The Central Board of Indirect Taxes and Customs (CBIC) has issued a detailed clarification confirming that consolidated GST demand notices covering multiple financial years are legally permissible under the CGST Act. Through a letter dated September 16, 2025 (F. No. CBIC-20010/67/2025-GST/994), the GST Policy Wing has formally addressed recurring litigation challenging the validity of such composite notices before various High Courts across the country.
According to CBIC, Sections 73 and 74 of the CGST Act explicitly allow issuance of show cause notices (SCNs) "for any period," enabling officers to club multiple financial years into a single consolidated notice, provided that the limitation period for each individual year is strictly adhered to. The Board emphasised that the statute contains no prohibition on composite notices, and a combined SCN does not dilute or extend the separate statutory timelines applicable to each financial year.
Delhi High Court Rulings Strengthen CBIC's Position
The clarification heavily draws support from the Delhi High Court's July 2025 judgment in Ambika Traders v. Additional Commissioner (Adjudication), DGST, which upheld the validity of issuing consolidated SCNs, particularly in cases involving fraudulent Input Tax Credit (ITC) claims spread across years. The Court held that GST investigations often involve transactions interlinked across multiple years, making a consolidated notice not only permissible but essential to establish the pattern of fraud.
CBIC further highlighted that High Court rulings from other states such as those in the Titan Company and Tharayil Medicals cases-are not binding nationally, and hence cannot be used to universally oppose consolidated SCNs.
Consolidated Notices Do Not Violate Limitation or Natural Justice
The GST Policy Wing clarified that while notices may be consolidated, each financial year included in the notice is examined independently for the purpose of statutory limitation under Sections 73(10) and 74(10). CBIC stressed that the consolidation is merely a procedural mechanism aimed at:
- avoiding duplication of proceedings,
- improving administrative efficiency, and
- reducing compliance burdens on taxpayers who otherwise would face multiple separate notices.
It also referred to Supreme Court precedent (AIR 1956 SC 130) affirming that composite tax proceedings can be split year-wise without affecting their validity.
Taxpayer Benefits Under Amnesty and Compounding Schemes Remain Intact
Addressing concerns raised by taxpayers, CBIC categorically stated that issuing one consolidated SCN does not deprive taxpayers of benefits available under the GST Amnesty Scheme (Section 128A) or other relief mechanisms such as compounding of offences. Taxpayers will continue to receive year-wise break-ups and can respond, contest, or settle liabilities separately for each financial year.
Field Formations Directed to Follow Standard Policy Comments
Standardised policy notes have been circulated to field officers, directing them to rely on the legal position affirmed by courts and the CGST Act. CBIC has urged formations to defend consolidated notices where limitation requirements are satisfied and taxpayers are not prejudiced.
Official copy of the notification has been attached
CAclubindia
