Facts of the Case

M/S Sri. Nanjundeshwara Tyre Retreaders, holding GSTIN 29ABZPB586M1ZK, faced two ex parte assessment orders dated 06.04.2024 and 15.07.2024 under Section 73(9) of the CGST/KGST Act, 2017, confirming demands of Rs.9,76,306/- and Rs.5,40,318/- respectively for tax periods 2018-19 and 2019-20, after the petitioner failed to respond to intimation notices in Form GST DRC-01A and subsequent show cause notices in Form GST DRC-01. The Department also directed Karnataka Bank to create a lien of Rs.9,76,306/- over the petitioner's account. The petitioner claimed the notices were never received and sought one more opportunity to contest the proceedings.

Issues Involved

  1. Whether ex parte GST demand orders passed for non-receipt of intimation and show cause notices should be set aside to allow a fresh reply.
  2. Whether relief should be conditioned on payment of costs given the taxpayer's default in responding to multiple notices.

Petitioner's Arguments

  • The pre-intimation notices and show cause notices under Section 73(1) were never received, so the petitioner could not submit replies or documents and could not contest the proceedings, resulting in ex parte orders.
  • The inability to reply was due to bona fide reasons, unavoidable circumstances and sufficient cause, and if given one more opportunity, the petitioner would submit a reply and contest the proceedings on merits.

Respondent's Arguments

  • There was no merit in the petition, which was liable to be dismissed, given that the demand orders had followed the due process of intimation and show cause notice.

Court Order / Findings

  • The Court adopted a justice-oriented approach given the petitioner's specific assertion of bona fide reasons and sufficient cause for not responding to the notices.
  • The Court set aside both impugned orders dated 06.04.2024 and 15.07.2024, remitting the matter for fresh consideration from the stage of the show cause notices, subject to the petitioner depositing Rs.15,000 costs to the Karnataka High Court Legal Services Authority within six weeks.
  • The petitioner was directed to appear on a fixed date without awaiting further notice, with liberty to file replies and documents, failing which the relief would stand automatically recalled.

Important Clarification

  • Karnataka High Court frequently sets aside ex parte GST demand orders on a justice-oriented, one-more-opportunity basis where the taxpayer pleads bona fide non-receipt of notices, but conditions such relief on payment of costs.
  • Bank liens created to recover confirmed demands fall away once the underlying order is set aside and the matter is remitted for fresh adjudication.

Sections Involved

  • Section 73(1) and 73(9), CGST/KGST Act, 2017 – governs show cause and determination of tax not paid for reasons other than fraud.
  • Form GST DRC-01A and Form GST DRC-01 – prescribed pre-intimation and formal show cause notice under GST demand proceedings.

Decision – In Favour of

Decided in favour of the assessee, subject to costs. Both ex parte orders were set aside and the matter remitted for fresh adjudication with a fresh opportunity to reply.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No. 32554 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 06.11.2025

Link to Download the Order

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