Case Title: Gopi Chand Proprietor, Kunal Constructions v. Deputy Commissioner of Commercial Taxes (Audit)-1.5, DGSTO-1, Bengaluru
Court: High Court of Karnataka, Bengaluru
Petition No.: W.P. No. 35993 of 2024 (T-RES)
Date of Judgment: 22 January 2025
Category of Dispute: Procedural Validity – Assessment under Section 73 (Clubbing of Multiple Financial Years)
Relevant Sections: Section 73 of the CGST Act / KGST Act, 2017
Facts of the Case (Paras 2–4)
The petitioner, Gopi Chand, Proprietor of Kunal Constructions, challenged the order-in-original dated 29.07.2024 issued by the Deputy Commissioner of Commercial Taxes (Audit)-1.5, Bengaluru, under Section 73(9) of the CGST/SGST Acts. The said order covered five financial years — 2019–20 to 2023–24 — through a single show cause notice and composite adjudication order. The petitioner argued that the law mandates separate proceedings for each year since the limitation under Section 73 runs independently from the due date for filing the annual return for each financial year. The petitioner relied on the decision in W.P. No. 15810/2024 (decided on 04.09.2024), where a co-ordinate bench had held similar composite proceedings invalid.
Questions before the Court (Para 6)
Whether an assessment order under Section 73 of the KGST Act covering multiple financial years through one show cause notice and composite order is legally valid?
Observations of the Court (Paras 7–8)
The Court noted that Section 73 of the CGST/KGST Act prescribes a time limit from the due date of the annual return for each financial year within which proceedings must be completed. Hence, each financial year represents a distinct period of assessment and requires a separate notice and order. Clubbing multiple years into one proceeding would defeat the statutory limitation scheme and is therefore not permissible. The Court relied upon its earlier decision in W.P. No. 15810/2024 where identical reasoning was adopted, emphasizing procedural discipline and fairness in tax administration.
Judgment (Para 8)
The Court allowed the writ petition, quashed the impugned composite order dated 29.07.2024 and consequential demand order dated 04.11.2024. However, it granted liberty to the tax authorities to issue separate show cause notices for each financial year in accordance with Section 73 of the KGST Act and proceed afresh in law.
Table – Summary of Referred Case
| Case | Citation / W.P. No. | Issue | Verdict |
|---|---|---|---|
| Unnamed (Coordinate Bench decision) | W.P. No. 15810/2024 (decided 04.09.2024, Karnataka HC) | Validity of clubbing multiple financial years in one SCN under Section 73 | Held impermissible; proceedings quashed; separate SCNs required for each FY |
Between Fine Lines
The judgment reinforces that under Section 73 of the CGST/KGST Act, each financial year must be treated as a separate assessment unit. Issuing a common show cause notice or composite adjudication order for multiple years breaches statutory timelines and undermines procedural validity. For taxpayers and authorities alike, this ruling underscores the need to maintain financial year-wise segregation in audit and adjudication to ensure enforceability of orders and safeguard against limitation challenges.
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