Bombay HC Quashes Consolidated SCN Under Section 74 — Clubbing of Multiple FYs Not Permissible
The Bombay High Court (Nagpur Bench) in M/s Paras Stone Industries v. Union of India (WP 7718/2025, dated 09.01.2026) has quashed a consolidated Show Cause Notice (SCN) issued by the DGGI covering FY 2017-18, 2018-19 and 2019-20 in a single notice under Section 74 of the CGST Act.
Key Findings of the Court
1. Clubbing of Multiple Financial Years in a Single SCN Is Impermissible
The Court relied on two recent Division Bench rulings of the Bombay HC:
- Milroc Good Earth Developers (Goa Bench) (09.10.2025)
- Rite Water Solutions (Nagpur Bench) (28.11.2025)
Both judgments categorically held that:
- GST law recognizes each financial year as a separate tax period.
- Section 74 SCNs must be issued year-wise, not consolidated.
- The Act provides year-wise limitation, year-wise annual returns, and year-wise assessment framework.
Therefore, a consolidated SCN for multiple years violates the statutory scheme.
2. Delhi HC View Not Applicable in Maharashtra
Respondents relied on the Delhi High Court ruling (Mathur Polymers, 26.08.2025) which permitted consolidated notices in cases involving alleged fraud.
The Bombay HC rejected this argument because:
- Bombay HC’s own later rulings (Oct & Nov 2025) take a contrary view.
- Within Maharashtra, the Bombay HC rulings are binding.
- Delhi HC’s view cannot override judgments of the jurisdictional High Court.
3. Writ Petition Maintainable Despite Alternate Remedy
The Court rejected the department’s objection on maintainability, holding:
- When a notice is issued without jurisdiction, writ remedy is maintainable even when appellate remedy exists.
4. SCN Quashed — Liberty to Issue Fresh Year-wise Notices
The Court:
- Quashed the consolidated SCN (Sept 2023).
- Allowed the department to re-issue separate SCNs year-wise, in accordance with Section 74.
5. Costs and Courtroom Conduct
Initially, the Court imposed ₹50,000 cost on the department for wasting judicial time due to irrelevant arguments.
Later, after a written (but qualified) apology by the Counsel, the Court recalled the cost, but warned of serious action for future misconduct.