Facts of the Case

M/s Pericorp, a proprietorship concern represented by its proprietor Mrs. Raksha Harilal Savla, approached the High Court of Karnataka by filing a writ petition under Articles 226 and 227 of the Constitution of India.

The petitioner had initially challenged the show cause notice dated 20 September 2025 bearing No. ADCOM/ENF/SZ/CTO-24/DRC-01/2025-06, issued by Respondent No. 2 under Section 73(8) of the Karnataka Goods and Services Tax Act, 2017, along with its summary in Form GST DRC-01. The proceedings related to a consolidated period from April 2021 to March 2024.

The petitioner also challenged the adjudication order dated 22 December 2025 passed under Section 73(9) of the KGST Act, 2017.

According to the petitioner, the adjudication order was passed ex parte. The petitioner contended that it could not submit a reply to the show cause notice and, consequently, the adjudication proceedings culminated in a final order without the benefit of considering the petitioner’s stand.

During the pendency of the adjudication proceedings, the petitioner had submitted a communication dated 24 May 2024 setting out certain revised turnover.

Subsequently, the petitioner claimed to have realised that the communication dated 24 May 2024 would not make much difference and asserted that material was available to demonstrate the same.

The petitioner further contended that the tax authorities had relied upon its communication dated 24 May 2024 while completing the adjudication proceedings.

Issues Involved

The principal issues before the High Court were:

  1. Whether the adjudication order dated 22 December 2025 passed under Section 73(9) of the KGST Act could be sustained when the petitioner claimed that the order was passed ex parte and no effective reply to the show cause notice had been placed before the adjudicating authority.
  2. Whether the matter required fresh consideration when the adjudication order appeared to have been concluded by taking note of the petitioner’s communication dated 24 May 2024.
  3. Whether the petitioner should be granted an opportunity to explain the circumstances surrounding the communication dated 24 May 2024 and produce other material capable of leading to reconsideration of the matter.
  4. Whether the adjudication order should be set aside and proceedings restored to the stage of reply to the show cause notice.

Petitioner’s Arguments

The petitioner submitted that the order passed under Section 73(9) of the KGST Act was an ex parte order.

It was argued that the petitioner could not submit a reply to the show cause notice and that the adjudication proceedings culminated in a final adjudication order without the benefit of considering the petitioner’s stand.

The petitioner further submitted that, during the pendency of the adjudication proceedings, a communication dated 24 May 2024 had been made setting out certain revised turnover.

The petitioner stated that it subsequently realised that the said communication would not make much difference and claimed to possess material capable of demonstrating the same.

It was also specifically argued that the authorities had relied upon the petitioner’s communication dated 24 May 2024 while completing the adjudication proceedings.

Accordingly, the petitioner sought an opportunity to explain the circumstances in which the communication dated 24 May 2024 was made and to place other relevant material before the authority for reconsideration.

Respondents’ Arguments / Stand

The learned High Court Government Pleader accepted notice for the respondents.

The judgment does not record any detailed independent counter-arguments on merits by the respondents. The Court, after perusing the adjudication order, observed that the authorities appeared to have concluded the proceedings by taking note of the petitioner’s communication.

Accordingly, the decision was based upon the factual circumstances appearing from the adjudication record, the petitioner’s assertions, and the need for clarification of the factual matrix.

Court Order / Findings

The High Court perused the adjudication order and observed that the authorities appeared to have concluded the proceedings after taking note of the petitioner’s communication.

The Court held that, in light of the petitioner’s stand, the matter required remand for fresh consideration.

The High Court specifically observed that the petitioner would be required to explain the circumstances surrounding the communication dated 24 May 2024 and also demonstrate other material that could lead to reconsideration of the matter.

The Court further noted that the adjudication order rested on a factual matrix requiring clarification from the petitioner’s side.

Taking into account the petitioner’s assertions, the findings, and the discrepancies noticed by the parties, the High Court considered it appropriate to:

  • Set aside the adjudication order at Annexure-B;
  • Remit the matter for fresh adjudication;
  • Restore the proceedings to the stage of reply to the show cause notice;
  • Direct the petitioner to pay costs of Rs. 10,000 to the Advocate Clerks Benevolent Fund;
  • Direct the petitioner to appear before Respondent No. 2 on 25 May 2026 without further notice; and
  • Keep all contentions open.

Accordingly, the writ petition was disposed of.

Important Clarification

The High Court did not decide the underlying GST tax liability on merits.

The order does not amount to a final determination that the tax demand itself was legally or factually incorrect. Instead, the adjudication order was set aside because the factual matrix required clarification from the petitioner’s side, particularly concerning the communication dated 24 May 2024 and other material that the petitioner claimed could justify reconsideration.

The matter was remitted for fresh adjudication from the stage of reply to the show cause notice. Therefore, all contentions of the parties remain open for consideration before the adjudicating authority.

It is also important to note that the relief was accompanied by a condition requiring the petitioner to pay costs of Rs. 10,000 to the Advocate Clerks Benevolent Fund.

Sections Involved

·         Section 73(8) of the KGST Act, 2017

·         Section 73(9) of the KGST Act, 2017

·         Articles 226 and 227 of the Constitution of India

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783501501_1472compressed.pdf

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