Multi-Year GST Show Cause Notices Under Sections 73 & 74: A Divided Legal Landscape

One of the most consequential and unresolved debates in contemporary GST jurisprudence concerns a seemingly procedural yet substantively critical question: Can the GST Department issue a single, consolidated Show Cause Notice (SCN) spanning multiple financial years under Section 73 and Section 74 of the Central Goods and Services Tax Act, 2017?

The answer to this question carries enormous practical implications — for assessees defending against large consolidated tax demands, for GST officers conducting investigations, and for the broader enforcement architecture of indirect taxation in India. What makes this issue particularly significant is that Indian High Courts have reached strikingly divergent conclusions, and the Supreme Court, despite having an opportunity to intervene, has not yet delivered a definitive ruling on the merits.

This article examines the competing judicial positions, analyses the reasoning underlying each approach, and assesses the current state of legal uncertainty surrounding multi-year SCNs in GST proceedings.

Understanding the Statutory Framework: Sections 73 and 74

Before examining the judicial disagreement, it is essential to understand what Section 73 and Section 74 of the CGST Act, 2017 actually provide.

Section 73 — Non-Fraud Cases

Section 73 governs the determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised — in cases not involving fraud, wilful misstatement, or suppression of facts. The adjudicating authority must issue a proper SCN before making a demand, and Section 73(10) prescribes a limitation period within which the adjudication order must be passed.

Section 74 — Fraud and Suppression Cases

Section 74 applies to the same categories of tax irregularities but specifically addresses situations involving fraud, wilful misstatement, or suppression of facts to evade tax. The limitation framework under Section 74(10) operates similarly to Section 73(10), albeit with an extended time window given the gravity of the alleged conduct.

The Structural Architecture of GST Returns

A foundational feature of the GST framework is that it is structured around distinct tax periods — typically monthly or quarterly — with separate returns, liabilities, and reconciliations for each period. Annual financial years serve as broader compliance milestones, but the legal obligations arise period by period. This structural design lies at the heart of the judicial disagreement: does it logically follow that adjudication proceedings must also be compartmentalised by financial year?

The "Year-Specific" School of Thought: High Courts Favouring Separation

Several High Courts across India have taken the position that a single SCN cannot validly encompass multiple financial years, and that the GST adjudication framework mandates year-wise proceedings.

The Bombay High Court's Initial Position

The leading early authority in favour of this view came from the Bombay High Court (Goa Bench) in Milroc Good Earth Developers v. Union of India [2026] 104 GSTL 45 (Bom). The Court reasoned that the entire GST compliance structure — registrations, returns, input tax credit claims, and tax payments — is built on the foundation of specific, defined tax periods. Adjudication proceedings under Section 73 and Section 74, the Court held, must mirror this architecture. Issuing a consolidated SCN covering multiple financial years was therefore found to be incompatible with the underlying legislative design.

Madras High Court's Alignment

The Madras High Court echoed this reasoning in two significant rulings: