Facts of the Case

M/s PSMI Management India Pvt Ltd, represented by its Director Shri Ajay B.R., approached the High Court of Karnataka at Bengaluru challenging Show Cause Notice No. 240/2021-22/DC dated 26.10.2021 issued by the Assistant Commissioner of Central Tax, Division 4, GST Commissionerate, Bengaluru East, and the consequent Order-in-Original No. 65/2023-24/AC/ED-4 dated 11.09.2023 passed under the proviso to Section 73(1) of the Finance Act, 1994. The petitioner also assailed Form GST DRC-13 bearing No. GEXCOM/TAR/D/62/2023-AE dated 20.06.2024, issued to its banker, Axis Bank, for recovery of the confirmed dues. The writ petition, filed under Article 226 of the Constitution, sought a writ of certiorari quashing the show-cause notice, the Order-in-Original and the DRC-13. The matter was disposed of by an oral order dated 15.12.2025 by Justice S.R. Krishna Kumar.

Issues Involved

  1. Whether the Order-in-Original passed under Section 73(1) of the Finance Act, 1994 pursuant to the impugned show-cause notice was sustainable in law.
  2. Whether the controversy was squarely covered by the earlier Co-ordinate Bench ruling in Karnataka Chinmaya Seva Trust vs Joint Commissioner of Central Tax.
  3. Whether the consequential DRC-13 recovery notice issued to the petitioner's banker could survive if the underlying Order-in-Original was set aside.

Petitioner's Arguments

  • Show Cause Notice No. 240/2021-22/DC dated 26.10.2021 was illegal, arbitrary and without jurisdiction, and deserved to be produced before the Court and quashed.
  • The Order-in-Original dated 11.09.2023 passed under the proviso to Section 73(1) of the Finance Act, 1994 was ex facie unsustainable in law.
  • Form GST DRC-13 dated 20.06.2024, issued to the petitioner's banker to recover dues under the impugned Order-in-Original, ought also to be quashed as a consequence.
  • The controversy was directly and squarely covered by the Co-ordinate Bench decision in Karnataka Chinmaya Seva Trust, entitling the petitioner to identical relief.

Respondent's Arguments

  • Counsel for Respondents No. 1 and 2 defended the show-cause notice and the Order-in-Original as validly and properly issued.
  • No independent distinguishing feature was pressed to take the case outside the ambit of the Karnataka Chinmaya Seva Trust ruling.
  • Respondent No. 3, the petitioner's banker, was arrayed only as the recipient of the recovery notice and did not contest the matter on merits.

Court Order / Findings

  • The Court held that although several contentions were urged by both sides, the issue in controversy was directly and squarely covered by the Co-ordinate Bench judgment in Karnataka Chinmaya Seva Trust vs Joint Commissioner of Central Tax (WP No. 11154/2023 and connected matters, dated 03.07.2024).
  • Following that precedent, Orders-in-Original impugned in such writ petitions are set aside and the matters relegated to designated officers to be reconsidered from the show-cause-notice stage; demands raised pursuant to such impugned orders also stand set aside.
  • The impugned Order-in-Original dated 11.09.2023 was accordingly quashed and the matter remitted to the concerned respondent to the stage of post-show-cause-notice, to proceed further in accordance with law.
  • The petition was disposed of in these terms.

Important Clarification

  • Where a batch ruling of a Co-ordinate Bench has already settled the treatment of show-cause-notice and Order-in-Original challenges on materially identical facts, subsequent writ petitions raising the same controversy will ordinarily be disposed of on the same terms rather than being independently re-adjudicated on merits.
  • An Order-in-Original can be set aside and the assessee relegated to the show-cause-notice stage for fresh, reasoned adjudication, rather than the writ court itself deciding the underlying tax dispute.

Sections Involved

  • Section 73(1) of the Finance Act, 1994 — empowers recovery of service tax not levied, not paid, short-levied or short-paid; the proviso extends the limitation period in cases of fraud, collusion, or wilful misstatement.
  • Form GST DRC-13 under the CGST Rules, 2017 — notice issued to a third party (here, the assessee's bank) directing recovery of confirmed dues.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — the Order-in-Original was quashed and the matter remitted to the show-cause-notice stage for fresh adjudication in accordance with law.

Related Case Laws

  • Karnataka Chinmaya Seva Trust vs Joint Commissioner of Central Tax, WP No. 11154/2023 and connected matters (Karnataka High Court, 03.07.2024).
  • Other Karnataka High Court rulings relegating show-cause-notice and Order-in-Original challenges to the adjudicating authority for de novo consideration.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No. 11857 of 2025 (T-RES); NC: 2025:KHC:54474
  • 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 order here.

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