Facts of the Case

Sri C Siddaraju, proprietor of M/s Manu Enterprises, Mysore, filed WP No. 37855 of 2025 (T-RES) before the High Court of Karnataka at Bengaluru challenging a show cause notice dated 28.05.2024 issued in Form GST DRC-01 under Section 73(1) of the CGST/KGST Act, 2017, alleging that the output tax liability declared in returns filed under Section 39 was less than that declared in Form GSTR-1. The petitioner did not respond to the notice, and the second respondent passed an ex parte adjudication order dated 29.07.2024 under Section 73(9), confirming a total demand of Rs. 26,54,784/- along with interest and penalty, without granting a personal hearing. The petitioner's subsequent appeal, along with an application for condonation of delay filed on 02.04.2025, was rejected as barred by limitation vide acknowledgment dated 07.04.2025 in Form GST APL-02.

Issues Involved

  1. Whether the ex parte adjudication order passed without granting an opportunity of reply or personal hearing was liable to be set aside.
  2. Whether the Section 73 proceedings were barred by limitation under Section 73(10), having regard to the pending Supreme Court challenge to the notifications extending the limitation period.

Petitioner's Arguments

  • Counsel submitted that the petitioner never received the show cause notice and hence could not reply, resulting in the ex parte order; given an opportunity, the petitioner would file a reply and documents.
  • It was submitted that the proceedings were barred by limitation under Section 73(10), and that the alternative remedy of appeal would not bar the writ since the challenge was itself to the limitation.
  • Reliance was placed on pending Special Leave Petition (C) No. 4240/2025, contending that the validity of the limitation-extension notifications was under challenge before the Supreme Court.

Respondent's Arguments

  • Learned AGA for the respondents submitted that the period of limitation had been validly extended by Notification No. 13/2022 dated 05.07.2022 and Notification Nos. 9 and 56 of 2023 dated 31.03.2023 and 08.12.2023 respectively, and hence the proceedings could not be said to be barred by limitation.

Court Order / Findings

  • The Court noted that the validity of the limitation-extension notifications was seized before the Supreme Court in SLP (C) No. 4240/2025, and that the outcome would have a direct bearing on the impugned proceedings.
  • To avoid multiplicity of proceedings and conflicting orders, the Court held that one more opportunity deserved to be granted to the petitioner by setting aside the ex parte adjudication order and remitting the matter for fresh consideration.
  • The petition was allowed; the adjudication order dated 29.07.2024 and the appeal-rejection acknowledgment dated 07.04.2025 were set aside, and the matter was remitted to the second respondent for a fresh adjudication order after disposal of SLP No. 4240/2025 by the Supreme Court.
  • The period between the date of the impugned order and the date of disposal of the SLP was directed to stand excluded for the purpose of limitation.

Important Clarification

  • Where the validity of notifications extending the limitation period for passing Section 73 orders is pending adjudication before the Supreme Court, and that outcome has a direct bearing on the proceedings under challenge, High Courts may set aside the impugned order and remit the matter for reconsideration after the Apex Court's decision, rather than ruling on the limitation question themselves.
  • This approach avoids the risk of conflicting orders across multiple pending writ petitions raising the same limitation challenge.

Sections Involved

  • Section 73 of the CGST/KGST Act, 2017 – determination of tax not paid or short paid; Section 73(9) for the adjudication order and Section 73(10) for the limitation period.
  • Notification No. 13/2022-CT, and Notification Nos. 9/2023-CT and 56/2023-CT – notifications extending the time limit for Section 73 orders, under challenge before the Supreme Court in SLP (C) No. 4240/2025.
  • Articles 226 and 227 of the Constitution of India – writ jurisdiction invoked.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee; the ex parte demand and the time-barred appeal rejection were set aside and the matter remitted for fresh adjudication, with no final finding recorded on the merits of the tax demand or the limitation question, which now awaits the Supreme Court's ruling.

Related Case Laws

  • See our earlier case notes on Karnataka High Court orders setting aside ex parte Section 73 demands for want of personal hearing.
  • See our case notes on writ petitions challenging the validity of notifications extending limitation for Section 73 GST proceedings.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No. 37855 of 2025 (T-RES) [NC: 2025:KHC:54475]
  • Parties: Sri C Siddaraju (Proprietor, M/s. Manu Enterprises) vs State of Karnataka & Anr.
  • Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
  • Date of Order: 15.12.2025

Link to Download the Order

You can view/download the full text of the order here: https://mytaxexpert.co.in/uploads/1787067975_4528compressed.pdf

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