Sunlog Services Pvt. Ltd. Vs Assistant Commissioner of Central Tax (Karnataka High Court)
The Karnataka High Court considered a petition challenging an adjudication order dated 30.12.2025 passed under Section 73 of the Central Goods and Services Tax Act, 2017. The proceedings arose from a mismatch between the details reflected in GSTR-2A and GSTR-3B. According to the adjudication order, the supplier to whom the petitioner had made remittances had not filed GST returns and proceedings concerning the supplier were pending before the National Company Law Tribunal (NCLT). The Adjudicating Officer observed that while the petitioner could pursue a remedy before the NCLT, the Department had no such recourse, and therefore directed the petitioner to discharge the tax liability and thereafter recover the amount from the defaulting supplier, subject to the NCLT proceedings.
The petitioner sought interim interference on the grounds that the GST authorities could not proceed against it when payment had already been made to the supplier without first initiating proceedings against the supplier. The petitioner relied upon the Division Bench judgment of the Calcutta High Court in Suncraft Energy (P.) Ltd. v. Assistant Commissioner, State Tax, wherein it was observed that proceeding against the purchasing dealer without first taking action against the selling dealer, despite production of tax invoices and bank statements evidencing payment of the price and tax, was arbitrary. It was also submitted that the Supreme Court had not interfered with the Division Bench’s order because of the extent of the demand. The petitioner further relied on the Karnataka High Court’s decision in Instakart Services (P.) Ltd. v. Union of India, which read down Section 16(2)(c) of the CGST Act and Rule 64 to extend the benefit of input tax credit to a bona fide recipient where the supplier had defaulted, while noting that the said judgment was under challenge in an intra-court appeal.
