Facts of the Case

Mamatha Borewell Drillers received a show cause notice dated 22.11.2024 under Section 73(1) of the CGST/KGST Act, preceded by an intimation in Form GST DRC-01A dated 08.11.2024, alleging excess ITC claimed in GSTR-3B compared to GSTR-2A. Having received no reply, the Assistant Commissioner passed an order dated 13.01.2025 under Section 73(9) confirming a demand of Rs.5,27,366 (tax, interest and penalty). The petitioner contended it had never been furnished a copy of, or opportunity to examine, the Joint Commissioner's authorization/approval for concluding the assessment, preventing it from filing any reply.

Issues Involved

  1. Whether an ex parte Section 73(9) order over an ITC mismatch should be set aside and one further opportunity granted where the assessee shows bona fide reasons — including denial of access to the departmental authorization — for its failure to respond.

Petitioner's Arguments

  • Was never provided a copy of, or opportunity to examine, the authorization/approval issued by the Joint Commissioner for concluding the assessment under Section 73, and hence could not respond to either the pre-intimation or the show cause notice.
  • Sought one more opportunity to submit a reply and contest the proceedings if the impugned order were set aside.

Respondent's Arguments

  • Submitted that there was no merit in the petition and it was liable to be dismissed.

Court Order / Findings

  • Adopted a 'justice-oriented approach', having regard to the petitioner's specific assertion of bona fide reasons, unavoidable circumstances and sufficient cause for its inability to respond.
  • Set aside the impugned order dated 13.01.2025 passed under Section 73(9) and remitted the matter for fresh reconsideration from the stage of the petitioner's reply to the show cause notice dated 22.11.2024.
  • Directed the petitioner to appear on a fixed date without awaiting further notice, reserving liberty to submit replies/documents, with the authority to bear in mind CBIC Circular No.183/15/2022-GST.
  • Clarified that the order would stand automatically recalled if the petitioner failed to appear on the fixed date, safeguarding against misuse of the relief.

Important Clarification

  • Where an assessee shows bona fide reasons — including denial of access to the departmental sanction/authorization for concluding an assessment — for failing to respond to a Section 73 show-cause notice raising an ITC mismatch between GSTR-3B and GSTR-2A, the High Court may set aside the resulting ex parte demand and grant one further opportunity to contest the matter on merits, conditioning the relief on the assessee's appearance on a fixed date.

Sections Involved

  • Section 73(1) & (9), CGST/KGST Act, 2017 — show cause notice and adjudication order for tax not paid.
  • CBIC Circular No.183/15/2022-GST — guidance on dealing with GSTR-2A/GSTR-3B ITC mismatches.

Decision – In Favour of

In favour of the Assessee (conditional remand).

Case Details

High Court of Karnataka at Bengaluru; WP No. 18279 of 2025 (T-RES); Coram: Justice S.R. Krishna Kumar; Order dated 03.11.2025.

Link to Download the Order

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