Kerala High Court Sets Aside Composite GST Notice Issued for Several Financial Years

Background of the Dispute

The matter in Nav Bsa Enterprises Vs Enforcement Officer (Kerala High Court) arose from a challenge to Ext.P1, a consolidated show cause notice issued under the Goods and Services Tax laws. The notice covered alleged liabilities for three different financial years:

  • 2019-2020
  • 2020-2021
  • 2021-2022

The assessee approached the Kerala High Court contending that a single composite show cause notice for multiple assessment years was impermissible in law and, therefore, the entire notice was liable to be quashed.

The central question before the Court was:

Whether a composite show cause notice combining several financial/assessment years into one proceeding is legally valid under the prevailing GST legal framework and existing judicial precedents.

The assessee argued that each assessment year constitutes a separate unit for adjudication and that clubbing multiple years into a single notice runs contrary to binding precedents of the Kerala High Court.

Precedents Relied Upon

To support this argument, the assessee placed reliance on two earlier Division Bench judgments of the Kerala High Court:

  1. Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories 12025 KHC OnLine 149
  2. Tharayil Medicals v. Deputy Commissioner, Audit Division – IV 12025 VIL 356 KER

In these decisions, the Division Bench had examined the validity of similar consolidated notices and had held that:

  • A single notice covering multiple assessment years is not legally sustainable.
  • Assessment for each year must be proceeded with distinctly, respecting the independent character of each period.

These rulings formed the backbone of the challenge mounted against Ext.P1.

Submissions Before the Court

Assessee’s Stand

The assessee argued, in essence, that:

  • Ext.P1 was a consolidated show cause notice clubbing three financial years (2019-2020 to 2021-2022).
  • As per the binding Division Bench decisions in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories 12025 KHC OnLine 149 and Tharayil Medicals v. Deputy Commissioner, Audit Division – IV 12025 VIL 356 KER, such a composite notice is inherently defective.
  • Since the Court has already taken a clear view on this issue in those cases, the same principle must be applied consistently, and Ext.P1 ought to be interfered with.

Respondents’ Position