Facts of the Case

The petitioner, M/s Sree Veerabhadreshwara Granites, challenged a chain of proceedings arising from a Form ASMT-10 notice dated 12.11.2024 issued by the Commercial Tax Officer, Hassan, seeking an explanation for the discrepancy between Form GSTR-3B and Form GSTR-2A for the period 01.04.2020 to 31.03.2021. This was followed by DRC-01A notices, a show cause notice dated 26.11.2024 under Section 73(1), and, upon the petitioner's non-response, an ex-parte Order-in-Original dated 15.02.2025 under Section 73(9), a summary order in DRC-07, and an Order-in-Appeal dated 29.07.2025 under Section 107(11) dismissing the petitioner's appeal.

Issues Involved

  1. Whether the ex-parte adjudication order and the appellate order confirming it, both passed without the petitioner having filed any reply, deserved to be set aside for bona fide reasons preventing participation.
  2. Whether the impugned orders were vitiated for failing to consider CBIC Circular No. 183/15/2022-GST governing GSTR-2A/GSTR-3B mismatch cases.

Petitioner's Arguments

  • Due to bona fide reasons, unavoidable circumstances, and sufficient cause, the petitioner could not submit a reply to the show cause notice; the ex-parte orders deserved to be quashed with the matter remitted for fresh consideration after an opportunity to reply.
  • The impugned orders were vitiated on account of non-consideration of Circular No. 183/15/2022-GST dated 27.12.2022, issued by the Central Government to address exactly this kind of GSTR-2A/3B mismatch dispute.

Respondent's Arguments

  • The Additional Government Advocate supported the impugned orders, submitting there was no merit in the petition since the petitioner had not exercised due diligence in participating in the proceedings.

Court Order / Findings

  • The Court found it an undisputed fact that the petitioner did not respond to the show cause notice and that the ex-parte orders were passed without hearing the petitioner.
  • Adopting a justice-oriented approach and to provide one more opportunity, the Court set aside all the impugned orders — Order-in-Appeal, Order-in-Original, DRC-07 summary, the Section 73(1) SCN, and the DRC-01A notices — and remitted the matter back for fresh reconsideration, expressly bearing in mind Circular No. 183/15/2022-GST dated 27.12.2022.
  • The petitioner was directed to appear before the respondent on 19.12.2025 and submit its reply along with relevant documents; upon such submission, the respondent was to afford a reasonable hearing and proceed further in accordance with law.

Important Clarification

  • Where an assessee shows bona fide reasons for failing to respond to a GSTR-2A/GSTR-3B mismatch notice, courts may still grant a fresh opportunity notwithstanding the ex-parte confirmation and dismissal of the statutory appeal.
  • Authorities adjudicating GSTR-2A/GSTR-3B mismatch demands are required to expressly consider CBIC Circular No. 183/15/2022-GST, which lays down the framework (including tolerance limits and documentary proof of genuine ITC) for reconciling such differences — failure to do so vitiates the order.

Sections Involved

  • Section 73, CGST Act, 2017 — show cause notice and order for tax determination on account of the GSTR-2A/3B mismatch.
  • Section 107(11), CGST Act, 2017 — appellate authority's power to confirm, modify, or annul the order under appeal.

Decision – In Favour of

Assessee. All the impugned orders, from the ASMT-10 stage through the Order-in-Appeal, were set aside and the matter remitted for fresh adjudication in light of Circular No. 183/15/2022-GST.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No. 35845 of 2025 (T-RES)
Neutral Citation: NC: 2025:KHC:49701
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 28.11.2025

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