The Great GST Divide: Can the Taxman Club Multiple Years into One Notice? Bombay High Court Refers the "Bunching" Controversy to a Larger Bench to Settle the Conflict Between High Courts on Section 73 and 74.
For businesses navigating the labyrinth of the Goods and Services Tax (GST) regime in India, the arrival of a Show-Cause Notice (SCN) is rarely a welcome event. However, a specific procedural practice by the tax department has recently sparked a significant legal firestorm: the "bunching" of multiple financial years into a single, consolidated notice. Is this a sensible administrative shortcut or a jurisdictional overreach that violates the sanctity of annual tax periods? A recent, pivotal ruling by the Bombay High Court in the case of M/s. Rollmet LLP vs. Union of India has brought this controversy to a head, signaling a major shift in how GST litigation may be handled moving forward.
The "Cleavage of Opinion" Across IndiaOne of the most striking aspects of this judgment is the court's acknowledgment of a deep "cleavage of opinion" among various High Courts. On one side, the High Courts of Madras, Kerala, Karnataka, and a previous bench of the Bombay High Court (Goa Bench) have held that clubbing multiple years is impermissible. They argue that since the law prescribes specific limitation periods for each financial year, a consolidated notice is fundamentally flawed. On the other side, the Delhi and Allahabad High Courts have viewed this as a mere procedural mechanism that does not prejudice the taxpayer, provided the individual timelines for each year are respected.
The "Milroc" Precedent Under FireFor years, taxpayers in Maharashtra relied heavily on the Milroc Good Earth Developers decision, which categorically stated that there was no provision in the CGST Act to club various tax periods. The petitioners in the current batch of cases argued that this precedent was binding. However, the Revenue department countered that Milroc was decided without considering the full machinery of the Act. The court noted:
"The judgment of the Division Bench in the case of Milroc (supra) is per incuriam and sub-silentio, considering that the said judgment... does not give any reason for taking a view that a show-cause notice issued... for different tax periods is a jurisdictional issue."
This reflection is crucial because it suggests that even established precedents can be re-examined if they fail to account for the broader statutory framework.
Statutory Interpretation: "Any Period" vs. "Financial Year"At the heart of the dispute is the phrasing of Sections 73 and 74 of the CGST Act. The petitioners argued that the law is built on the foundation of an "annual return" and a "financial year", making each year a distinct unit of assessment. Conversely, the Revenue pointed to the phrase "for any period" used in the statute. The court found that the legislature’s choice of words was deliberate. If the law allows a notice for "any period", does that necessarily restrict the officer to a single year? The court expressed "grave doubt" regarding the petitioners' restrictive interpretation, suggesting that "any period" could logically encompass a duration spanning multiple years.
The Limitation Logic: Procedural vs. Substantive BarA fascinating takeaway is the distinction the court drew between the power to issue a notice and the limitation on passing an order. Section 73(10) sets a deadline for passing a final order (three years from the annual return due date). The Revenue argued that as long as the consolidated notice is issued within the earliest applicable deadline, no harm is done. The court seemed to lean toward the idea that the limitation period for passing an order is an independent concept from the issuance of the notice itself. This suggests that "bunching" might be a valid administrative tool as long as it doesn't sneakily extend the time the government has to penalize a taxpayer for older years.
The Road to the Larger BenchRecognizing the massive implications for thousands of pending litigations and the conflicting views of its sister courts, the Bombay High Court chose not to issue a final verdict. Instead, it referred the matter to a Larger Bench. This is a sophisticated judicial move that prioritizes legal certainty over a quick fix. The court identified five specific questions of law, including whether Section 160 of the CGST Act (which protects notices from technical defects) can save a consolidated notice.
This judgment is a masterclass in judicial humility and rigor. By refusing to simply follow the "pro-taxpayer" trend of other High Courts without a deeper analysis of the statute's "plain and natural meaning", the Bombay High Court has set the stage for a definitive resolution. For now, the "great bunching debate" remains in limbo, but the eventual decision of the Larger Bench will undoubtedly redefine the boundaries of tax administration in the GST era.
Case: ROLLMET LLP v. UNION OF INDIA AND ORS
Court: Bombay High Court
Citation: 2026:BHC-AS:18153-DB
Law: Central Goods and Services Tax Act, 2017; Constitution of India, Article 141; Principles of Statutory Interpretation; Doctrine of Per Incuriam; Limitation Law in Tax Adjudication
Decision Date: 17-04-2026