Facts of the Case

The petitioner, M/s. Institute of Baking and Cake Art (GSTIN 29ADWPG995P9ZZ), a proprietorship represented by Sri Manish Gaur, challenged an order dated 06.10.2023 passed by the Additional Commissioner of Commercial Taxes (Enforcement), South Zone, under Section 73(9) of the KGST Act, 2017 read with Rule 142 and Section 50(1). The petitioner had earlier been issued a notice dated 27.03.2023 in FORM GST DRC-01, but contended that no notice under Section 73 was thereafter issued, and that the observation column of the impugned order — which should record the reasons for the conclusion — was left blank.

Issues Involved

  1. Whether an adjudication order under Section 73(9) is sustainable where no notice under Section 73 was issued after FORM GST DRC-01, and the reasons/observation column is left blank.

Petitioner's Arguments

  • No notice under Section 73 of the KGST Act was issued following the DRC-01 intimation.
  • The observation column in the impugned order, which should reflect the reasons for confirming the demand, was left blank, showing non-application of mind and denial of due opportunity.

Respondent's Arguments

  • The High Court Government Pleader appeared to accept notice for the respondent; no substantive defence to the specific procedural infirmities alleged is recorded in the order.

Court Order / Findings

  • The Court accepted the petitioner's grievance, holding there was an obvious lack of due opportunity and application of mind justifying interference, since the observation/reasons column in the impugned order was blank.
  • The respondent was directed to consider the petitioner's reply to FORM GST DRC-01, issue notice under Section 73, and then conclude the proceedings afresh.
  • The petition was allowed; the impugned order dated 06.10.2023 was quashed and the proceedings restored for reconsideration in light of the Court's observations.

Important Clarification

  • An adjudication order under Section 73(9) of the KGST/CGST Act that omits to record reasons in the observation column — leaving it blank — reflects non-application of mind and is liable to be quashed for want of due opportunity, even where a prior DRC-01 intimation was issued; the proper officer must separately issue notice under Section 73 and record reasoned findings.

Sections Involved

  • Section 73(9), KGST Act 2017 — determination and confirmation of tax not paid/short paid, where reasons must be recorded.
  • Rule 142, KGST Rules 2017 — procedure for issue of FORM GST DRC-01 and summary of order.
  • Section 50(1), KGST Act 2017 — interest on delayed payment of tax.

Decision – In Favour of

The Assessee — writ allowed, impugned Section 73(9) order quashed and matter remanded for fresh adjudication after considering the petitioner's DRC-01 reply.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No.27867 of 2023 (T-RES)
  • CNR: Not available
  • Coram: Justice B.M. Shyam Prasad
  • Decision Date: 19-12-2023
  • Disposal Nature: Allowed; impugned order quashed and remanded

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