The Andhra Pradesh High Court has held that a single show cause notice under the Central Goods and Services Tax Act, 2017 cannot validly cover more than one financial year. The ruling was delivered in M/s. Vatech Wabag Limited v. The Union of India & Others, Writ Petition No. 19161 of 2026, decided on 15 July 2026 by a Division Bench comprising Justice Ninala Jayasurya and Justice T.C.D. Sekhar.
The petitioner had challenged a show cause notice dated 19 June 2026 issued in Form GST DRC-01 under Section 74 of the CGST Act. The notice covered the financial years 2020-21, 2021-22, 2022-23 and 2023-24 through a single composite proceeding.
The petitioner contended that clubbing multiple financial years in one notice was contrary to the statutory scheme of the CGST Act. It was argued that each financial year constitutes a separate assessment period and must therefore be dealt with independently.
Reliance was placed on the earlier decision of the Andhra Pradesh High Court in S.J. Constructions v. The Assistant Commissioner & Others, in which the Court had held that a single show cause notice or composite assessment order cannot be issued for more than one tax period or more than one financial year where the due date for filing the annual return has already been reached.
The Court noted that the Standing Counsel for the tax authorities did not dispute either the applicable legal position or the factual circumstance that the impugned notice was a composite notice covering several financial years.
Accordingly, the High Court set aside the show cause notice dated 19 June 2026. The Court, however, granted liberty to the concerned authority to issue separate notices for each assessment year and to proceed with the assessments for the relevant tax periods after providing due opportunity to the petitioner and following the procedure prescribed by law.
The Court further directed that the period between the date of the impugned notice and the date of receipt of the High Court’s order would be excluded while computing limitation.
The decision reinforces the principle that GST proceedings must be initiated separately for each financial year. Composite notices covering several assessment years may adversely affect statutory rights relating to assessment, penalty, limitation and appeal, and are therefore inconsistent with the structure of Sections 73 and 74 of the CGST Act.