Facts of the Case

Sri Karimangala Muniswamy Sreerama, proprietor of a civil works contracting firm, was issued a show cause notice dated 05.08.2024 under Sections 74, 75, 122 and 50 of the KGST Act read with the corresponding CGST and IGST provisions. Having received no reply, the Commercial Tax Officer passed an order dated 04.02.2025 under Section 74(9) confirming a total demand of Rs.2,49,822/- including tax, interest and penalty, and subsequently initiated recovery proceedings dated 21.10.2025. The petitioner explained that he only became aware of the proceedings when Railways informed him that his GST account had been blocked, by which point he could no longer contest the matter on merits.

Issues Involved

  1. Whether an assessee who failed to respond to a Section 74 show cause notice due to genuine unawareness — only discovering the proceedings when his GST account was blocked — deserves a further opportunity to contest the demand.
  2. Whether the recovery proceedings consequent to the confirmed demand should also be set aside pending a fresh decision on merits.

Petitioner's Arguments

  • The inability to respond to the pre-intimation and show cause notices, and to contest the proceedings, arose from bona fide reasons and unavoidable circumstances, since the petitioner had no knowledge of the notices until informed by Railways about the blocking of his GST account.
  • If given one more opportunity by setting aside the impugned order, the petitioner would submit a reply and duly contest the proceedings on merits.

Respondent's Arguments

  • The Additional Government Advocate for the respondents submitted that there was no merit in the petition and that it was liable to be dismissed, given the petitioner's failure to respond despite the notice having been duly issued.

Court Order / Findings

  • The Court, having regard to the petitioner's specific assertion of bona fide reasons, unavoidable circumstances and sufficient cause for his inability to respond, decided to adopt a 'justice oriented approach' and provide one further opportunity rather than leave the confirmed demand undisturbed.
  • The impugned order dated 04.02.2025 and the recovery proceedings dated 21.10.2025 were set aside, and the matter was remitted to the Commercial Tax Officer for fresh consideration from the stage of the petitioner submitting his reply to the show cause notice dated 05.08.2024.
  • The petitioner was directed to appear before the officer on a fixed date without awaiting further notice, failing which the order would stand automatically recalled and the original demand would revive.

Important Clarification

  • Karnataka High Court's 'justice oriented approach' allows a further opportunity to contest a confirmed GST demand even after an ex parte Section 74(9) order, where the assessee shows bona fide reasons — such as only learning of the proceedings via a third party's blocking notification — for failing to respond earlier.
  • Such relief is typically made strictly conditional on the assessee's appearance before the assessing authority by a fixed date, with automatic revival of the original order upon non-compliance, ensuring the opportunity is not indefinitely open-ended.

Sections Involved

  • Section 74, KGST Act, 2017 — determination of tax not paid by reason of fraud, wilful misstatement or suppression of facts, read with Sections 75, 122 and 50.
  • Section 6, CGST Act, 2017 — cross-empowerment of officers under the CGST and SGST Acts.
  • Sections 4 & 20, IGST Act, 2017 — extend CGST provisions, including the demand mechanism, to IGST.

Decision – In Favour of

The decision is in favour of the assessee (Sri Karimangala Muniswamy Sreerama), conditional on his appearance before the assessing authority as directed. The confirmed demand and recovery were set aside for a fresh merits decision.

Case Details

High Court of Karnataka at Bengaluru; Writ Petition No. 37287 of 2025 (T-RES); Coram: Hon'ble Mr. Justice S.R. Krishna Kumar; Order dated 10.12.2025.

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