Facts of the Case

The petitioner, Marquee Agriventures Private Limited (formerly Relobridge Relocations Private Limited), challenged an order of adjudication dated 20.07.2023 passed under Section 73(9) of the CGST/KGST Act, 2017 (Order No.ACCT/(A)-1.1/GST/DRC-7/17/T.No.150/2023-24). The adjudication proceeded on a notice dated 22.05.2023, and the petitioner's reply, submitted by email on 24.06.2023 upon receipt of a notice dated 22.06.2023, was not considered before the adjudication order confirmed a demand levying CGST and SGST at 9% each on "Non-GST turnover" declared in GSTR-3B to the tune of Rs.16,34,12,516/-, along with interest under Section 50(1).

Issues Involved

  1. Whether an adjudication order passed without considering the assessee's timely reply violates principles of natural justice.
  2. Whether the levy of CGST/SGST and Section 50(1) interest could stand where the department's own record showed a reply had been filed but was not addressed.

Petitioner's Arguments

  • The petitioner's primary grievance was that its reply dated 24.06.2023, filed in response to the notice dated 22.06.2023, was not considered before the adjudication order was passed, leading to an unjustified demand.
  • Counsel for the petitioner conceded the claim based on one part of the notice but pressed the grievance specifically regarding the failure to consider the reply on the remaining claim.

Respondent's Arguments

  • The Revenue's position, reflected in the impugned order, was that despite three endorsements dated 22.06.2023, 20.06.2023 and 11.07.2023, the company had failed to appear or produce supporting documents, justifying confirmation of the demand along with interest under Section 50(1).

Court Order / Findings

  • The Court found that it was undisputed that the petitioner had submitted its reply by email on 24.06.2023 upon receipt of the notice, and that it was possible the adjudication would not be justified if that reply and the invoices/documents accompanying it were duly considered — meaning the impugned order violated principles of natural justice and had to yield.
  • The Court noted the petitioner's counsel conceded the claim relating to one part of the notice while pressing the grievance only in respect of the unconsidered claim.
  • The petition was allowed in part: the impugned adjudication order dated 20.07.2023 was quashed, restoring the proceedings to the stage of the original notice in Form GST DRC-01 dated 22.05.2023.
  • The petitioner was given liberty to re-submit the documents filed on 24.06.2023 within three weeks, and the proceedings were directed to be completed considering that reply.

Important Clarification

An adjudication order under Section 73(9) confirming a GST demand cannot stand where the department's own record shows that a reply and supporting documents were submitted by the assessee in time but were not considered before the order was passed. Courts will quash such orders and restore proceedings to the show cause notice stage for a fresh, reasoned decision that engages with the assessee's reply.

Sections Involved

  • Section 73, CGST/KGST Act, 2017 — determination of tax not paid or short paid, or ITC wrongly availed, in non-fraud cases; sub-section (9) provides for the adjudication order.
  • Section 50(1), CGST Act, 2017 — levy of interest on delayed payment of tax.
  • Form GST DRC-01 — the prescribed form for the summary of the show cause notice under Section 73.

Decision – In Favour of

The decision is in favour of the Assessee in part. The adjudication order was quashed and the matter restored to the notice stage for fresh consideration of the petitioner's reply, though the concession on one part of the demand stands.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No.19769 of 2023 (T-RES)
Coram: Justice B. M. Shyam Prasad
Date of Order: 23.09.2023

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