Consolidated Section 74 SCN Covering Multiple Financial Years Quashed — Bombay HC Continues Milroc Line, Distinguishes Delhi HC's Ambika Traders on Facts

The Bombay High Court has quashed consolidated show cause notices issued under Section 74 of the CGST Act covering multiple financial years in a batch of eight writ petitions, following its own binding precedents in Milroc Good Earth Developers, ICAD School of Learning and Rite Water Solutions, and has expressly distinguished the Delhi High Court's contrary view in Ambika Traders on facts. The ruling was delivered by Justices Arun R. Pedneker and Vaishali Patil-Jadhav on 27.02.2026 in Writ Petition No. 11644 of 2025 and batch.

The DGGI had issued consolidated notices under Section 74 to multiple petitioners across several financial years. In two of the petitions (WP 742/2026 and WP 743/2026), adjudication had already been completed and final orders passed, which were also challenged by amendment as being founded on jurisdictionally defective notices.

The court's analysis reaffirmed the statutory architecture: under Section 74(10), the order must be passed within five years from the due date for furnishing the annual return for the relevant financial year. This year-specific limitation structure means that different financial years have different limitation dates, different factual matrices and different defences. Clubbing them in a single notice collapses these distinctions, aggregates separate tax periods and prejudices the assessee's right to raise year-specific defences.

The Revenue relied on the Delhi HC's Ambika Traders ruling — which held that where fraudulent ITC availment spans several years and cannot be established without connecting cross-year transactions, a consolidated notice may be permissible — as well as the Delhi HC's Mathur Polymers. The Bombay HC distinguished Ambika Traders by noting that in that case, there existed a common and indivisible fraudulent mechanism spanning years that could not be established in isolation. In the present cases, the notices did not allege any composite or interlinked fraudulent design necessitating consolidation — they merely clubbed together multiple years. The SCNs and consequential orders were set aside with liberty to issue fresh year-wise notices.