The Andhra Pradesh High Court has clarified a critical procedural flaw in GST assessment proceedings by invalidating a single assessment order covering multiple financial years. This ruling reinforces statutory compliance under the GST Act and provides immediate relief to taxpayers subjected to aggregated assessments.
Background & Facts
The Dispute
The petitioner, M/s Avika Steel Mart, a registered dealer under the Goods and Services Tax (GST) regime, was served with an Order in Original dated 22.11.2025 (Exhibit 'P1') by the 5th Respondent, the Deputy Assistant Commissioner (ST II), Hindupur. This order assessed tax liabilities for the period spanning November 2020 to October 2023 - encompassing four distinct financial years: 2020-21, 2021-22, 2022-23, and part of 2023-24. The petitioner challenged the legality of this composite assessment, arguing it violated the statutory framework under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017.
Key Facts
- The petitioner is a registered business with GSTIN 37ABEPD0481D1Z6, operating from Thumukunta Industrial Area, Andhra Pradesh.
- The impugned assessment order (dated 22.11.2025) aggregated tax demands across four financial years without separate proceedings.
- A Show Cause Notice (SCN) dated 19.02.2025 (Exhibit 'P4') preceded the assessment, also covering the same multi-year period.
- The petitioner filed a writ petition under Article 226 of the Constitution seeking quashing of both the SCN and the assessment order.
- The petitioner also filed IA No. 1 of 2026 under Section 151 CPC seeking stay of coercive recovery actions, including attachment of assets.
Procedural History
- November 2020 to October 2023: Tax period under dispute - covering four financial years.
- 19.02.2025: Show Cause Notice issued under Sections 73/74 GST Act, covering the entire period.
- 22.11.2025: Order in Original passed by the 5th Respondent, assessing tax liability for the full period in a single order.
- 05.03.2026: Writ Petition No. 9510/2026 filed before the Andhra Pradesh High Court.
- 15.04.2026: Hearing conducted before a Division Bench of the High Court.
The Parties' Positions
Petitioner’s Position: The composite assessment order violates the mandatory requirement under Sections 73 and 74 of the GST Act, which contemplate separate proceedings for each tax period. The law does not permit aggregation of liabilities across financial years in a single order. The petitioner relied on a prior Division Bench judgment in W.P.Nos.11028 of 2025 & batch.
Respondents’ Position: The respondents did not file a detailed written submission. The Government Pleader for Commercial Tax appeared and conceded the legal position raised by the petitioner, acknowledging the binding precedent.
Relief Sought
The petitioner sought:
- Quashing of the impugned Order in Original dated 22.11.2025.
- Quashing of the Show Cause Notice dated 19.02.2025.
- Stay of all coercive recovery actions, including attachment of property.
- Exclusion of the period between issuance of the impugned order and the judgment for limitation purposes.
The Legal Issue
Can a single assessment order under Sections 73 and 74 of the GST Act, 2017 be issued for multiple financial years, or must separate proceedings be initiated for each tax period?
Arguments Presented
For the Petitioner
The petitioner relied on the binding precedent of the Division Bench of this Court in W.P.Nos.11028 of 2025 & batch, which held that a single show-cause notice or composite assessment order covering more than one tax period - whether monthly or annual - is legally impermissible. The petitioner argued that Sections 73 and 74 contemplate proceedings initiated for each tax period separately, as each period constitutes an independent cause of action. The statutory scheme requires distinct notices, opportunities of hearing, and adjudication for each financial year. Aggregation undermines the taxpayer’s right to a fair hearing and violates the principle of natural justice.
For the Respondent
The Government Pleader for Commercial Tax did not contest the legal position advanced by the petitioner. The respondents acknowledged the binding nature of the earlier Division Bench judgment and conceded that the impugned order was legally unsustainable.
The Court's Analysis
The Court examined the statutory scheme under Sections 73 and 74 of the GST Act, 2017, which govern regular and fraudulent tax recovery respectively. Both sections require the issuance of a show-cause notice for a specific tax period, followed by an opportunity of hearing and a separate adjudication order. The Court noted that each financial year under GST constitutes a distinct tax period with its own return filing obligations, liability computation, and statutory deadlines.
"A single assessment order covering multiple financial years cannot be sustained as it violates the mandatory procedural requirements under Sections 73 and 74 of the GST Act."
The Court reaffirmed its earlier ruling in W.P.Nos.11028 of 2025 & batch, emphasizing that the legislature’s intent was to ensure granular, period-specific adjudication. The Court rejected the notion that administrative convenience could override statutory mandates. It held that aggregating liabilities across years not only contravenes the Act but also deprives the taxpayer of the right to contest liabilities year-by-year, including claims of limitation, input tax credit reversals, or rectifications specific to each period.
The Court further noted that the respondents had not challenged the precedent, nor offered any legal justification for the composite order. The absence of any counter-argument reinforced the petitioner’s position.
The Verdict
The writ petition is allowed. The impugned Order in Original dated 22.11.2025 is set aside. The Show Cause Notice dated 19.02.2025 is also quashed. All coercive recovery actions, including attachment of assets, are set aside. The respondents are directed to initiate fresh proceedings for each financial year separately - 2020-21, 2021-22, 2022-23, and 2023-24 - within three months of this order. The period from 22.11.2025 to 15.04.2026 shall be excluded for limitation purposes. There shall be no order as to costs. Pending miscellaneous applications are closed.
What This Means For Similar Cases
Separate Proceedings Are Mandatory for Each Financial Year
- Practitioners must now challenge any GST assessment order covering more than one financial year as void ab initio.
- Taxpayers can invoke W.P.Nos.11028 of 2025 & batch and this judgment to seek immediate quashing of composite assessments.
- Revenue authorities must issue separate SCN and assessment orders for each year, even if the default is continuous.
Coercive Actions Are Automatically Invalidated
- Any attachment, seizure, or recovery initiated under a composite order is legally unsustainable.
- Practitioners should immediately file applications under Section 151 CPC or Article 226 to stay such actions.
- Taxpayers may claim damages for wrongful attachment if proven.
Limitation Periods Are Protected
- The time between issuance of an illegal composite order and its quashing is excluded from limitation calculations.
- This protects taxpayers from being barred from defending future proceedings due to delays caused by the authorities’ procedural violations.
Procedural Compliance Is Non-Negotiable
- The judgment reinforces that statutory procedures under the GST Act are not directory but mandatory.
- Administrative convenience cannot override the taxpayer’s right to a fair, period-specific adjudication.
- Revenue officers must be trained to avoid batch-processing assessments across years.
The Burden of Justification Lies with the Revenue
- If a composite order is challenged, the burden shifts to the revenue to justify why separate proceedings were not initiated.
- Silence or non-submission of grounds by the revenue, as in this case, leads to automatic quashing.
