Kerala High Court Reinforces Separate Year-Wise GST Proceedings The Update The Kerala High Court set aside composite GST notices and assessment orders for several years, observing that yearly proceedings are required under the CGST. The Court noted that the Caltex case was decided on a very different piece of legislation, and it did not address the general question of whether authorities have the power to issue composite notices of multiple years under the GST Act.
In a landmark decision on GST assessment procedure the Kerala High Court held that authorities cannot issue one combined notice or assessment order for more than one assessment year under the CGST regime. The Court noted that GST proceedings operate on individual assessment years and combining them would be illegal. This decision tends to have substantial repercussions on procedures for GST assessment in other Indian jurisdictions.
Key Takeaways
- Kerala High Court Reinforces Separate Year-Wise GST Proceedings The Update The Kerala High Court set aside composite GST notices and assessment orders for several years, observing that yearly proceedings are required under the CGST.
- Background of the Dispute This issues was brought before the Kerala High Court at the instance of a number of writ petitions assailing various GST notices and assessment orders issued under the CGST and the KGST Acts.
- The petitioners further placed reliance on certain earlier orders of the Kerala High Court in Lakshmi Mobile Accessories and Tharayil Medicals, in which the High Court had already observed earlier that the composite notices and orders for more than one year were unsustainable.
- The Court noted that the Caltex case was decided on a very different piece of legislation, and it did not address the general question of whether authorities have the power to issue composite notices of multiple years under the GST Act.
- The Kerala High Court held thatHaving looked into the statutory provisions and the earlier judgments, the composite notices and the consolidated assessment orders for a period of five or ten years cannot be upheld in law under the GST regime.
Kerala High Court Reinforces Separate Year-Wise GST Proceedings
The Update
The Kerala High Court set aside composite GST notices and assessment orders for several years, observing that yearly proceedings are required under the CGST.
The Impact
The decision will benefit the GST paying public by strengthening the procedural safeguards to be followed for conducting assessment and restricting the practice of issuing consolidated assessment and demand for GST, for a number of years together.
The Action
For businesses concerned, who have been served composite GST notices spanning several assessment years should be diligent in analyzing if proceedings were initiated in accordance to the provisions contained in the statute, and the judicial rulings.
Background of the Dispute
This issues was brought before the Kerala High Court at the instance of a number of writ petitions assailing various GST notices and assessment orders issued under the CGST and the KGST Acts. All the cases involve a single notice issued by the GST authorities and an aggregate assessment order passed for all financial years together.
The petitioners submitted that the proceedings were contrary to the statutory scheme of the GST assessments, inasmuch as an assessment proceeding for each year is separately provided for.
In the view of the taxpayers, all GST liabilities, limitation periods, compliance obligations, and factual issues varied from year to year and the aggregation of several years in one proceeding undermined the statutory protections. The petitioners further placed reliance on certain earlier orders of the Kerala High Court in Lakshmi Mobile Accessories and Tharayil Medicals, in which the High Court had already observed earlier that the composite notices and orders for more than one year were unsustainable.
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Why Taxpayers Challenged Composite GST Notices?
Taxpayers submitted what comes next agreement, The release further explained that each financial year "must be taken as a separate assessment period, with its own separate tax implications". The proceedings are initiated under sections 73 and 74 and the proceedings take place for a specified tax period and there are separate factual aspects, separate computation and separate limitation. Due to this structure, Petitioners contended that agencies cannot simply add a number of years together into one notice for administrative efficiency.
They further submitted that separate proceedings in each assessment year are required to afford a fair opportunity of hearing to all taxpayers to a specific allegation on each assessment year. The petitioners submitted that a consolidated disposal is confusing and uncertain and the proceedings are more jeopardized by procedural irregularity.
Revenue’s Reliance on the Caltex Judgment
The revenue contested the petitions placing reliance on the Constitution Bench judgment of the Supreme Court in, State of Jammu and Kashmir v. Caltex (India) Ltd. In fact, the department states that the Supreme Court in Caltex had accepted composite assessment proceedings in some circumstances: The Revenue further argued that the earlier Kerala High Court decisions in Lakshmi Mobile Accessories and Tharayil Medicals had not arrived at the conclusion on the point after having given due weight to the Caltex ratio.
But the Kerala High Court dismissed this submission. The Court noted that the Caltex case was decided on a very different piece of legislation, and it did not address the general question of whether authorities have the power to issue composite notices of multiple years under the GST Act. The Court then explained that the earlier Kerala decisions had made a detailed investigation of the statutory scheme under the CGST Act before they held that separate year-wise proceedings are a compulsive requirement.
What the Kerala High Court Held?
The Kerala High Court held thatHaving looked into the statutory provisions and the earlier judgments, the composite notices and the consolidated assessment orders for a period of five or ten years cannot be upheld in law under the GST regime. The Court observed that GST assessments are "set up on different assessment periods and different liabilities. It would be contrary to that set up for proceedings of different years to be lumped together in a single notice or order of adjudication".
The judgment affirms the principle that the procedural protections of the tax law cannot be watered down simply for administrative expediency. The Court That means found that authorities should give a distinct notice and commence different proceedings for each assessment year.
Relief Granted by the Court
Kerala High Court has set aside the disputed notices and assessment orders in all the connected writ petitions. But, the Court gave permission to the department to file new proceedings per law by giving separate notices Year-wise.
Crucially the Court held that the time period from laying the notices to delivery of the certified copy of the judgment would be deducted in working out the limitation period for the new proceedings. Such safeguards mandate that tax authorities should not be prejudiced unfairly only because the previous proceedings were set aside on procedural grounds.
Conclusion
The decision of the Kerala High Court, K.P. Salih v. Assistant Commissioner of Central Tax & Central Excise underlines the importance of procedural discipline in the GST. The Court has held that issues like composite notices and assessment orders covering assessment years amalgamating more than one assessment year, are arbitrary and invalid because each assessment year is a separate lapse of compliance and adjudication, and special period of proceedings.
It tends to have a large impact on the way the GST assessments are carried on, Mainly in instances where the authorities issue consolidated notices for more than one financial year. For tax payers, it is an important procedural cushion against defective assessment proceedings for the tax authorities to make in the case, but it reemphasizes the necessity of rigid compliance with statutory provisions on the part of the revenue under GST regime.
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Kerala High Court Says Composite GST Notices for Multiple Years Are Invalid+
Kerala High Court Reinforces Separate Year-Wise GST Proceedings The Update The Kerala High Court set aside composite GST notices and assessment orders for several years, observing that yearly proceedings are required under the CGST. The Court noted that the Caltex case was decided on a very different piece of legislation, and it did not address the general question of whether authorities have the power to issue composite notices of multiple years under the GST Act.