Facts of the Case

M/s BSM Construction Company, a partnership firm, challenged an original order passed under Section 74A(1) read with Section 74A(5)(i) of the KGST/CGST Act, 2017, dated 8 August 2025, issued by the Deputy Commissioner of Commercial Taxes (Audit-4). The petition had earlier been disposed of on the premise that it was covered by a judgment of a coordinate Bench; however, on discovering that the judgment relied upon did not actually cover the issue involved, the Court recalled its own earlier order.

Issues Involved

  1. Whether the impugned demand order, passed without affording an opportunity of personal hearing despite the petitioner's request, was sustainable.
  2. Whether the availability of an alternative statutory remedy under Section 107 barred the writ petition.

Petitioner's Arguments

  • The petitioner had filed replies to the draft audit report, GST ADT-01, and the show cause notice, and had specifically requested a personal hearing before any final order was passed.
  • The final response dated 12 March 2025 was never considered before the demand order of Rs.22,99,62,468/- was passed on 30 March 2024, and no personal hearing was ever granted – a clear violation of Section 75(4) of the CGST Act.
  • The order was cryptic, non-speaking, and failed to record reasons as mandated by Section 75(6).

Respondent's Arguments

  • Sufficient opportunities for filing a reply and for a personal hearing had already been extended to the petitioner, which were not availed; the petitioner was attempting to run out the limitation clock deliberately.
  • The writ petition was not maintainable given the alternative efficacious remedy of appeal under Section 107 of the KGST Act.

Court Order / Findings

  • Recalling its earlier order (passed on the mistaken premise that a different coordinate-Bench judgment covered the issue), the Court re-disposed of the petition by following the ratio of the coordinate Bench in W.P. No. 103813 of 2024, involving materially identical facts.
  • Sections 73(9) and 75(4) of the CGST Act use the word "shall", making consideration of the taxpayer's representation and the grant of a personal hearing (where requested) mandatory before any adverse order is passed.
  • Since the petitioner's final reply dated 12 March 2025 (in the connected matter) was neither considered nor was a personal hearing granted despite a specific request, the impugned order was quashed and the matter remitted for fresh consideration after affording an opportunity of personal hearing, subject to the petitioner paying costs of Rs.50,000/- for having failed to promptly avail earlier opportunities.

Important Clarification

  • The requirement of personal hearing under Section 75(4) of the CGST Act is mandatory wherever a written request is made or an adverse decision is contemplated, and non-compliance vitiates the order despite the existence of an alternative statutory remedy.
  • Relief for breach of natural justice may still carry costs where the taxpayer's own conduct (delay in filing replies, non-utilisation of earlier opportunities) has contributed to the situation.

Sections Involved

  • Section 73/74A, CGST/KGST Act, 2017 – determination and demand of tax, interest and penalty.
  • Section 75(4), CGST Act, 2017 – mandatory personal hearing on request or before an adverse order.
  • Section 75(6), CGST Act, 2017 – requirement of a speaking, reasoned order.
  • Section 107, CGST Act, 2017 – statutory appeal remedy.

Decision – In Favour of

Disposed of largely in favour of the Assessee, with the demand order quashed and the matter remanded for a personal hearing, subject to the assessee paying costs of Rs.50,000/- to the Revenue.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: WP No. 108577 of 2025 (T-RES)
  • Neutral Citation: NC: 2025:KHC-D:16103
  • Coram: Hon'ble Justice M. Nagaprasanna
  • Date of Order: 24 November 2025

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