Common/consolidated SCN for multiple FYs/tax periods permissible, however, each period forming part of notice must satisfy limitation

The Karnataka High Court has answered in affirmative the question as to whether it would be permissible to issue consolidated/common show cause notice under Sections 73 and 74 of the CGST Act covering multiple financial years or multiple tax periods. The Division Bench of the Court in Commissioner v. Chimney Hills Education Society observed the following:

• ‘Tax period’ must be understood in the contest in which the requirement is prescribed, and it cannot be confined to a month or a financial year.
• In context of Sections 65, 66 and 67, Sections 73 and 74 cannot be construed as being confined to a tax period or a financial year.
• When legislature intends to confine to specific period, it expressly provides so. Statute employs expression ‘such period’ or does not refer to any period if such confinement is not intended. 
• Concept of ‘tax period’ is relevant in dealing with furnishing of returns and cannot be imported into interpretation of Sections 73 and 74.
• Expression ‘any period’ in Sections 73 and 74 is not defined and cannot be equated with ‘tax period’. 
• Mere reference to ‘financial year’ in sub-section (10) neither indicates nor can it be construed to mean that Sections 73 and 74 are confined to a financial year.
• Expression ‘such periods’ in sub-section (3) is significant. If legislature had intended to confine itself to a financial year the language would have been different.
• Though column 4 of Form-GST DRC-01 refers to the tax period, note appended to the form clarifies that column No.4 is not mandatory.
• No prejudice to assessee merely because after combining more than one financial year the pecuniary jurisdiction shifts to an officer of the higher rank. 

However, it may be noted that the High Court here also held that if any portion of the period covered by the notice is beyond the limitation stipulated under sub-section (10), the same should be excluded as being time-barred. According to the Court, each period forming part of notice must satisfy scrutiny on the touchstone of limitation and any portion falling short of such test cannot be sustained.

Delhi, Allahabad, and Jammu & Kashmir High Courts’ decisions were concurred with, while the Court here differed with the view taken by the High Courts of Bombay, Kerala, Madras, Andhra Pradesh, and Himachal Pradesh.