Rollmet LLP v. Union of India: consolidated GST show-cause notices referred to a Larger Bench

On 17 April 2026, a Bombay High Court division bench declined to follow Milroc Good Earth and referred to a Larger Bench the question whether a single show-cause notice under Sections 73/74 CGST Act may span multiple financial years.

Valkya Editorial· Legal Intelligence·2 June 2026·8 min read

Court: Bombay High Court
Citation: Writ Petition (L) No. 16848 of 2025 (with connected matters)
Bench: G.S. Kulkarni, J., Aarti A. Sathe, J.
Decided: 17 April 2026

Provisions discussed

Central Goods and Services Tax Act 2017 s.73Central Goods and Services Tax Act 2017 s.74Central Goods and Services Tax Act 2017 s.168Maharashtra Goods and Services Tax Act 2017Constitution of India art.226

How the dispute reached the Court

The litigation arose from an administrative practice that the Central GST Department had adopted across Maharashtra: instead of issuing a separate show-cause notice for each financial year covered by an investigation, the proper officer would issue a single composite notice covering periods that often began on 1 July 2017 (the GST commencement date) and extended through FY 2023-24. The departmental logic was efficiency. The seven-year backlog of pre-GST and early-GST proceedings, the recurring deployment of the same adjudicating officers, and the overlap of allegations across years made a composite notice administratively attractive.

The assessees disagreed. Rollmet LLP, joined by a batch of Maharashtra-based manufacturers, traders and service providers, moved the Bombay High Court under Article 226 challenging the validity of such consolidated notices. Their contentions clustered around three propositions. First, Section 73(10) and Section 74(10) tie the limitation period for adjudication to the "due date for furnishing of the annual return for the financial year" — a textual anchor that, on the petitioners' reading, presupposes financial-year-specific proceedings. Second, the Bombay High Court's own co-ordinate Bench in Milroc Good Earth Developers v. Union of India had already held that a proper officer lacks the authority to club multiple financial years into a single Section 73(1)/74(1) notice. Third, the practice caused real prejudice: any relief, set-aside or remand for one financial year would entangle the entire bundle.

The Department defended the composite notice as a legitimate procedural shortcut. Sub-section (3) of both sections, the Revenue submitted, expressly contemplates supplementary statements for "such periods other than those covered under sub-section (1)" — recognising that one set of proceedings can spread across multiple periods.

The statutory text on which the dispute turns

Sub-section (1) of Sections 73 and 74 empowers the proper officer to serve notice on the person chargeable with "any tax" which has not been paid, has been short-paid, has been erroneously refunded, or where input tax credit has been wrongly availed or utilised. The language is "any tax" — not "tax for a financial year".

Sub-section (3) permits a supplementary statement "for such periods other than those covered under sub-section (1)". The petitioners read this as a narrow gap-filler operating only after the initial notice has been issued. The Department read it as confirming that the statutory scheme contemplates multi-period proceedings as a structural matter.

Sub-section (10) supplies the limitation discipline. The proper officer must issue the order within three years (Section 73) or five years (Section 74) from the due date for furnishing of the annual return for the financial year to which the tax not paid relates. This is the load-bearing textual hook on which the Milroc prohibition was built — if the limitation period is keyed to a financial year, the natural inference (the Milroc Bench had reasoned) is that the proceeding itself is financial-year-specific.

The Bench's prima facie reading

The Division Bench was not persuaded that the statutory text bars consolidation. The phrase "any tax" in sub-section (1) is unrestricted. The sub-section (3) acknowledgement of supplementary statements "for such periods other than those covered under sub-section (1)" presupposes that multi-period proceedings exist. The sub-section (10) limitation period operates as an outer limit per financial year — it does not, on the Bench's reading, partition the procedural notice itself.

The language of sub-section (1) of Sections 73 and 74 of the CGST Act uses the words "any tax" and sub-section (3) expressly contemplates statements for "such periods other than those covered under sub-section (1)" — strongly indicating that the legislature did not intend to confine a show-cause notice to a single financial year.

— Kulkarni, J., for the Bench

But the Bench could not stop at that reading. Milroc Good Earth Developers, a decision of another co-ordinate Bench of the same Court, had held the opposite. The discipline of co-ordinate Bench precedent — articulated by a five-judge bench in Central Board of Dawoodi Bohra Community v. State of Maharashtra (2005) 2 SCC 673 — required either following Milroc or referring the question to a Larger Bench for authoritative determination. The Bench chose the second route.

