Facts of the Case

M/S Digitech Communication, a registered partnership firm, was issued a show cause notice dated 27.11.2024 under Section 73 of the CGST/KGST Act, 2017 by the Assistant Commissioner of Commercial Taxes. Since the petitioner did not submit a reply, the Assistant Commissioner passed an adjudication order dated 27.02.2025 under Section 73(9) in Form GST DRC-07, confirming a total demand of Rs.23,02,852 comprising tax, interest and penalty. A subsequent recovery notice dated 16.10.2025 in Form GST DRC-13 was also issued to the petitioner's banker. Aggrieved, and contending that the notices had not been received and that it had therefore been unable to contest the proceedings, the petitioner approached the High Court of Karnataka under Article 226, seeking to quash the show cause notice, the adjudication order and the recovery notice.

Issues Involved

  1. Whether an assessment order passed under Section 73(9) without the assessee's participation, allegedly on account of non-receipt of the show cause notice, warrants being set aside and the matter remitted for fresh consideration.

Petitioner's Arguments

  • The pre-intimation and show cause notices dated 27.11.2024 were not received by the petitioner, and hence it could not submit a reply or contest the proceedings.
  • The inability to respond was due to bona fide reasons and unavoidable circumstances, constituting sufficient cause.
  • Sought one more opportunity to reply to the show cause notice and contest the proceedings if the impugned order was set aside.

Respondent's Arguments

  • There was no merit in the petition and it was liable to be dismissed.

Court Order / Findings

  • Adopting a "justice-oriented approach" in view of the petitioner's specific assertion of bona fide non-receipt of notice and its resulting inability to contest the proceedings, the Court set aside the impugned order dated 27.02.2025 passed under Section 73(9).
  • The matter was remitted to the Assessing Authority for fresh consideration from the stage of the petitioner filing its reply to the show cause notice dated 27.11.2024, subject to payment of costs of Rs.10,000 to the Karnataka High Court Legal Services Authority.
  • The petitioner was directed to appear before the Assessing Authority on 19.01.2026 without awaiting further notice, failing which the order would stand automatically recalled.
  • Liberty was reserved to the petitioner to submit replies and documents, which the Assessing Authority was directed to consider after affording a reasonable opportunity of hearing.

Important Clarification

  • Where an assessee shows bona fide reasons for non-receipt of a show cause notice and consequent inability to participate in Section 73 proceedings, courts may exercise Article 226 discretion to set aside the resultant demand order and grant one further opportunity, rather than relegating the assessee to a statutory appeal.
  • Such relief is typically conditional — accompanied by costs and a mandatory appearance date — and is liable to be automatically forfeited if the assessee again fails to cooperate with the remanded proceedings.
  • This is a discretionary, facts-specific remedy and does not amount to a ruling on the merits of the underlying tax demand.

Sections Involved

  • Section 73, CGST/KGST Act, 2017 — determination of tax not paid or short paid for reasons other than fraud or wilful misstatement.
  • Section 73(9), CGST/KGST Act, 2017 — provision under which the adjudicating authority determines and confirms the amount of tax, interest and penalty payable.
  • Article 226, Constitution of India — writ jurisdiction invoked to challenge the show cause notice, adjudication order and recovery notice.

Decision – In Favour of

The petition is allowed and disposed of with directions; the demand order is set aside and the matter remitted for fresh adjudication — this is partly in favour of the Assessee, granted as a conditional, one-time opportunity rather than a finding on the merits of the tax demand.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No. 36230 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 11 December 2025
Petitioner's Counsel: Sri G.L. Mohan Maiya
Respondent's Counsel: Smt. Jyoti M. Maradi, HCGP

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