Facts of the Case

The petitioner, M/s SSR Enterprises, a proprietorship represented by Mr. Sheikh Mohammed Rahamathullah, was issued a show-cause notice dated 28.04.2021 under Section 73 of the CGST/KGST Act, 2017. The petitioner did not file any reply to the show-cause notice. Consequently, the respondent, the Commissioner of Central Taxes, Bengaluru South GST Commissionerate, proceeded to pass an order dated 30.11.2023 (bearing No.25/ST/COMMR/2023-24) confirming a total demand of Rs.2,09,19,774/-, comprising tax, interest and penalty, for the tax periods FY 2015-16 and 2016-17. Aggrieved by this order passed without the petitioner's participation, the petitioner approached the Karnataka High Court under Article 226 of the Constitution seeking to quash the order, contending that its failure to respond was on account of bonafide reasons and circumstances beyond its control.

Issues Involved

  1. Whether an order confirming a substantial GST demand, passed without the petitioner having filed a reply to the show-cause notice, should be set aside where the petitioner claims bonafide inability to respond.
  2. Whether the petitioner is entitled to a fresh opportunity to contest the demand on merits.

Petitioner's Arguments

  • The petitioner could not file a reply to the show-cause notice dated 28.04.2021 due to bonafide reasons, unavoidable circumstances and sufficient cause.
  • The omission was not deliberate, and the petitioner was consequently unable to contest the proceedings on merits before the adjudicating authority.
  • If given one more opportunity by setting aside the impugned order, the petitioner is willing and able to submit a proper reply and contest the show-cause notice.

Respondent's Arguments

  • There is no merit in the writ petition and it deserves to be dismissed.
  • The impugned order was validly passed under Section 73 of the KGST Act after due process, since the petitioner failed to respond to the show-cause notice.

Court Order / Findings

  • The Court noted that despite several contentions urged by both sides, the specific assertion of the petitioner regarding bonafide reasons and sufficient cause for not replying warranted a justice-oriented approach.
  • The Court held that one more opportunity ought to be given to the petitioner to submit its reply and contest the proceedings.
  • The impugned order dated 30.11.2023 was set aside, and the matter was remitted back to the respondent for fresh consideration in accordance with law, from the stage of the petitioner submitting its reply to the show-cause notice dated 28.04.2021.
  • The writ petition was allowed on this limited ground, without going into the merits of the demand itself.

Important Clarification

  • Liberty was reserved for the petitioner to submit replies and supporting documents, which the respondent is obligated to consider.
  • The respondent was directed to provide sufficient and reasonable opportunity of hearing to the petitioner before proceeding further in accordance with law.
  • The order underscores that courts favour a justice-oriented, one-more-chance approach in ex-parte GST demand matters where the taxpayer shows bonafide reasons for the earlier default, rather than allowing large demands to be confirmed unilaterally.
  • The setting aside was purely procedural; all rights and contentions on the merits of the tax demand remain open to be urged afresh before the adjudicating authority.

Sections Involved

  • Section 73 of the CGST/KGST Act, 2017 – determination of tax not paid or short paid, or input tax credit wrongly availed, for reasons other than fraud.
  • Finance Act, 1994 – referenced in relation to the impugned order for the residual service tax periods.
  • Article 226 of the Constitution of India – writ jurisdiction invoked to challenge the assessment order.

Decision – In Favour of

The petition was allowed and the matter was disposed of with directions: the impugned order was set aside and remitted to the respondent for fresh adjudication after affording the petitioner an opportunity to reply and be heard. The relief is procedural in nature and does not amount to a final decision in favour of the Assessee or the Department on the merits of the tax demand.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No. 31509 of 2025 (T-RES)
Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
Date of Order: 1st December, 2025

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