for orders?

The petitions were heard together, including Rollmet LLP Vs Union of India, because they raised a common legal question on the validity of such consolidated show-cause notices (SCNs).

2. Assessee’s Stand: Consolidated SCNs Are Beyond Jurisdiction

Counsel representing the assessees attacked consolidated SCNs on multiple fronts. Their broad submissions were:

2.1 Year-wise Scheme and Limitation

According to the assessees:

  • The CGST Act is structured financial year-wise.
  • Section 2(97) defines “return” as any return prescribed or required under the Act, and this must be read along with:
    • Section 2(106) – “tax period” means the period for which the return is required to be furnished;
    • Section 44 – dealing with annual return and reconciliation with audited financial statements.
  • Section 73(10) prescribes a 3-year limitation and Section 74(10) a 5-year limitation for passing orders, both linked to the respective financial year’s annual return.

Therefore, each financial year is an independent unit for:

  • Assessment,
  • Returns, and
  • Limitation calculations.

From this perspective, the assessee argued:

  • Clubbing multiple financial years in a single SCN undermines this year-specific scheme.
  • Such a consolidated SCN is therefore without jurisdiction and violative of Section 73(10) and Section 74(10).

2.2 Reliance on Milroc and Other High Court Rulings

The petitioners placed heavy reliance on earlier judgments that favoured their position, particularly:

  • Milroc Good Earth Developers v. Union of India (Bombay High Court – Goa Bench), where it was held that no provision exists in the CGST Act to club several tax periods in one SCN, and consolidated notices were declared invalid.
  • This view was followed by:
    • M/s Paras Stone Industries v. Union of India & Ors.
    • Rite Water Solutions (India) Ltd. v. Joint Commissioner, CGST & CE

They also cited supportive judgments from other High Courts, including:

  • Titan Company Ltd. v. JC, GST & Central Excise (Madras HC)
  • Bangalore Golf Club v. AC, Commercial Taxes (Karnataka HC)
  • Veremax Technologies v. AC, Central Tax (Karnataka HC)
  • UNO Minda v. Joint Commissioner of GST & CE (Madras HC)
  • Chimney Hills Education Society v. AC, Central Tax (Karnataka HC)
  • Gopi Chand v. DC, Commercial Taxes (Audit) (Karnataka HC)
  • Lakshmi Mobiles v. Joint Commissioner and Joint Commissioner v. Laxmi Mobile (Kerala HC)
  • X.L. Interiors v. DC (Intelligence), SGST Dept. (Kerala HC)
  • Tharayil Medicals v. Deputy Commissioner (Kerala HC)
  • R.A. and Co. vs. AC of Central Taxes, Chennai South (Madras HC)
  • R. Ashaarajaa v. Senior Intelligence Officer, DGGI (Madras HC)
  • Oriental Lotus Hotel Supplies Pvt. Ltd. v. JC (Madras HC)
  • S.J. Constructions v. AC (ST), Vishakhapatnam (Andhra Pradesh HC)
  • Pramur Homes and Shelters v. Union of India (Karnataka HC)

2.3 Argument on Binding Nature of Coordinate Bench

The assessees also urged that:

  • The Bombay High Court is bound to follow its own prior Division Bench ruling in Milroc Good Earth Developers.
  • In the interest of certainty and uniformity, a coordinate Bench cannot depart from Milroc merely because there are contrary High Court views.
  • Milroc had already considered and distinguished Delhi High Court judgments relied upon by the Revenue.

Judgments such as Sant Lal Gupta v. Modern Co-operative Group Housing Society Limited and Panjumal Hassomal Advani v. Harpal Singh were cited to support strict adherence to precedent by coordinate benches.

2.4 Assessment and Tax Period Logic

The petitioners further submitted:

  • Under Section 2(11), “assessment” means determination of tax liability, including self-assessment, re-assessment, etc.
  • As “return” and “tax period” are tightly linked, any proceedings under Section 73 or Section 74 must also be structured tax-period-wise, i.e., monthly or annually, but always within a particular financial year.
  • Since the CGST Act does not contemplate assessment spanning across multiple financial years in a single SCN, the department must issue separate notices per financial year.

2.5 Year-bound ITC and Limitation

They also relied on Section 16(4) (time limit for availing input tax credit) to reinforce the year-bound nature of GST: