Facts of the Case

M/s Vibgyor Net Connections, a partnership firm, was issued a show cause notice on 31.05.2024 under Section 73(1) of the KGST Act, to which it did not reply, resulting in the Assistant Commissioner confirming the demand for FY 2019-20 vide order dated 14.08.2024 (Ref. No. ZD2908240533104) under Section 73(9). The petitioner's subsequent appeal was dismissed by the appellate authority on 30.08.2025 as barred by limitation, leading it to approach the Karnataka High Court challenging both the original order and the appellate dismissal.

Issues Involved

  1. Whether an assessee's failure to reply to a show cause notice, attributed to bonafide and unavoidable circumstances, justifies setting aside an ex-parte Section 73(9) order and granting a fresh opportunity.
  2. Whether an appellate order dismissing the first appeal solely on the ground of limitation results in a 'merger' that would bar writ jurisdiction over the underlying assessment.
  3. What conditions should attach to any remand where the assessee's own default contributed to the ex-parte proceedings.

Petitioner's Arguments

  • The petitioner's inability to file a reply and contest proceedings before the Assistant Commissioner was attributed to bonafide reasons, unavoidable circumstances and sufficient cause, though the specific reasons are not elaborated in the order.
  • It was implicitly urged that the appellate dismissal on limitation should not foreclose the underlying merits from being examined by the writ court, since a limitation-based dismissal does not constitute a merger with the original order.

Respondent's Arguments

  • The Department's position, as reflected in the impugned orders, was that the show cause notice was validly issued and the demand rightly confirmed given the absence of any reply from the petitioner, and the first appeal was rightly dismissed as time-barred.

Court Order / Findings

  • The Court accepted that the petitioner's inability to contest the proceedings before the Assistant Commissioner was attributable to bonafide reasons and sufficient cause, warranting a justice-oriented approach rather than a rigid, technical dismissal.
  • The Court held that since the appeal was dismissed purely on the ground of limitation, this did not constitute a merger of the adjudicating authority's order with that of the appellate authority, and therefore did not bar the Court's jurisdiction under Articles 226 and 227 to examine the original order; it set aside the impugned orders (Annexures A, B, C and G) and remitted the matter to the Assistant Commissioner for fresh consideration, subject to the petitioner paying Rs.10,000/- to the Legal Services Authority within four weeks.
  • The petitioner was directed to appear before the Assistant Commissioner on 19.01.2026 without awaiting further notice, with liberty to file replies, pleadings and documents, and the order was made to stand automatically recalled if the petitioner failed to appear as directed.

Important Clarification

  • A first-appellate dismissal purely on the ground of limitation does not create a 'merger' of the original adjudication order with the appellate order, and therefore does not bar a writ court from examining the original assessment order under Articles 226/227.
  • Where an assessee shows bonafide, unavoidable reasons for its default in replying to a show cause notice, courts may adopt a justice-oriented approach and grant a fresh opportunity even at the cost of some conditions, such as a cost payment to the Legal Services Authority.
  • Such conditional remands are typically time-bound and self-executing — non-appearance on the specified date automatically recalls the relief granted.

Sections Involved

  • Section 73(1) and 73(9) of the Central/Karnataka Goods and Services Tax Act, 2017 – govern issuance of the show cause notice and confirmation of demand, respectively.
  • Articles 226 and 227 of the Constitution of India – the writ jurisdiction exercised despite the appellate dismissal on limitation, given the absence of merger.

Decision – In Favour of

In favour of the assessee — the assessment and appellate orders were set aside and the matter remitted for fresh consideration, subject to a cost condition and a fixed appearance date.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No. 37242 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 10.12.2025

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