Facts of the Case

The petitioner, M/s. Oceanus Transports Private Limited, Bengaluru, challenged an ex parte adjudication order dated 30.12.2025 passed under Section 73(9) of the CGST/KGST Act for assessment year 2021-22, raising a demand based on alleged short payment of GST under reverse charge, wrong availment and utilisation of excess input tax credit, and discrepancies between ITC claimed in GSTR-3B and ITC available per GSTR-2A. Since the petitioner had not participated in the adjudication proceedings, the order was passed purely on the material available with the authority, and the petitioner approached the Karnataka High Court seeking an opportunity to place its reconciliation and explanation on record.

Issues Involved

  1. Whether an ex parte Section 73(9) order raising densely factual issues, including ITC reconciliation between GSTR-3B and GSTR-2A, should be set aside to allow the taxpayer a hearing.
  2. What conditions, if any, should be imposed on the taxpayer for being granted a fresh opportunity after having earlier failed to participate.
  3. Whether re-opening the proceedings at the show cause stage, rather than merely remanding the order, is the appropriate remedy.

Petitioner's Arguments

  • The issues raised were densely factual, including discrepancies in ITC claimed under GSTR-3B compared to ITC reflected in GSTR-2A, and the petitioner possessed material capable of reconciling and explaining the alleged discrepancies.
  • The petitioner sought to be put on terms and have the matter relegated to the authority by reopening the proceedings, rather than have the ex parte demand stand unchallenged.

Respondent's Arguments

  • The Additional Government Advocate argued that since the petitioner had not participated in the proceedings despite opportunity, it had to bear the consequences of the ex parte order passed against it.

Court Order / Findings

  • The Court found the issues, spanning short payment under reverse charge, excess ITC utilisation, and GSTR-3B versus GSTR-2A discrepancies, to be genuinely fact-intensive and best resolved through a written reply rather than an ex parte order.
  • Where an ex parte GST adjudication order raises densely factual questions of input tax credit reconciliation that the taxpayer claims it can resolve with supporting material, the appropriate course is to set aside the order and restore proceedings to the show cause stage, conditional on part-payment to protect revenue, rather than leave the ex parte demand undisturbed.
  • The impugned order was set aside and the matter remitted to the stage of reply to the show cause notice, with the petitioner directed to deposit 10% of the demand by the date fixed for hearing and appear before the authority without further notice, keeping all contentions open.

Important Clarification

  • Taxpayers seeking to reopen ex parte GST orders on ITC-reconciliation grounds are more likely to succeed where they can show genuine documentary material capable of explaining the discrepancy, rather than a bare denial.
  • Courts frequently condition such remands on a partial pre-deposit (commonly 10% of the demand) to balance the taxpayer's opportunity to be heard against protection of revenue given the taxpayer's earlier non-participation.
  • Remitting to the show cause stage, rather than merely quashing the order, ensures the matter is decided afresh with full opportunity rather than leaving a legal vacuum.

Sections Involved

  • Section 73(9), CGST/KGST Act, 2017 – provides for determination of tax after adjudication of a show cause notice, under which the ex parte order was passed.
  • GSTR-3B and GSTR-2A reconciliation (Section 16, CGST Act, 2017) – the mismatch in input tax credit claimed versus credit reflected that formed the core factual dispute.
  • Reverse Charge Mechanism, Section 9(3)/9(4), CGST Act, 2017 – basis for part of the alleged short payment of GST.

Decision – In Favour of

The decision favours the assessee procedurally. The ex parte order was set aside and the matter restored to the show cause stage for a hearing on merits, subject to a 10% deposit.

Case Details

High Court of Karnataka at Bengaluru; Writ Petition No. 10839 of 2026 (T-RES); M/S. Oceanus Transports Private Limited vs Union of India and Others; Coram: Justice S Sunil Dutt Yadav; Decided on 22.04.2026.

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