Facts of the Case

M/S Navyug Energy Solutions Pvt. Ltd. (GSTIN 29AADCN6371P1ZP) challenged an adjudication order dated 25.02.2025 passed under Section 73(9) of the CGST/KGST Act, 2017, confirming a total demand of Rs.31,95,307/- including tax, interest and penalty, following a show-cause notice dated 15.11.2024 issued under Section 73(1) to which the petitioner had not filed a reply. The petitioner contended that its failure to respond was due to bonafide reasons, unavoidable circumstances and sufficient cause, and sought one further opportunity to contest the show-cause notice on merits by setting aside the confirmed order. The Karnataka High Court at Bengaluru, per Justice S.R. Krishna Kumar, disposed of the writ petition on 25 November 2025.

Issues Involved

  1. Whether an ex parte order confirming demand under Section 73(9), passed for want of reply to the show-cause notice, should be set aside where the petitioner asserts a bonafide inability to respond.
  2. Whether such relief should be conditioned on the petitioner's appearance before the authority on a fixed date.
  3. What safeguard should apply if the petitioner again fails to avail the opportunity granted.

Petitioner's Arguments

  • The inability and omission to submit a reply to the show-cause notice dated 15.11.2024 and to contest the proceedings was owing to bonafide reasons, unavoidable circumstances and sufficient cause, and not any deliberate default.
  • If granted one further opportunity, by setting aside the impugned adjudication order dated 25.02.2025, the petitioner would submit its reply to the show-cause notice and fully contest the proceedings on merits.
  • Sought quashing of both the adjudication order (Annexure-E) and the consequential summary order in Form GST DRC-07 (Annexure-F).

Respondent's Arguments

  • Learned AGA for the respondents submitted that there was no merit in the petition and that it was liable to be dismissed, given that the show-cause notice had gone unanswered and the adjudication order was validly passed under Section 73(9).

Court Order / Findings

  • Having regard to the specific and unrebutted assertion of bonafide reasons, unavoidable circumstances and sufficient cause for the petitioner's failure to reply, the Court found it just to adopt a justice-oriented approach rather than allow the ex parte demand to stand.
  • Where an assessee's failure to reply to a Section 73 show-cause notice is attributable to bonafide reasons and sufficient cause, a High Court may, in a justice-oriented exercise of writ jurisdiction, set aside the resulting Section 73(9) order and restore the matter to the show-cause stage for a fresh opportunity to contest on merits, rather than relegate the assessee to appeal.
  • The impugned order dated 25.02.2025 was set aside and the matter remitted to the second respondent for fresh consideration from the stage of the petitioner filing its reply to the show-cause notice dated 15.11.2024.
  • The petitioner was directed to appear before the second respondent on 16.12.2025 without awaiting further notice, failing which the order granting relief would stand automatically recalled.

Important Clarification

  • An unrebutted, specific assertion of bonafide reasons and sufficient cause for not replying to a Section 73 show-cause notice can justify setting aside an ex parte confirmed demand and restoring the matter to the reply stage, even without demonstrating a substantive defence on merits.
  • Such relief is typically made self-executing against non-compliance: courts commonly build in an automatic-recall clause if the assessee again fails to appear on the date fixed, ensuring the opportunity is not misused to indefinitely stall recovery.

Sections Involved

  • Section 73(1)/(9), CGST/KGST Act, 2017 — issuance of show-cause notice and confirmation of demand for tax not paid/short paid other than by reason of fraud.
  • Form GST DRC-07 — summary of the adjudication order raising the confirmed demand.

Decision – In Favour of

Assessee (petitioner) — adjudication order set aside and matter remitted to the show-cause stage, conditional on appearance on the fixed date.

Case Details

Court: High Court of Karnataka at Bengaluru. Case No.: WP No. 35167 of 2025 (T-RES). Coram: Hon'ble Mr. Justice S.R. Krishna Kumar. Date of Order: 25 November 2025.

Link to Download the Order

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