Why a Larger Bench rather than disagreement-in-judgment

The Bench's choice to refer rather than to overrule reflects the deep co-ordinate-Bench discipline of Indian appellate practice. A division bench cannot simply disagree with another division bench's holding on the same point of law. Disagreement triggers reference. The reference frames the substantive questions in five formulations, each calibrated to the textual hook in sub-sections (1), (3) and (10) and to whether Milroc lays down the correct law.

The Bench was conscious of three further complications. The Madras High Court in S.P.K. & Co. had quashed composite SCNs along the Milroc logic. The Karnataka High Court was about to decide Chimney Hills Education Society the other way — and did so just nine days later, on 26 April 2026, holding that composite SCNs are permissible (see our separate piece on the Karnataka decision). The Supreme Court's dismissal of an SLP in Mathur Polymers v. Union of India without reasons did not, under the Khoday Distilleries v. State of Karnataka (1996) 3 SCC 605 line, constitute a binding declaration. The legal landscape, in other words, was unsettled at every level — and the Bombay Larger Bench's answer would have outsized national consequence.

What the reference will and will not decide

The Larger Bench reference is doctrinally narrow. The question is whether Sections 73 and 74 permit a single show-cause notice covering multiple financial years. It is not whether composite notices are good administrative practice, whether they prejudice taxpayers, or whether the Department should be allowed to consolidate adjudication after issuing separate notices.

The answer will, however, ripple across several adjacent questions. If composite notices are permissible, the limitation analysis under sub-section (10) will need to operate per financial year within a single proceeding — leading to partial set-asides where one year is time-barred but others are not. If composite notices are barred, the Department will need to issue separate notices going forward, and a wave of pending composite SCNs will face quashing challenges across Maharashtra. The administrative cost of either outcome is substantial; the institutional cost of continued uncertainty is greater still.

The interim picture

Interim relief was granted to the petitioners pending the Larger Bench determination. All writ petitions involving composite GST SCNs in Maharashtra are likely to be tagged and held over. Departmental counsel will press for continued issuance of composite SCNs as a matter of administrative necessity given the backlog of pre-GST and early-GST proceedings; petitioners will press for an interim direction freezing such SCNs until the Larger Bench rules.

The Supreme Court will almost certainly receive a tagged-along SLP regardless of which way the Larger Bench rules — the question is now national-importance scale. The GST Council and CBIC are likely to issue an administrative circular clarifying their position even before the judicial determination. During the Mohit Minerals litigation, CBIC issued mid-litigation circulars that the Supreme Court ultimately relied upon; a similar pattern is plausible here.

Given the divergence of judicial opinion across the High Courts and the dismissal of the SLP in Mathur Polymers v. Union of India by the Supreme Court without expressing any binding view, we deem it appropriate to refer the matter to a Larger Bench for authoritative determination.

— Kulkarni, J., for the Bench

Practical guidance for assessees

Three operational points emerge for taxpayers who have received or expect to receive composite GST show-cause notices.

First, maintain detailed year-by-year working papers — tax computations, ITC reconciliations, and supporting invoices — keyed to each financial year covered by the composite notice. Even if the Larger Bench upholds the composite-SCN practice, the limitation discipline under sub-section (10) will require per-year analysis at the adjudication stage, and any partial set-aside (for a time-barred year, for instance) will be administratively easier if the underlying papers are already disaggregated.

Second, preserve the procedural objection on the record. The Bombay Bench did not finally rule that composite notices are permissible; it framed a prima facie view and referred the question. Taxpayers who reply to composite SCNs without preserving the consolidation objection may be foreclosed from raising it after the Larger Bench rules — particularly if the ruling goes their way.

Third, watch the Karnataka and Madras developments closely. The Karnataka High Court's Chimney Hills decision creates a clear inter-state vertical conflict that the Supreme Court will eventually be asked to resolve. The Madras line, anchored in S.P.K. & Co., continues to bar composite SCNs in Tamil Nadu. Until the Supreme Court rules, the country is operating under an inconsistent SCN regime: Karnataka pro-Revenue, Madras pro-assessee, Bombay in flux.