Facts of the Case

The petitioner, M/s Lekcon Infrastructure Private Limited, challenged an Order-in-Original dated 17.12.2025 passed by the Additional Commissioner of Central Tax for the financial years 2018-19 to 2022-23. The assessment order was issued as a single composite order covering multiple financial years under the GST Acts. The petitioner contended that the order was illegal as it invoked Section 74 of the GST Act without satisfying the statutory conditions, imposed 100% penalty without justification, was partly barred by limitation, and was otherwise arbitrary and unsustainable.

Issues Involved

  1. Whether a single assessment order covering multiple financial years is valid under Sections 73 and 74 of the CGST/APGST Act, 2017.
  2. Whether proceedings initiated under Section 74 were legally sustainable in the absence of the necessary ingredients.
  3. Whether the impugned order imposing tax, interest and 100% penalty for multiple years through one order was liable to be set aside.

Petitioner’s Arguments

  • The assessment order covering FY 2018-19 to FY 2022-23 through a single order violated the statutory scheme of Sections 73 and 74 of the GST Act.
  • The authorities wrongly invoked Section 74, although the ingredients relating to fraud, wilful misstatement or suppression of facts were absent.
  • The levy of 100% penalty lacked legal justification.
  • The assessment was arbitrary, beyond jurisdiction, partly barred by limitation and unsustainable on merits.
  • The petitioner primarily pressed the legal ground that a single composite assessment order for multiple financial years is impermissible under GST law.

Respondent’s Arguments

The respondents defended the assessment order passed by the tax authorities. However, the High Court examined the legal issue in light of its earlier Division Bench judgment dealing with the validity of composite assessment orders under the GST Acts.

Court Order / Findings

The Andhra Pradesh High Court observed that a Division Bench in W.P. No.11028 of 2025 & batch had already held that:

  • A single show cause notice or
  • A single composite assessment order

cannot be issued for more than one tax period, namely:

  • more than one month, where assessment is before the due date for filing the annual return; or
  • more than one financial year, where the due date for filing the annual return has already expired.

Since the impugned assessment order covered multiple financial years (2018-19 to 2022-23) through one order, it was contrary to the statutory provisions interpreted by the Division Bench.

Accordingly, the High Court:

  • Set aside the assessment order dated 17.12.2025.
  • Remanded the matter to the GST authorities.
  • Granted liberty to the department to initiate fresh proceedings separately for each assessment year.
  • Directed that the period between the date of the impugned order and receipt of the High Court order shall be excluded while computing limitation.
  • Left all other grounds raised by the petitioner open for consideration in fresh proceedings.

Important Clarification

This judgment reiterates that under the GST law:

  • Separate assessment proceedings should ordinarily be undertaken for each relevant tax period.
  • Composite assessment orders covering multiple financial years are not legally sustainable where the statutory framework requires separate proceedings.
  • Setting aside the composite order does not prevent the department from initiating fresh proceedings in accordance with law for each assessment year independently.
  • The Court protected the revenue by directing exclusion of the intervening period while calculating limitation.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017
  • Section 74 of the Central Goods and Services Tax Act, 2017
  • Article 226 of the Constitution of India

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785408784_2421compressed.pdf

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