Pramur Homes and Shelters v. Union of India & Ors.
TS-1011-HC(KAR)-2025-GST | Judgment dated 11 December 2025
Background:
The Karnataka High Court examined the legality of a single consolidated Show Cause Notice (SCN) issued under Section 74 of the CGST/KGST Act covering multiple financial years from FY 2019-20 to FY 2023-24. The notice alleged wrong availment of Input Tax Credit (ITC) and raised a consolidated demand of approximately ₹11.87 crores including tax, interest, and penalty.
Key Legal Issue:
Whether the GST Department is legally permitted to issue a single composite SCN covering multiple financial years instead of issuing separate year-wise notices under Sections 73 or 74 of the CGST Act.
Key Findings of the Court:
- Composite SCNs Are Without Jurisdiction:
The Court held that clubbing or consolidating multiple financial years in a single SCN is illegal, invalid, impermissible, and contrary to the CGST/KGST Act. The GST framework is inherently financial-year specific.
2. Distinction Between Sections 73 and 74 Cannot Be Blurred:
Issuing one SCN for multiple years enables the Department to wrongly invoke Section 74 (fraud cases with 5-year limitation) for all years, even where Section 73 (non-fraud, 3-year limitation) applies. This amounts to a colourable exercise of power.
3. ITC Entitlement Is Financial-Year Specific:
Input Tax Credit under Section 16(4) is statutorily frozen year-wise. A consolidated allegation of “wrong ITC for five years” is conceptually flawed and legally unsustainable.
4. Violation of Principles of Natural Justice:
Each financial year involves different turnovers, ITC positions, contracts, amendments in law, and reconciliations. A single SCN deprives taxpayers of the right to provide year-wise explanations and defenses.
5. Limitation Provisions Cannot Be Diluted:
Limitation under Sections 73 and 74 is computed with reference to the due date of annual return for each financial year. These timelines cannot be bypassed by issuing a consolidated notice.
6. Section 74A Reinforces Year-Wise Assessment:
The Court relied on the insertion of Section 74A (effective from 01.11.2024) to reinforce legislative intent that GST determinations are intrinsically financial-year specific.
Judicial Precedents Relied Upon:
The Court relied on decisions including Veremax Technologies, Bangalore Golf Club, Chimney Hills Education Society, Albatross Builders, Milroc Good Earth Developers, Rite Water Solutions, and Titan Company Ltd. The Delhi High Court rulings in Ambika Traders and Mathur Polymers were distinguished.
Final Ruling:
The composite SCN covering FY 2019-20 to FY 2023-24 was quashed in entirety. The Department was granted liberty to issue separate year-wise notices in accordance with law and limitation.