Facts of the Case

M/s Karthik Agro Industries Private Limited, a company incorporated under the Companies Act, 1956 and represented by its Executive Director Sri Karthik L. Mashyal, filed this writ petition under Articles 226 and 227 of the Constitution before the High Court of Karnataka, Dharwad Bench, challenging an intimation of tax ascertained as payable under Section 73 of the GST Act in Form GST DRC-01A dated 13.06.2023 (Reference No. DCCT1BGM.DRC-1A.2023-24.T-419) and the consequent show cause notice dated 07.08.2023, with summary in Form GST DRC-01 (Reference No. DCCT1BGM.DRC-01.2023-24.T-742), both issued by the Deputy Commissioner of Commercial Taxes, Audit-1, Belagavi, arrayed as respondent no. 6. The Union of India, the CBIC, the GST Council, the State of Karnataka, the Commissioner of Commercial Taxes and the Karnataka State Beverages Corporation Limited were also arrayed as respondents. The show cause notice concerned three items, of which the petitioner specifically contested the finding on Item No.1, relating to the leviability of GST on un-denatured extra neutral alcohol supplied by the petitioner. The petitioner had already filed a reply to the notice, which was pending consideration when the writ petition came up for preliminary hearing on 17.11.2023.

Issues Involved

  1. Whether the show cause notice concerning GST leviability on un-denatured extra neutral alcohol is liable to be quashed before the reply filed by the petitioner has been adjudicated.
  2. Whether a writ petition filed while the reply to a Section 73 show cause notice/DRC-01A intimation is still pending consideration is premature.
  3. Whether an alternative writ of prohibition restraining GST levy on un-denatured extra neutral alcohol, pending a decision by the competent authorities, should be issued at the preliminary hearing stage.

Petitioner's Arguments

  • The show cause notice dated 07.08.2023 raised three items, but the petitioner specifically challenged the finding on Item No.1, contending that GST on un-denatured extra neutral alcohol falls outside the purview of the CGST Act, 2017.
  • A reply to the show cause notice had already been filed.
  • Sought quashing of the entire show cause notice concerning all three items, or alternatively a writ of prohibition restraining levy of GST on un-denatured extra neutral alcohol until the issue was decided by the competent respondents.

Respondent's Arguments

  • No detailed counter-arguments are recorded in the order beyond the appearance of counsel for respondents 4 to 7; the Court decided the matter on the preliminary ground of prematurity without requiring elaborate opposition from the respondents.

Court Order/Findings

  • The Court held that the writ petition was premature, since the petitioner still had to await the passing of an order on the reply already submitted to the show cause notice.
  • The petition was accordingly dismissed on this preliminary ground.
  • Nothing was expressed on the merits of the petitioner's claim regarding GST leviability on un-denatured extra neutral alcohol.

Important Clarification

  • Courts routinely decline to entertain writ challenges to a Section 73 show cause notice or DRC-01A intimation where the taxpayer's reply is yet to be considered by the adjudicating authority — the appropriate course is to await the order and pursue statutory remedies thereafter.
  • A dismissal 'as premature' with nothing expressed on merits preserves the taxpayer's substantive arguments — here, on GST leviability on un-denatured extra neutral alcohol — for a fresh challenge once the adjudication order is actually passed.
  • The underlying substantive question of whether GST applies to un-denatured extra neutral alcohol remains open and was not decided in this order.
  • Even an alternative prayer for a writ of prohibition restraining levy of tax pending final determination is unlikely to succeed at the preliminary hearing stage once the department has already engaged the statutory adjudication process through a show cause notice and a filed reply.

Sections Involved

  • Section 73, CGST Act, 2017 – determination of tax not paid or short paid, for reasons other than fraud or suppression.
  • Form GST DRC-01A – intimation of tax ascertained as payable, issued prior to the formal show cause notice.
  • Articles 226 and 227, Constitution of India – writ jurisdiction invoked before the Karnataka High Court.

Decision – In Favour of

Dismissed on the procedural ground of prematurity, without adjudication on merits — not a substantive win for the Department, since the core question of GST leviability on un-denatured extra neutral alcohol was left entirely open for later consideration.

Related Case Laws

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

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: WP No.105512 of 2023 (T-RES)
  • CNR: Not available on record
  • Coram: Hon'ble Mr Justice Anant Ramanath Hegde
  • Decision Date: 17.11.2023
  • Disposal Nature: Dismissed as premature

Link to Download the Order

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