Introduction
A Show Cause Notice (“SCN”) under the Goods and Services Tax (“GST”) marks the beginning of adjudicatory proceedings against a taxpayer. As such, it is important that any Show Cause Notices comply with fairness, clarity and statutory compliance. The Kerala High Court’s ruling in the matter of Kerala State Self-financing B. Pharm College Management Association (KSSBCMA) v. Intelligence Officer (WP(C) No. 9108 of 2026, decided 09 March 2026) is a reaffirmation of these foundational principles. Two questions were addressed by the Hon’ble Court pertaining to procedure: First, can there be one composite SCN covering multiple financial under the GST code? Secondly, can the language used in an SCN indicate a predetermined outcome regarding the taxpayer’s tax liability or their ability to register? The Hon’ble Court clarified the standards to be followed by the tax authority when initiating proceedings pursuant Section 63 of the Central Goods & Services Tax Act, 2017 (“CGST Act”) and the Kerala Goods & Services Tax Act, 2017 (“KGST Act”).
Facts of the Case
The Kerala State Self-Financing B. Pharm College Management Association (KSSBCMA), which represents thirty-six self-financed pharmacy colleges in the State of Kerala and is registered under the Societies Registration Act, conducts a separate selection process (other than those relating to Non-Resident Indian seats and the number of seats transferred to the NRI category by the Government of Kerala or the respective colleges) for awarding places to students for admission to pharmacy courses at each member college. On February 9, 2026, the Intelligence Officer issued a composite Show Cause Notice (SCN) under section 63 of the GST Acts, clubbing multiple year’s assessments and penalties. The KSSBCMA has challenged this SCN based upon its contention that the KSSBCMA services related to admissions are exempt from GST and exempt from any registration requirement under entry no. 66(b)(iv) of notification no. 12/2017- Central Tax (Rate). The KSSBCMA states that the SCN is based upon presumptive liabilities and does not comply with Circular No. 6 of 2021 (dated 11/7/2021), which requires that the proper jurisdictional authority adjudicates matters rather than the IO. Due to these procedural errors, the KSSBCMA has petitioned the Hon’ble High Court of Kerala under Article 226 of the Constitution of India.
Issues Raised before the Hon’ble Court
1) Whether it’s valid to combine the multiple financial year into one SCN under GST?
2) Whether principle of natural justice is violated when it is pre-determined conclusion regarding tax liability and registration?
3) Whether Entry No. 66(b)(iv) of Notification No. 12/2017 – Central Tax (Rate) provides an exemption for the services provided by the petitioner association regarding the admissions process of educational institutions?
4) Whether the jurisdictional authority’s adjudication process, as outlined in Circular No. 6/2021 dated 07.11.2021, was followed in this particular case?
Contentions of the Petitioner
The petitioner claimed that the notice was unlawfully issued, as there is no legal basis for combining multiple years of assessment into a single notice pursuant to the GST laws as well as the procedural error of the notice’s wording, which left no room for discussion, intimated that the department had already concluded its investigation and found that the petitioner had a legal duty to register for GST and pay the taxes and penalty associated thereto.
The petitioner also claimed that its services were exempt from GST by virtue of Entry No. 66(b)(iv) under Notification No. 12/2017 — Central Tax (Rate), as those services relate to the admission process of educational institutions. The petitioner relied upon the judgment in Oryx Fisheries Pvt. Ltd. v. Union of India (2011 (266) E.L.T. 422 (SC)) to demonstrate that a show cause notice shall not create an impression that a decision has already been made by the authority.
Contentions of the Respondent
The respondent submitted that the issue regarding GST registration and tax liability would ultimately be decided during the adjudication process after examining the documents produced by the petitioner. It was further contended that the competent adjudicating authority would determine the issue of registration, and therefore the petitioner’s challenge to the show cause notice was premature.
Core Legal Discussion
- Multiple financial years cannot be considered as one under GST and the Hon’ble Kerala High Court ruled this, relying on its earlier decisions in: Joint Commissioner (Intelligence & Enforcement) v. M/s. Lakshmi Mobiles Accessories and Tharayil Medicals v. Deputy Commissioner, The Hon’ble court observed that these consolidated notices were not legally valid, and more importantly, they violate procedural fairness.
- An SCN can only make “preliminary” allegations and provide the taxpayer an opportunity to respond. The language of the notice reflected a final conclusion. The Hon’ble Court relied on Oryx Fisheries Pvt. Ltd. v. Union of India for the proposition that SCNs must be unbiased, thus adjudication shall not be a mere formality.
- The petitioner relied upon Entry 66(b)(iv) of Notification No. 12/2017–CT (Rate) and argued that they should receive a GST exemption because their service is part of the admission process for educational institutions. Rather than making a final ruling on this specific issue, the Hon’ble Court directed the proper adjudicatory authority to make a decision on this matter.
Court’s Ruling in this case
The Hon’ble High Court observed that the contested show cause notice is legally untenable. The Hon’ble Court further observed that the notice in view of the earlier decisions of the same court that stacking of multiple years in single SCN is untenable in law. Furthermore, the Hon’ble Court noted that the notice’s wording implied the authority had already made a pre-determined judgment about the petitioner’s liability, a violation of the established rules for show cause procedures. Accordingly, the Hon’ble Court set aside SCN. However, it granted liberty to the respondent authority to issue fresh SCN separately for each relevant assessment year in accordance with the law and the principles laid down in Oryx Fisheries. The Hon’ble Court further directed that adjudication must be conducted as per Circular No. 6/2021 dated 07.11.2021 by the competent jurisdictional authority after considering the petitioner’s documents and submissions.
AMLEGALS Remarks
The Hon’ble Court held that a tax authority can only issue a single, compound SCN for a single assessment year. Each assessment year is considered an independent cause of action, thus issuing consolidated notices violates basic procedures and hampers a taxpayer’s ability to defend themselves properly. Furthermore, the Hon’ble Court held that an SCN should be interpreted as a request, not as a finding of liability. Therefore, any implication that the authority had already determined a conclusion about the taxpayer’s liability before issuing the SCN is a violation of the tenets of natural justice and undermines the integrity of the adjudication process. The Hon’ble Court’s reference to Oryx Fisheries in its judgment reiterates the position of the judiciary that fair notice must be given for fairly conducting the administrative proceedings. This decision requires the GST Department to give specificity in their show cause notices with respect to the year of assessment; the show cause should be worded with clarity and only furnish preliminary objections rather than framing the notice in a pre-determined fashion.