One Notice to Rule Them All? Bombay HC Says "No" to Multi-Year SCNs in Milroc Good Earth-Implications for GST Demands

Consolidated show cause notices (SCNs) that club several financial years into one omnibus demand have become a convenience play for investigating wings in complex GST matters-especially construction and ITC cases where transactions span long project cycles. The Bombay High Court’s decision in M/s. Milroc Good Earth Developers, Mariposa Beach Grove v. Union of India & Ors., 2025 (2025(10)LCX0164) calls time on that practice. The Court held that issuing a single SCN for multiple financial years to raise GST demand and recover "ineligible ITC" is without jurisdiction and amounts to judicial overreach, and therefore such notices are liable to be quashed.

Beyond the immediate relief for the petitioner-developer, Milroc resets the drafting discipline around Sections 73 and 74, re-centres the concept of "tax period," and forces both the Department and taxpayers to re-think how multi-year disputes should be framed, defended, and adjudicated.

The Backstory: Why This Case Matters

The petitioner-a partnership firm developing residential projects "Colina" and "Adarsh" in Goa-was issued consolidated SCNs dated 28 March 2025 by DGGI and jurisdictional CGST authorities. These notices aggregated demands and proposed recovery of ineligible ITC on construction and TDR services for FY 2017-18 through FY 2023-24-in other words, seven years bundled into a single set of notices.

The petitioner’s case: the CGST Act structures assessment and limitation per tax period, and requires year-wise computation of time limits and compliance. A composite SCN, it argued, short-circuits statutory limitation, muffles period-specific defenses, and violates the scheme of Sections 73/74 read with Section 2(106).

The Department’s stance: no jurisdictional defect-let the petitioner raise defenses before the proper officer; consolidation was adopted for administrative and evidentiary efficiency.

The issue: Is one SCN covering multiple financial years permissible under the CGST Act-or is that clubbing contrary to the statute’s period-wise design and limitation architecture?

Statutory Architecture: The "Tax Period" Lens

Three textual cues in the CGST Act are decisive:

1. Section 2(106) – "Tax period": the period for which a return is required to be furnished. In GST, liability follows the cadence of returns (monthly/quarterly), with an annual return knitting the year together.

2. Section 73 (non-fraud cases) and Section 74 (fraud, willful misstatement or suppression): both provisions link the outer time limit for passing orders to the financial year concerned-

3. s.73(2) / s.74(2): the SCN must be issued at least 3 months / 6 months, respectively, before the expiry of the above order-passing limits-again per financial year.

Put simply: the Act’s limitation scheme is period-specific. Every FY carries its own clock-both for issuing the SCN and for passing the order. That structure is hard to reconcile with a single composite notice that muddles timelines across years.

What the Bombay High Court Held in Milroc

The Court’s reasoning tracks the statute’s design:

The Wider Jurisprudence: A Split Screen

The "No Clubbing" Line

These decisions lean on the internal logic of tax period + FY-anchored limitation.

The "Conditional Clubbing" Line

Reconciling the Rift

A working synthesis-now reinforced by Milroc-is this:

Practical Takeaways-for Both Sides

If You’re a Taxpayer (Especially in Real Estate & Long-Cycle Projects)

1. Test limitation FY-wise. For any consolidated SCN, prepare a year-wise timeline: annual return due date → outer limit to pass order (s.73(10)/s.74(10)) → SCN notice-deadline buffer (3/6 months). If any year fails the buffer, you have a potent objection.

2. Insist on period-specific particulars. Even where a court tolerates consolidation (e.g., fraud allegations in some jurisdictions), demand year-wise quantification, evidence, and reasoning. A composite story without granular particulars violates natural justice.

3. Watch pre-SCN steps. Was there a s.73(5)/s.74(5) intimation and Rule 142(1A) pre-notice? If not-or if it was bunched without clarity-raise the defect.

4. Preserve defenses unique to specific years.

○ Credit timing (availing vs. utilization).

○ Specific notifications/exemptions/transitional changes that applied for a subset of years.

○ Accounting closures and GSTR-9/GSTR-9C positions.

○ Industry-specific tweaks (e.g., TDR valuation clarifications; s.17(5) changes; post-2019 real-estate rate shifts).

5. Map project realities to tax periods. In real estate, milestones, possession triggers, JDA/TDR sequencing, and invoicing patterns are rarely uniform. Use that variance to expose why a monolithic SCN obscures reality.

6. Consider writs when jurisdiction is in doubt. Where a consolidated SCN masks limitation mis-steps or fails to plead year-wise particulars, Milroc enables a threshold challenge rather than waiting for an adverse order.

If You’re a Departmental Officer

1. Default to FY-wise SCNs. It is cleaner, defensible, and faithful to the Act’s clock.

2. If consolidation is contemplated (fraud cases):

○ Justify the necessity: explain why the pattern only emerges across years.

○ Maintain FY granularity: annex year-wise tables, evidentiary trails, and limitation computation per FY.

○ Respect buffers: ensure 3/6-month notice windows are met for each FY implicated.

○ Serve pre-SCN intimations that mirror the year-wise approach.

3. Avoid "limitation laundering." Do not use consolidation to sneak in time-barred years. Courts spot this quickly.

4. Structure the notice as a spine + annexures. The narrative spine may span multiple years (for context), but liability must be pleaded and quantified FY-wise.

A Practitioner’s Checklist for Multi-Year Controversies

Sector Focus: Why Real Estate Keeps Coming Up

Real estate disputes often entangle:

All of this heightens the harm when many years are rolled into a single notice: critical, year-specific defenses get blurred. Milroc restores the discipline taxpayers need to present those defenses coherently.

What Milroc Does-and Doesn’t-Settle

Until the Supreme Court lays down a uniform rule, expect:

Drafting Guidance: A Safer Way Forward

If the Department must tell a multi-year story (say, to trace alleged bogus ITC chains):

1. Tell the story once, but plead the liability many times. Use a single narrative section for the scheme, and then distinct FY-wise schedules that state:

○ Tax period(s) covered within that FY,

○ Specific contraventions alleged,

○ Quantification (gross, net of reversals),

○ Evidence relied upon, and

○ Limitation computations and pre-SCN timeline compliance.

2. Respect procedural safeguards FY-wise: pre-SCN intimation, opportunity of personal hearing, and speaking order per FY-even if issued contemporaneously.

3. Avoid composite relief prayers: Seek separate determinations FY-wise in the prayer clause to align with s.73(10)/s.74(10).

For taxpayers responding, mirror this structure in your reply: tabulate each FY, plug documentary defenses, and challenge limitation precisely.

The Bottom Line

Milroc Good Earth is a strong reaffirmation from the Bombay High Court that GST disputes are built FY by FY, and the law’s limitation scheme is not a mere technicality but an architectural pillar. Consolidated SCNs, the Court says, distort that architecture, blur defenses, and risk becoming a back-door to rescue time-barred years-hence, they are without jurisdiction and deserve to be quashed.

For the Department, the message is clear: administrative convenience cannot trump statutory design. For taxpayers, particularly in long-cycle sectors like real estate, Milroc is both a shield (against composite, limitation-skirting notices) and a roadmap for how to organise year-wise defenses.

Until a final word comes from the Supreme Court, prudence suggests this middle path:

And that, in the end, may be the best outcome for GST adjudication as a whole-more discipline, more clarity, fewer shortcuts, and a fairer contest on the merits, one financial year at a time.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.