M/s ARANMULA CHIT FUNDS PVT. LTD. v. DEPUTY COMMISSIONER OF STATE TAX (INTELLIGENCE) & ORS.

Introduction

This judgment of the Kerala High Court reiterates the settled legal principle that a single composite show cause notice or assessment order covering multiple financial years is not legally sustainable under the GST law. Relying upon its earlier Division Bench decisions in Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories and Tharayil Medicals (M/s.) v. Deputy Commissioner, the Court held that each assessment year constitutes a separate cause of action and must be dealt with through an independent show cause notice and adjudication.

The Court observed that issuance of a consolidated order covering several assessment years violates the statutory scheme of assessment under the GST Act. Accordingly, the impugned order was quashed with liberty to the Department to initiate fresh proceedings separately for each assessment year. To safeguard the Revenue’s interest, the Court directed that the period spent in the earlier proceedings would be excluded while computing the limitation for fresh proceedings.