Bombay HC Quashes GST Demand Raised Through Single Notice Covering Multiple Financial Years

The Bombay High Court has recently set aside a GST demand of about ₹2.54 crore raised through a single show cause notice spanning more than four years. The Court held that the proceedings were without jurisdiction.

A Division Bench of Justice Nitin B. Suryawanshi and Justice Vaishali Patil-Jadhav allowed a petition filed by Rithwik Projects Private Limited. The Bench observed that the controversy was already covered by earlier decisions of the Court, particularly Milroc Good Earth Developers v. Union of India.

It also noted that the same view had subsequently been followed in Paras Stone Industries v. Union of India and Asawa Brothers Corporate Avenue v. Union of India.

Rithwik Projects Private Limited is engaged in integrated construction, infrastructure development, and management. It had received services relating to allocation, permission, and leasing of natural resources from the Government. The company paid royalty charges between July 1, 2017 and August 31, 2021.

On June 29, 2022, GST authorities issued a show cause notice seeking about ₹2.54 crore in tax, along with interest and penalty.

The demand was confirmed in December 2023, following which recovery proceedings were initiated against the company.

The company challenged the proceedings before the High Court, arguing that a single show cause notice could not cover multiple financial years.

The Revenue opposed the petition. It argued that the company had an effective alternative statutory remedy. It also pointed to the company's request to pay the dues in installments and argued that, having accepted liability, the company could not challenge the show cause notice and the order.

Rejecting those objections, the Bench referred to settled principles that an order passed without jurisdiction is a nullity. It held that such an order cannot be validated by waiver, acquiescence, or admission.

The court observed, "Since the show-cause notice and the impugned order are without jurisdiction, the same are void ab initio and cannot be acted upon, irrespective of admission of liability on the part of petitioner."

The bench further held that once the show cause notice and the adjudication order were found to be wholly without jurisdiction, the availability of a statutory remedy could not bar the exercise of writ jurisdiction.

The Court set aside the show cause notice issued on June 29, 2022, the order confirming the demand, and the recovery proceedings that followed.

At the same time, it left the door open for GST authorities to issue fresh notices for the relevant financial years, provided such action is otherwise permissible in law.

For Petitioner: Senior Advocate V.D. Sapkal instructed by Advocate Abhijit C. Darandale

For Respondents: Advocates D.S. Ladda and P.P. Kothar