Facts of the Case

Kalavai Digital Private Limited (formerly Technology Information Engineering Services Pvt. Ltd.) challenged an order dated 07.03.2025 rejecting its appeal on limitation, arising from an ex-parte order dated 27.04.2024 passed under Section 73(9) of the CGST/KGST Act, 2017, confirming a demand of Rs. 37,79,039/-. Pursuant to notice in Form ASMT-10 dated 10.07.2023 and intimation in Form GST DRC-01A dated 12.01.2024, a show cause notice dated 31.01.2024 alleging discrepancies relating to zero-rated supplies had been issued, to which no reply was filed. The petitioner attributed its inability to respond to non-communication of statutory notices due to negligence of an outsourced agency and lack of portal access, and stated it became aware only upon a bank attachment notice, following which it filed a delayed appeal that was rejected.

Issues Involved

  1. Whether the petitioner should be granted a final opportunity to contest an ex-parte GST demand where its appeal was rejected on limitation and the GST Appellate Tribunal was not yet constituted.

Petitioner's Arguments

  • Non-communication of statutory notices due to negligence of an outsourced agency and lack of portal access prevented it from replying to the pre-intimation and show cause notices.
  • Since the GSTAT was not constituted, it had no option but to approach the High Court by writ.

Respondent's Arguments

  • The department submitted there was no merit in the petition and it was liable to be dismissed.

Court Order / Findings

  • Considering the petitioner's specific assertion of bona fide reasons and unavoidable circumstances for its inability to respond, the Court adopted a 'justice-oriented approach' and set aside both the order dated 27.04.2024 under Section 73(9) and the appellate order dated 07.03.2025 under Section 107, subject to payment of costs of Rs. 15,000/- to the Karnataka High Court Legal Services Authority.
  • The matter was remitted to the stage of the petitioner submitting its reply to the notice dated 31.01.2024, with a fixed date for appearance without awaiting further notice.
  • Liberty was reserved for the petitioner to submit replies and documents, to be considered after a reasonable hearing, and the order was made subject to automatic recall if the petitioner failed to appear on the fixed date.

Important Clarification

  • Where an ex-parte GST demand culminates in a limitation-barred appeal and the assessee attributes non-participation to bona fide reasons, courts may — particularly while the GSTAT remains unavailable as an alternate remedy — set aside both orders and restore the matter to the reply stage, conditioned on payment of costs and strict compliance with fresh timelines.

Sections Involved

  • Section 73(9), CGST/KGST Act, 2017 — determination of tax, interest and penalty after considering representation.
  • Section 107, CGST/KGST Act, 2017 — appeal to the appellate authority.

Decision – In Favour of

The writ petition was allowed in part in favour of the Assessee, remitting the matter to the reply stage on payment of cost, rather than deciding the underlying demand on merits.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No. 24960 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 30.10.2025

Link to Download the Order

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