Facts of the Case

M/S Freshgreen Agro Exports Private Limited, an exporter of gherkins registered under the KGST and CGST Acts, challenged an adjudication order dated 18.12.2024 passed under Section 73(9) read with Section 50 of the GST Act, 2017, for assessment year 2020-21. A show-cause notice dated 20.06.2024 under Section 73(5) had been partly dropped after the petitioner's reply satisfied the authority on some issues, but the proceedings continued on the remaining issues; the petitioner could not file a further reply due to paucity of time and its auditor's illness, resulting in the confirmed order. The petitioner also contended the authority wrongly disallowed its claim to interest relief on belated returns under Notification No. 31/2020-Central Tax dated 03.04.2020, relying on Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax. The Karnataka High Court, Dharwad Bench, per Justice Pradeep Singh Yerur, disposed of the writ petition on 23 July 2025.

Issues Involved

  1. Whether the Section 73(9) order should be interfered with in writ jurisdiction despite the existence of an appellate remedy under Section 107 of the GST Act.
  2. Whether the disallowance of interest relief under Notification No. 31/2020-Central Tax and other grounds raised should be examined by the High Court or left to the appellate authority.
  3. On what terms — pre-deposit and stay of recovery — the petitioner should be permitted to pursue the appeal.

Petitioner's Arguments

  • The order dated 18.12.2024 under Section 73(9) read with Section 50 was passed without providing an opportunity of hearing after the show-cause notice, and was not maintainable, relying on Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax (2022 SCC OnLine All 1088).
  • The respondent authority failed to appreciate the petitioner's entitlement to interest relief on belated returns under Notification No. 31/2020-Central Tax dated 03.04.2020 and disallowed the claim without jurisdiction.
  • Explained that the inability to file a further reply on the surviving issues in the show-cause notice was due to paucity of time and the illness of the petitioner's auditor, and not any deliberate default, seeking that the order be set aside on this and other grounds.

Respondent's Arguments

  • Learned AGA contended that the petition was not maintainable since an alternative, efficacious remedy of appeal under Section 107 of the GST Act was available against any order passed under Section 73(9), and the petitioner ought to be relegated to that appellate authority.

Court Order / Findings

  • Without going into the merits of the various contentions raised by the petitioner, the Court noted that a statutory appeal remedy is available against any order passed under Section 73(9) of the GST Act, and that the petitioner would invariably have to be relegated to the appellate authority.
  • Where a statutory appellate remedy exists against a Section 73(9) order, a High Court will ordinarily relegate the assessee to that authority rather than examine the merits in writ jurisdiction, but can protect the assessee meanwhile by directing that recovery not be precipitated on furnishing a partial (here 10%) pre-deposit.
  • The petitioner, being ready and willing to deposit 10% of the tax amount, was granted two weeks to approach the appellate authority.
  • The Court directed that the impugned order shall not be precipitated by the respondent upon deposit of the 10% amount, and that the respondent authority shall provide an opportunity of hearing before passing further orders in accordance with law.

Important Clarification

  • Even where specific statutory grounds are raised — such as wrongful disallowance of interest relief under Notification No. 31/2020-Central Tax, or denial of an opportunity of hearing — a High Court will generally leave these to be examined by the appellate authority under Section 107, rather than decide them itself, once a functioning appellate forum exists.
  • A voluntary offer to deposit a partial amount (here 10%) can secure interim protection against precipitate recovery while the appeal is pursued, even though it is less than the statutory minimum pre-deposit otherwise prescribed for a straightforward appeal.

Sections Involved

  • Section 73(5)/(9), GST Act, 2017 — show-cause notice and confirmation of demand for tax short paid/ITC wrongly availed.
  • Section 107, GST Act, 2017 — statutory appeal against a Section 73(9) order, the remedy to which the petitioner was relegated.
  • Notification No. 31/2020-Central Tax dated 03.04.2020 — interest relief on belated returns, the disallowance of which was one of the grounds raised.

Decision – In Favour of

Disposed of with directions; the petitioner was relegated to appeal rather than granted relief on merits, with interim protection against recovery on a 10% pre-deposit.

Case Details

Court: High Court of Karnataka, Dharwad Bench. Case No.: WP No. 102368 of 2025 (T-RES). Coram: Hon'ble Mr. Justice Pradeep Singh Yerur. Date of Order: 23 July 2025.

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