Facts of the Case

M/s Fresh Green Agro Exports Pvt. Ltd., an exporter of gherkins registered under the KGST and CGST Acts, filed its returns for assessment year 2019-20. On audit, a show cause notice dated 23.05.2024 was issued under Section 73(1) of the KGST/CGST Act. On considering the petitioner's reply, the authority dropped some issues but continued proceedings on the remaining ones. The petitioner could not file a reply on those issues, citing paucity of time and its auditor's illness, and the Assistant Commissioner passed an adjudication order dated 08.07.2024 under Section 73(9) read with Section 50, raising a tax, interest and penalty demand. The petitioner approached the Karnataka High Court (Dharwad Bench) under Article 226 challenging the order and the consequential DRC-07.

Issues Involved

  1. Whether the writ petition was maintainable despite the availability of an alternate statutory appeal under Section 107 against an order passed under Section 73(9).
  2. Whether the Section 73(9) order was vitiated for having been passed without adequate opportunity to the petitioner.
  3. Whether the petitioner's claim for interest relief under Notification No.31/2020-Central Tax dated 03.04.2020 was wrongly disallowed.

Petitioner's Arguments

  • The order was passed without providing an opportunity of hearing after the reply on the remaining issues could not be filed, relying on Bharat Mint and Allied Chemicals v. Commissioner Commercial Tax.
  • The demand for interest on belated returns ignored the concessional benefit available under Notification No.31/2020-Central Tax, making the order without jurisdiction to that extent.
  • Several other grounds were also urged for setting aside the impugned order in its entirety.

Respondent's Arguments

  • The petition was not maintainable since an efficacious alternate remedy of appeal under Section 107 of the GST Act was available against any order passed under Section 73(9).
  • The petitioner ought to be relegated to the appellate authority to raise all its grievances, including on the interest computation.

Court Order / Findings

  • The Court expressly declined to examine the merits of the contentions raised by the petitioner.
  • It held that, prima facie, a statutory appeal remedy is available against any order passed under Section 73(9), and the petitioner would have to be relegated to that appellate remedy.
  • The petitioner's counsel volunteered to deposit 10% of the tax amount, and the Court disposed of the petition on that basis, granting two weeks to approach the appellate authority.
  • The impugned order was directed not to be precipitated by the department on deposit of 10% of the tax amount, and the petitioner was permitted to operate its bank account on making that deposit.
  • The respondent was directed to deal with the matter afresh in accordance with law after affording an opportunity of hearing.

Important Clarification

  • High Courts will ordinarily decline to go into the merits of a Section 73(9) order and will relegate the assessee to the statutory appeal under Section 107, without recording any finding for or against either side.
  • Even while relegating a petitioner to the appellate remedy, courts commonly grant interim protective relief — such as permitting operation of an attached bank account and restraining precipitative recovery — conditional on part-payment (here 10%) of the disputed tax pending the appeal.

Sections Involved

  • Section 73(1) & (9), CGST/KGST Act, 2017 — determination and adjudication of tax not paid for reasons other than fraud.
  • Section 50, CGST Act, 2017 — levy of interest on delayed payment of tax.
  • Section 107, CGST Act, 2017 — statutory appeal against orders passed under Section 73(9).

Decision – In Favour of

Disposed of with directions; interim relief in favour of the Assessee (bank account operation permitted, recovery stayed on 10% deposit) while the merits are left open for the appellate authority under Section 107.

Case Details

High Court of Karnataka, Dharwad Bench; WP No. 107001 of 2024 (T-RES); Coram: Justice Pradeep Singh Yerur; Date of Order: 14.07.2025.

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