Facts of the Case

Bengaluru Motor Cycle Works, a partnership firm, received an intimation under Form GST ASMT-10 dated 17.02.2024, to which it filed a detailed reply. A subsequent intimation in Form GST DRC-01A dated 14.05.2024 and a show cause notice dated 02.07.2024 went unanswered, and the Assistant Commissioner passed an order dated 27.02.2025 under Section 73 confirming a demand of Rs.47,83,514 (tax, interest and penalty).

Issues Involved

  1. Whether an ex parte Section 73 order confirming a demand, passed after the assessee failed to respond to the pre-intimation and show cause notice, should be set aside and a further opportunity granted for bona fide reasons.

Petitioner's Arguments

  • Due to bona fide reasons, unavoidable circumstances and sufficient cause, the petitioner could not submit replies or documents to either the pre-intimation notice or the show cause notice, resulting in the ex parte order.
  • 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', accepting the petitioner's specific assertion of bona fide reasons, unavoidable circumstances and sufficient cause for its inability to respond.
  • Allowed the petition subject to payment of cost of Rs.10,000 to the Karnataka High Court Legal Services Authority.
  • Set aside the impugned order dated 27.02.2025 passed under Section 73 and remitted the matter to the respondent for fresh reconsideration from the stage of the petitioner's reply to the show cause notice dated 02.07.2024.
  • Directed the petitioner to appear on a fixed date without awaiting further notice, reserving liberty to file replies/documents, with the order to be automatically recalled if the petitioner failed to appear as directed.

Important Clarification

  • The Karnataka High Court will, on a justice-oriented approach, set aside an ex parte Section 73 demand and remand the matter for fresh consideration from the show-cause-reply stage where the assessee demonstrates bona fide reasons for its earlier non-response — but will often condition such relief on payment of a cost to a legal services authority and on strict compliance with the fixed appearance date, failing which the relief is automatically recalled.

Sections Involved

  • Section 73, CGST/KGST Act, 2017 — determination and adjudication of tax not paid.
  • Form GST ASMT-10 & DRC-01A — scrutiny notice and pre-show-cause intimation.

Decision – In Favour of

In favour of the Assessee (conditional remand, with cost).

Case Details

High Court of Karnataka at Bengaluru; WP No. 30792 of 2025 (T-RES); Coram: Justice S.R. Krishna Kumar; Order dated 15.10.2025.

Link to Download the Order

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