Composite GST Show Cause Notice Covering Several Years Struck Down by Calcutta High Court

Background and Core Dispute

The Calcutta High Court, in State Bank of India Vs Commercial Central Goods and Service Tax and Central Excise, examined whether the GST department could lawfully issue a single composite Show Cause Notice (SCN) under Section 74 of the Central Goods and Services Tax Act, 2017 (2017 Act) covering multiple financial years from 2018-19 to 2023-24.

The proceedings arose out of:

  • A composite SCN dated 25 June 2025 issued under Section 74 to State Bank of India alleging short payment of GST for six financial years; and
  • A consequent Order-in-Original dated 12 December 2025 confirming tax, interest and penalty.

The assessee challenged both before the High Court, primarily on the ground that:

  1. Each financial year is a distinct unit for GST adjudication and limitation.
  2. Section 74(10) prescribes a separate five-year limitation period for each financial year, computed from the due date of the annual return.
  3. By issuing a single consolidated SCN for six years, the department effectively attempted to revive time-barred demands for earlier years by clubbing them with later years, which is impermissible under the statute.

The revenue resisted the writ petition by emphasizing:

  • The existence of an alternate appellate remedy under Section 107 of the 2017 Act.
  • The contention that limitation involves mixed questions of fact and law, unsuitable for determination in writ jurisdiction.
  • The argument that in cases involving alleged fraud or suppression, a consolidated SCN for multiple years ought to be permissible.

Facts Leading to the Litigation

Pre-SCN Correspondence and Audit

  1. The GST authorities, by communication dated 04 June 2025, sought various documents from SBI.
  2. This was followed by an email dated 10 June 2025, requiring production of records and details for financial years 2018-19 to 2023-24.
  3. On 12 June 2025, SBI furnished the required material, including 56 inter-branch invoices up to March 2024, along with supporting details.

Despite this, the authorities:

  • Issued an audit observation for April 2018–March 2019 on 11 June 2025 (even before the 12 June response was processed), and
  • Issued an audit report for April 2018–March 2024 on 19 June 2025, allegedly without properly considering the documents submitted.

Composite SCN and Order-in-Original

  • A composite SCN dated 25 June 2025 was issued under Section 74, clubbing demands for financial years 2018-19 to 2023-24.
  • SBI filed a detailed reply on 21 July 2025, enclosing:
    • Calculation workings,
    • Invoice-level details of the disputed transactions, and
    • Copies of each invoice.

In its reply, SBI categorically contended that a single SCN cannot lawfully cover multiple tax periods under the structure of the 2017 Act.

Nevertheless, through the Order-in-Original dated 12 December 2025, the adjudicating authority:

  • Confirmed GST of Rs.5,48,56,775/- under Section 74(1);
  • Directed recovery of interest under Section 50;
  • Imposed penalty of Rs.5,48,56,775/- under Section 74 read with the IGST provisions; and
  • Recorded that the assessee’s contentions were “unjustified” for want of adequate invoice-level backing, despite the materials on record.

The assessee disputed this finding as a clear case of non-application of mind and violation of natural justice.

Counsel for SBI raised, among others, the following core grounds:

  1. Lack of Jurisdiction in Issuing Composite SCN

    • Section 74(10) limits the time for passing the order to five years from the due date of furnishing the annual return for the relevant financial year.
    • Section 74(2) requires the SCN to be issued at least six months prior to that outer limit.
    • The repeated use of the expression “for the financial year” in Section 74(10) shows each year is separate for the purpose of limitation.
    • A composite SCN covering 2018-19, 2019-20 and 2020-21, issued only on 25 June 2025, sought to revive claims that were already time-barred by virtue of CBIC notifications extending limitation for Section 73 and the statutory framework under Section 74.

  2. Time-Bar for Earlier Financial Years
    With reference to CBIC circulars/notifications dated 31 March 2023 and 28 December 2023 (cited in argument), it was submitted that for Section 73: