Kerala High Court Rules Composite GST Orders Legally Invalid — Separate Year-Wise Orders Mandatory

Overview of the Case

A significant ruling has emerged from the Kerala High Court in the matter of X L Interiors Vs Deputy Commissioner (Intelligence), where the Court addressed a fundamental procedural question under the Central Goods and Services Tax Act, 2017 — whether a single composite order can validly cover multiple financial years in tax determination proceedings.

The judgment carries substantial implications for GST adjudication practice across India, particularly for cases where tax authorities issue consolidated show cause notices and composite orders spanning several assessment years simultaneously.

Background and Facts of the Case

The assessee, X L Interiors, filed a writ petition before the Kerala High Court challenging a composite show cause notice that had been issued covering financial years 2018–19 through 2022–23 under the Central Goods and Services Tax Act, 2017. As part of the reliefs sought, the assessee also requested the Court to direct the concerned tax authority to pass individual, separate adjudication orders for each financial year covered under the said notice, rather than a single consolidated order.

Interim Direction on Limitation for 2017–18

When the matter was taken up for hearing on 31.01.2025, the Court noticed that the limitation period applicable to the financial year 2017–18 was set to expire on 05.02.2025. Considering the imminent deadline, the Court granted a limited interim permission to the Tax Officer to proceed with adjudication exclusively for the year 2017–18, while directing that proceedings for all remaining years be kept in abeyance pending further orders from the Court.

This interim arrangement ensured that the revenue's right to adjudicate for 2017–18 was not lost due to the approaching limitation deadline, while simultaneously protecting the assessee from a potentially illegal composite determination for the remaining years.

Status at the Time of Final Hearing

During the course of arguments, it was submitted before the Court that:

  • The order determining tax for the year 2017–18, pursuant to the composite show cause notice, had already been passed by the Tax Officer.
  • For the remaining financial years covered by the notice (i.e., 2018–19 to 2022–23), orders were still awaited, subject to directions from the High Court.

This set the stage for the Court to examine the central legal question — whether composite orders for multiple financial years are permissible under the CGST Act.