Facts of the Case

M/S Anvi Envelop Design and Engineering LLP was issued a show cause notice in Form GST DRC-01 dated 20.06.2024, and, having received no reply, the Department issued a reminder dated 09.08.2024. When the LLP still did not respond, the Assistant Commissioner passed an ex parte adjudication order dated 18.02.2025 under Section 73 of the KGST/CGST Act, 2017, confirming the demand raised in the show cause notice in Form GST DRC-07. Aggrieved, the LLP challenged the order before the Karnataka High Court, seeking a remand to the show cause notice stage to establish its bona fides.

Issues Involved

  1. Whether an ex parte GST adjudication order, passed after a reminder went unanswered, should still be set aside for a fresh opportunity.
  2. Whether such relief should require conditions safeguarding revenue interest.

Petitioner's Arguments

  • The impugned order dated 18.02.2025 was arbitrary, violative of the principles of natural justice, and contrary to the provisions of the CGST Act, warranting remand to the show cause notice stage.
  • The petitioner sought an opportunity to establish its bona fides before the adjudicating authority, having missed the earlier chances to reply.

Respondent's Arguments

  • The Department's counsel appeared and defended the proceedings, which followed due process — a show cause notice, a reminder, and only then the ex parte order — before the Court.

Court Order / Findings

  • The Court found the proceedings were indeed ex parte, the petitioner having failed to respond to either the show cause notice or the reminder before the order confirming the demand was passed.
  • Adopting a justice-oriented approach, the Court set aside the adjudication order and remitted the matter back to the respondent for re-consideration afresh in accordance with law, to provide one more opportunity to the petitioner.
  • The petitioner was directed to appear on a fixed date without awaiting further notice, with liberty to file replies, pleadings and documents, failing which the order would stand automatically recalled.

Important Clarification

  • Karnataka High Court consistently applies a 'justice-oriented approach' to set aside ex parte GST orders and grant one further opportunity, even where the taxpayer ignored both the show cause notice and a subsequent reminder.
  • Such remand relief is typically conditioned on the taxpayer's mandatory appearance on a fixed date, with automatic recall of the relief if the taxpayer again defaults.

Sections Involved

  • Section 73, CGST/KGST Act, 2017 – determination of tax not paid or short paid for reasons other than fraud or wilful misstatement.
  • Form GST DRC-01 and Form GST DRC-07 – prescribed show cause notice and summary adjudication order forms.

Decision – In Favour of

Decided in favour of the assessee. The ex parte order was set aside and the matter remitted for fresh adjudication with an opportunity to reply.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No. 37306 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 10.12.2025

Link to Download the Order

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