Facts of the Case

This writ appeal (WA No. 753 of 2026) was filed by the Revenue — the Commissioner of Central Tax, North-West Commissionerate and connected GST officers — against an order dated 17.12.2025 of a learned Single Judge of the Karnataka High Court in W.P. No. 38292/2025. The Single Judge had allowed the writ petition filed by the respondent, Sri D. Shivakumara, proprietor of M/s Shivakumara D (GSTIN 29DUVPS6942H2ZI), and quashed an Order-in-Original dated 23.01.2025 along with a show cause notice dated 20.12.2023 and a summary of show cause notice dated 27.12.2023, all issued under Section 74 of the CGST/KGST Act. The Order-in-Original had been passed ex-parte, i.e., without the respondent having filed a reply to the show cause notice. The Revenue appealed against the quashing.

Issues Involved

  1. Whether the Single Judge was right in quashing the Order-in-Original and the show cause notice outright, rather than merely restoring the matter for the assessee to reply.
  2. What relief is appropriate where an Order-in-Original under Section 74 has been passed ex-parte.

Petitioner's Arguments

  • The Order-in-Original dated 23.01.2025 was passed ex-parte, without the assessee having replied to the show cause notice, and the Single Judge's quashing of the notice itself (rather than remitting for a reply) went further than warranted.
  • A coordinate Division Bench of the same High Court, in W.A. No. 1751/2024 and connected appeals decided the same day, had already taken the view that in such ex-parte Section 74 matters the appropriate course is to restore the show cause notice and give the assessee an opportunity to reply, not to quash the proceedings altogether.

Respondent's Arguments

  • No independent contest is recorded on behalf of the respondent-assessee in the judgment; the Bench proceeded on the basis that the earlier coordinate-bench ruling in W.A. No. 1751/2024 applied on all fours to this case.

Court Order / Findings

  • The Writ Appeal was allowed and the Single Judge's order dated 17.12.2025 was set aside.
  • The Order-in-Original dated 23.01.2025 was set aside, and the show cause notice dated 20.12.2023 stood restored (not quashed outright).
  • The respondent was granted four weeks from the date the order is uploaded to file a reply to the show cause notice.
  • If the reply is filed within the four weeks, the proper officer was directed to consider it on merits.
  • The Court did not examine or decide any substantive question of GST law — the ruling is confined to the correct procedural remedy for an ex-parte Section 74 order.

Important Clarification

This order does not decide whether Sri Shivakumara owes any tax, interest or penalty under the show cause notice — that question remains entirely open and will be decided by the proper officer only after considering his reply. The practical takeaway is procedural: where an Order-in-Original under Section 74 is passed without the taxpayer having replied to the show cause notice, courts in this jurisdiction have preferred to restore the matter to the reply stage (with a fixed time limit) rather than quash the notice altogether, so that the department gets to adjudicate the matter properly once natural justice is complied with.

Sections Involved

  • Section 74, Central Goods and Services Tax Act, 2017 — determination of tax not paid/short paid by reason of fraud, wilful misstatement or suppression of facts.
  • Section 4, Karnataka High Court Act, 1961 — provision under which the intra-court writ appeal was filed.

Decision – In Favour of

The appeal was decided in favour of the Revenue (the appellants) to the extent that the Single Judge's quashing order was set aside; however, this is not a decision on the tax merits — it is disposed of by restoring the show cause notice to the reply stage, leaving the actual tax question to be decided afresh by the department after hearing the assessee.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: Writ Appeal No. 753 of 2026 (T-RES)
  • Neutral Citation: NC: 2026:KHC:23098-DB
  • Coram: Hon'ble Mr. Justice S.G. Pandit and Hon'ble Mr. Justice K.V. Aravind
  • Date of Order: 24 April 2026

Link to Download the Order

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