K.K. Steel Traders Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
The petitioner challenged an adjudication order dated 30.08.2025 passed under Section 74 of the Karnataka Goods and Services Tax Act/Central Goods and Services Tax Act, 2017 read with Rule 142(5) of the Central Goods and Services Tax Rules, 2017, along with the appellate order dated 14.01.2026 dismissing the appeal on limitation. The principal issue before the Karnataka High Court was whether the adjudication order warranted interference on the ground of lack of opportunity.
The adjudicating authority had concluded that the petitioner had wrongly availed Input Tax Credit (ITC) on the basis of fabricated invoices relating to inward and outward supplies. The order recorded that pre-notice consultation in Form GST DRC-01A was undertaken, followed by reminders and a show cause notice. Since no reply was received to the show cause notice, the authority presumed that the transactions were clandestine and intended solely to avail inadmissible ITC, and accordingly confirmed the demand and issued Form GST DRC-07.
The petitioner contended that it had already responded to the Form GST DRC-01A by submitting invoices, e-way bills and bank statements to establish that the purchases and ITC claims were genuine. It was argued that although the show cause notice was issued nearly one and a half years after receipt of this response, the adjudicating authority neither referred to nor considered the earlier reply while passing the order.
