Facts of the Case

National Transcare, a proprietary concern, did not respond to an intimation in Form GST DRC-01A dated 12.04.2024, following which a show cause notice dated 23.05.2024 was issued under Section 73(1) of the CGST/KGST Act, 2017, alleging excess input tax claimed as compared to GSTR-3B and GSTR-2A. Having received no reply to this notice either, the Assistant Commissioner (Audit) passed an order dated 29.08.2024 under Section 73(9), confirming a total demand of Rs. 12,67,820/- including tax, interest and penalty. The petitioner approached the Karnataka High Court to quash the adjudication order.

Issues Involved

  1. Whether an ex-parte order under Section 73(9) of the KGST Act, passed after non-response to both the intimation notice and the show cause notice, could be set aside to allow the assessee a fresh opportunity, and on what conditions.

Petitioner's Arguments

  • The petitioner submitted that due to bona fide reasons, unavoidable circumstances and sufficient cause, it could not respond to either the intimation notice or the show cause notice, and that no opportunity of personal hearing was granted before the adverse order was passed; it sought one more opportunity to contest the demand on merits.

Respondent's Arguments

  • The Additional Government Advocate for the respondents submitted there was no merit in the petition and that it was liable to be dismissed.

Court Order / Findings

  • Adopting what it termed a “justice-oriented approach” in view of the petitioner's specific assertion of bona fide reasons for its default, the Court set aside the impugned order dated 29.08.2024 passed under Section 73(9) of the KGST Act, on imposing costs of Rs.15,000 payable to the High Court Legal Services Authority, Bengaluru.
  • The matter was remitted to the respondent for reconsideration afresh from the stage of the petitioner submitting its reply to the show cause notice dated 22.05.2024 (referred in the order as 23.05.2024), with the petitioner directed to appear on 28.11.2025 without awaiting further notice.
  • Liberty was reserved for the petitioner to submit replies and documents, which the respondent must consider after affording sufficient opportunity; failure to appear on the fixed date would automatically recall the order.

Important Clarification

  • An assessee's failure to respond to both the DRC-01A intimation and the subsequent show cause notice does not foreclose relief in writ; a self-imposed cost to the Legal Services Authority, coupled with a firm compliance date, is a common condition on which courts restore the opportunity to contest an excess-ITC demand on merits.

Sections Involved

  • Section 73(1) and 73(9), Karnataka Goods and Services Tax Act, 2017 – show cause and adjudication for tax short paid or ITC wrongly availed.
  • Form GST DRC-01A, CGST Rules, 2017 – pre-notice intimation of the proposed demand.

Decision – In Favour of

Allowed subject to cost; in favour of the Assessee, with the order set aside and a fresh opportunity to contest the demand on merits.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No. 23623 of 2025 (T-RES)
  • Coram: Justice S.R. Krishna Kumar
  • Date of Order: 31.10.2025

Link to Download the Order

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