If you need to change your address record with VFS, you must provide evidence of your new address. Some people use utility bills, others have their drivers licence. For documents that refer to an Australian address, those documents can/should be notarised in Australia.
But what about changes to Indian addresses?
To prove your new Indian address, presumably, you'll be providing copies of your Indian utility bills or your Indian drivers licence. Even though VFS asks for these Indian documents to be verified and notarised in Australia, they can't be - or at least they shouldn't be notarised in Australia.
It's interesting that VFS has taken this position with various documents that originate from India. Normally, if you needed to verify or attest a document issued by an Indian government or authority, it would need to be done in India or at least by the Indian Consulate (ie, through VFS). The same applies to any other document issued by any other foreign government.
For some reason (unknown to us or to others we've spoken to), VFS direct that Indian documents can be notarised in Australia, yet if you have a document (such as a birth certificate or marriage certificate) issued by any other country other than India or Australia, then that document must be attested by the relevant foreign office of the country where it was issued.
Essentially, this same rule should also apply to Indian documents since they cannot be attested in Australia aside from being attested by VFS/Indian Consulate and they certainly shouldn't be attested by a notary public in Australia. The fact that if you live in New South Wales, VFS now requires all documents to be attested by a notary public, makes things both confusing and potentially not possible.