Facts of the Case

The Petitioner, Akanksha Enterprises Private Limited, Bengaluru, challenged an ex-parte assessment order in Form GST DRC-07, dated 19.10.2023, passed under Section 78 of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017, for the tax period July 2017 to March 2018, before the High Court of Karnataka at Bengaluru. The Respondent's own record showed that a DRC-01 notice had been sent to the taxpayer's business address by registered post and to its registered e-mail, that the officer had called the taxpayer's staff multiple times, and had even visited the business premises on 26.09.2023, where the Accountant was asked to file a reply or discharge the liability. Despite this, no reply was filed and no liability discharged within the 30-day period allowed in the show cause notice dated 14.09.2023, leading to confirmation of the demand. The Petitioner contended that its representative had in fact been in touch with the Respondent, furnishing certain documents that the Respondent found insufficient, without being given any further opportunity before the order was passed. Even before the appeal period expired, a Form GST DRC-13 notice was issued, resulting in attachment of the Petitioner's bank account.

Issues Involved

  1. Whether the assessment order dated 19.10.2023, passed under Section 78 of the KGST/CGST Act after the Petitioner's representative had furnished some documents without further opportunity, was liable to be set aside as an ex-parte order.
  2. Whether the disputed question of adequacy of opportunity required detailed factual enquiry, and if so, on what terms the matter could be restored for reconsideration.

Petitioner's Arguments

  • The impugned order was ex-parte, since the Petitioner's representative had furnished certain documents when called upon, but was informed these were insufficient, and no further opportunity was given before confirmation of the demand.
  • Even before the statutory appeal period expired, Form GST DRC-13 had been issued, attaching the Petitioner's bank account.
  • The Petitioner was willing to deposit the disputed liability, estimated at over Rs. 10,00,000/-, within one week, in exchange for restoration of the proceedings for reconsideration.

Respondent's Arguments

  • The Respondent's record showed that adequate opportunity had been given — through registered post, e-mail, repeated phone calls, and a personal visit to the business premises — but the taxpayer neither discharged the liability nor filed a reply within the 30 days allowed.
  • The Respondent was agreeable to restoration for reconsideration, but only without undermining the State's interest, and subject to the Petitioner depositing Rs. 10,00,000/-.

Court Order/Findings

  • The Court observed that whether the opportunity provided was sufficient — given the competing claims about documents furnished and their adequacy — would, if seriously contested, require a detailed factual enquiry.
  • The Court held that the ex-parte assessment order could be quashed and the proceedings restored for reconsideration, but only on the condition that the Petitioner deposit Rs. 10,00,000/- within one week and its representative appear before the Respondent without further notice on a fixed date.
  • The writ petition was accordingly allowed, and the impugned Form GST DRC-07 order under Section 78 of the KGST/CGST Act was quashed subject to the deposit condition.

Important Clarification

Where the adequacy of the opportunity granted before an ex-parte GST assessment order is genuinely disputed on facts, courts may restore the matter for reconsideration rather than resolve the factual controversy themselves — but such relief can be made conditional on the taxpayer depositing a substantial portion of the disputed demand to safeguard revenue interests.

Sections Involved

  • Section 78 of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017 — initiation of recovery proceedings.
  • Form GST DRC-07 and Form GST DRC-13 under the CGST Rules, 2017 — summary of order and notice for recovery through third parties.

Decision – In Favour of

The outcome is a qualified win for the Assessee — the ex-parte order was quashed — but it comes tied to a significant Rs. 10,00,000/- deposit condition and reappearance before the same authority, so it is best read as a conditional, balanced relief rather than a clean victory for either side.

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. 27216 of 2023
  • CNR: 2023:KHC:45455
  • Coram: Hon'ble Mr. Justice B. M. Shyam Prasad
  • Decision Date: 14 December 2023
  • Disposal Nature: Writ allowed; ex-parte GST assessment order quashed on deposit condition

Link to Download the Order

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