The Nagpur Ashok v. DGGI, NZU, Nagpur & Ors.

(2) 935wp2546.26encouraged. While doing so, the Court considered relevant provisionsof the CGST Act, and held as under :“18. When we have perused the scheme of assessment andpayment of tax, we find that the taxes payable under the Actcommensurate with Return filed for ‘each tax period’ and this ismay be in the form of self assessment or provisional assessmentas provided in the Act. However, what is important to note isthat there is a prescription of period of five years of due date onwhich ‘annual Return’ is filed for the relevant financial year andprovision of payment and recovery is also included in thestatutory scheme in form of Section 73 and 74, whichunderwent significant amendment by the Act 15 of 2024 andthe provision as per sub-section (12) shall be applicable fordetermination of tax pertaining to the period up to FinancialYear 2023-24 and for financial year 2024-25 and onwards, theprovision under Section 74A will be relevant.19. From the perusal of the entire Scheme, it is evidently clearto us that the statutory provision for assessment of tax for eachfinancial year expect the Show Cause Notice to be issued at least3 months prior to the time limit specified in Section 73(10) and74(10) of the Act, for issuance of assessment order as sub-section (10) provide that the proper officer shall issue the orderwithin a period of five years from the due date for furnishing ofannual Return for the financial year to which the tax notpaid/short paid or input tax credit wrongly availed or utilisedrelates to or within five years from the date of erroneous Return.Thus, there is limitation prescribed for demand of tax and itsrecovery.The Act of 2017, therefore involve a definite tax period,based on the filing of the Return, which can be either monthlyor annual Return and if the assessment is based on annualReturn, the tax period shall be the relevant financial year. In the light of the statutory scheme, we find that there is noscope for consolidating various financial years/tax period whichis attempted by the impugned Show Cause Notices assailed inthe Petition.”5]As could be seen, the Division Bench has, in categoricalterms, held that there is no scope for consolidating various financialyears/tax period while issuing show cause notice under Section 74 ofthe CGST Act.6]The aforesaid judgment was then considered by theDivision Bench of this Court in Rite Water Solutions (India) Ltd. Vs.Joint Commissioner, CGST & Central Excise, Nagpur and Ors. [WritPetition No. 466/2025 decided on 28/11/2025], wherein, the Court (3) 935wp2546.26reiterated that there is no scope for consolidating various financialyears/tax period while issuing show cause notice under Section 74 ofthe CGST Act.7]The Counsel for the respondents opposed the contentionsby saying that clubbing of notice is permissible. He referred to thejudgment of the Division Bench of the High Court of Delhi in M/sMathur Polymers Vs. Union of India & Ors. [W.P.(C) 2394/2025decided on 26/8/2025], wherein, the Court referred to its earlierjudgment, and held as under :“22. Thus, this Court is of the opinion that in cases involvingallegations of fraudulent availment of ITC, where thetransactions are spread across several years, a consolidatednotice may in fact be required in such cases in order toestablish the illegal modality adopted by such businesses andentities. The language of the legislation, itself, does not preventissuance of SCN or order for multiple years in a consolidatedmanner.”8]The Counsel for the respondents submits that thejudgment of the Delhi High Court was tested before the Hon’bleSupreme Court in Special Leave Petition (Civil) Diary No.50279/2025, wherein, the Supreme Court declined to interfere withthe impugned judgment. Accordingly, the Counsel argued that thelaw laid down by the Delhi High Court has attained finality.9]True it is that the judgment of the Delhi High Court hasattained finality, however, concept of merger of judgment will notapply here because the Hon’ble Supreme Court has dismissed thepetition in limine and not on merit. 10]There is another reason why we find that thejudgments of the High Court of Bombay will prevail. In the case ofM/s. Milroc Good Earth Developers Vs. Union of India & Ors. (supra)and Rite Water Solutions (India) Ltd. (supra), following amongstothers were the reasons why the Court held that show cause noticeconsolidating various financial years/tax periods is not permissible. (4) 935wp2546.26I]The GST Scheme is based on annual returns foreach financial year (even if returns are filed monthly inpractice, the liability is tied to a specific financial year).II]The statute fixes a five year time limit fordemanding and recovering tax from due date for furnishingannual return for that year or from the date of erroneousreturn (Sections 73(10) and 74(10) of the CGST Act asapplicable). This limit runs separately for each year.III]If issued a single SCN covering multiple years, youwould be aggregating different tax period with different duedates and different limitations, which the statute does notpermit.IV]Tax period is defined (Section 2(106) of the CGSTAct) as the period, for which the return is required to befurnished. Return can be monthly or yearly, but the statutetreats each financial year as a separate tax period for thepurpose of assessment and recovery (Sections 39, 44, 37, 50,etc.).V]Time limit operate year by year. Section 73(10) and74(10) of the CGST Act fix the time limit to issue anassessment order within three years (Section 73) or five years(Section 74) from the last date for filing annual return for theyear to which the tax dues relate.VI]Consolidation would collapse these years, specificsteps and grounds, harming the tax payers’ ability to respondyear by year and violating the explicit year wise structure ofthe statute. These niceties, in our view, were not considered by theDelhi High Court. (5) 935wp2546.2611]The Division Bench of this Court in Commissioner ofIncome-tax, Vidarbha and Marathwada, Nagpur Vs. Smt.Godavaridevi Saraf Tumsar [1978 (2) ELTJ 624 Bombay] held thatuntil a contrary decision is given by any other competent High Court,which is binding on Tribunal in the State of Bombay, it has to proceedon the footing that the law declared by the High Court, though ofanother State, is the final law of land. 12]In the present case, since this Court has, subsequent todecision of the Delhi High Court, taken a different view, theauthorities below will be bound by the subsequent judgments. TheHon’ble Supreme Court has neither stayed nor overruled the viewtaken in above two cases. The argument of Counsel for respondentnos. 1 to 4, therefore, cannot be accepted.13]The Counsel for the respondents submits that to the best ofhis knowledge, a proposal to challenge the judgments in Milroc GoodEarth Developers (supra) and Rite Water Solutions (India) Ltd.(supra), is under consideration. Thus, it is suggested that judgmentsin both cases are likely to be challenged before the Hon’ble SupremeCourt.14]If that be so, the purpose will be served if the respondentsare given opportunity to revive the petition, if the judgments passedby the High Court of Bombay in aforesaid two cases, are set aside.15]With the above liberty, and for the reasons set out inMilroc Good Earth Developers (supra) and Rite Water Solutions(India) Ltd. (supra), the petition is partly allowed. The demand-cum-show cause notice dated 28/5/2025 issued by respondent no.5 andthe consequential order in original dated 29/12/2025 passed byrespondent no.4 are quashed and set aside. The respondents,however, are at liberty to re-issue notice strictly in terms of the (6) 935wp2546.26provisions of Section 74 of the CGST Act, if there is no other legalimpediment. 16]The petition is disposed of in above terms. No order as tocosts.(JUDGE)(JUDGE)Kahale