Droplet Offshore Services Private Limited Vs Assistant Commissioner of Central Tax (Karnataka High Court)
Summary: The Karnataka High Court considered a writ petition filed by M/s Droplet Offshore Services Private Limited challenging a Recovery Notice in Form DRC-13 dated 23.03.2026 issued to HDFC Bank. The petitioner sought quashing of the recovery notice, furnishing of the Order-in-Original/Adjudication Order dated 27.03.2024, liberty to file an appeal under Section 85 of the Finance Act, 1994, and protection against recovery until the appellate period expired. The petitioner’s grievance was that the Adjudication Order had been sent to its old registered address even though the change in registered address had been uploaded in 2023, resulting in denial of the opportunity to pursue the statutory appellate remedy. During the proceedings, the respondent submitted that the Adjudication Order dated 27.03.2024 had subsequently been uploaded and a copy furnished to the petitioner’s counsel.
The respondent could not dispute that the petitioner had uploaded the change of address and that the Adjudication Order had been sent to the old address. The Court observed that even if the petitioner had become aware of the Show Cause Notice and participated in the proceedings, such circumstances could not by themselves establish knowledge of the Adjudication Order as of its date. Since the order had admittedly been sent to an address from which the petitioner had moved, the Court recognised that intervening circumstances could support the petitioner’s case that it was unaware of the order until service of the impugned garnishee notice.
The Court held that the limitation period for the appellate remedy under Section 85 of the Finance Act, 1994 had to be reckoned from communication of the Adjudication Order. As the petitioner had now received the order, limitation for challenging it was to commence from that receipt. The Court therefore held that the Garnishee Notice issued during the period of limitation could not be sustained. The petition was allowed, the Recovery Notice dated 23.03.2026 in Form DRC-13 was quashed, and liberty was granted to the petitioner to avail the appellate remedy against the Adjudication Order dated 27.03.2024 and assert that limitation commenced from the date of receipt of the order.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner’s grievance is with the issuance of a Recovery Notice in Form DRC-13 dated 23.03.2026 [Annexure-A] without furnishing a copy of the Adjudication Order dated 27.03.2024, and in fact, Sri L.S. Karthikeyan, the learned counsel for the petitioner, on the previous occasion, has submitted that the petitioner’s grievance would be redressed if the respondent is directed to furnish a copy of the Adjudication Order withdrawing the Recovery Notice so that the petitioner can avail the appellate remedy against such order.
2. In elaboration, Sri L.S. Karthikeyan submits that the petitioner had updated the change in the registered address in the year 2023 itself, that the Adjudication Order is sent to the old address and that this has resulted in denial of the appellate remedy resulting in a Recovery Notice. Sri Aravind V Chavan, the learned counsel for the respondent, who was extended with opportunity, submits that the Adjudication Order dated 27.03.2024 has now been uploaded and a copy is also furnished to the learned counsel for the petitioner. However, the learned Standing Counsel cannot dispute the two vital aspects viz., that the petitioner has uploaded the change in its address and that the Adjudication Order is sent to the petitioner’s old address.
3. This Court must opine that the petitioner, because of certain circumstances as of the date of the notice, may have come to know about the Show Cause Notice and participated in the proceedings, but that cannot be held against the petitioner to infer knowledge of the Adjudication Order as of its date. Admittedly, the Adjudication order is sent to the address from which it has moved. There could be intervening circumstances, and aplenty at that, which may inure to the petitioner’s benefit justifying its case that it was not aware of the order until service of notice of the impugned garnishee notice.
4. The period of limitation for the petitioner’s appellate remedy under Section 85 of the Finance Act, 19941 against the Adjudication Order, will have to be reckoned from the date of communication of the order. The petitioner has now received a copy of the order, and the limitation for challenging the order must commence from the date of the receipt of the Adjudication order. The Garnishee Notice issued during the period of limitation cannot be sustained. The petition must be disposed of with liberty to the petitioner to avail appellate remedy and to seek interim order with the limitation being computed from today. Hence, the following
ORDER
The petition stands allowed quashing the Recovery Notice dated 23.03.2026 in Form DRC-13 with liberty to the petitioner to avail remedy against the Adjudication Order dated 27.03.2024 and to assert that the limitation starts from today.
Notes:
1 Section 85. Appeals to the Collector of Central Excise Appeals).
(1) Any person aggrieved by any assessment order passed by the Central Excise Officer under section 71, section 72 or section 73, or denying his liability to be assessed under this Chapter, or by an order levying interest or penalty under this Chapter, may appeal to the Commissioner of Central Excise (Appeals).
(2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner
(3) An appeal shall be presented within three months from the date of receipt of the decision or order of the Central Excise Officer, relating to service tax, interest or penalty under this Chapter
Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months.
The underlining is by this Court.
