Madras HC: The Clustering of GST Show Cause Notices Contradicts the Intent of Section 73

The bunching of the show cause notice ( SCN ) is against the spirit of provisions of Section 73 of the Central Goods and Service Tax Act, 2017 ( CGST Act ), the Madras High Court recently observed.

On behalf of the petitioner N.L.Rajah Senior Counsel appearing presented that the first grievance of the applicant is that the respondent had issued a bunching of show cause notices on 28.09.2023 for 5 Assessment Years beginning from 2017-18 to 2021-22.

In terms of Section 73 of CGST Act, 2017, bunching of show cause notices is not allowed and it merely furnishes for the finding of the tax filed or short paid or erroneously refunded or ITC incorrectly claimed or used for any cause other than fraud or wilful misstatement or suppression of facts.

It was furnished that sub-section 10 of Section 73 stated that an order finding the tax from the person must be passed within 3 years from the due date to file the annual return for the fiscal year to which the due tax pertains and hence he shall provide that finding of the unpaid tax under Section 73 is concerning the fiscal year and the limitation date to finish the proceedings and grant an order is 3 years from the last date to furnish the yearly return for the specific fiscal year.

The senior standing counsel stands on behalf of the respondents provided that no provision under Section 73 of the CGST Act restricts the respondents is there from providing the bunching of the SCN and in the absence of these provisions, the applicant could not come before the court and the respondents do not have the authority to provide the bunching of the SCN.

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“Therefore, I find fault in the process of issuing of bunching of show cause notices and the same is liable to be quashed. However, since the petitioner has made a representation before the authorities concerned for splitting up of the show cause notices.” a Single Bench of Justice Krishanan Ramaswamy noted.