Bleuclif Apparels India Private Ltd & Anr. Vs Assistant Comercial Tax (Karnataka High Court)
Summary: Karnataka High Court allowed the writ petition filed by M/s Bleuclif Apparels India Private Ltd and another petitioner and quashed the GST adjudication order and its summary dated 09.02.2024 as well as the recovery notice dated 20.05.2024, while granting liberty to respond to the show cause notice dated 28.12.2023. The petitioner contended that after receiving Form GST DRC-01A on 20.12.2022, it had filed only a partial response and could not submit a detailed reply because its bankers had commenced proceedings for default and its premises were under the banker’s lock and key.
The show cause notice in Form GST DRC-01 dated 28.12.2023, when sent by RPAD, was returned with the remark that the petitioner had left the premises without instruction. It was further contended that ₹25 lakh had subsequently been recovered from the personal bank account of the petitioner’s representative. The Revenue opposed interference, including on the ground of delay and uncertainty whether the recovery related to the impugned adjudication order. The High Court, however, noted that the petitioner’s assertion regarding distress proceedings by its bankers and locking of its premises was undisputed and held that these circumstances justified extending an opportunity to respond to the show cause notice.
Accordingly, the adjudication order/summary and the Section 79 recovery notice were quashed, with the petitioner directed to file its response and supporting documents by 12.10.2026. The Court also cautioned that if the stated ₹25 lakh recovery did not relate to the subject period, that could constitute a ground for recall of the order and dismissal of the petition.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the Adjudication Order dated 09.02.2024 and the Summary thereof [Annexures-A and B] while also calling in question the Recovery Notice dated 20.05.2024 [Annexure-F]. The petitioner seeks interference with the Adjudication Order and the subsequent proceedings on lack of a reasonable opportunity; and in elaboration, Sri E. I. Sanmathi, the learned counsel for the petitioner, submits that the petitioner, upon receipt of intimation in Form DRC-01A on 20.12.2022, has filed a partial response but could not file a detailed response because of the proceedings commenced by its bankers for certain default.
2. Sri E. I. Sanmathi submits that the show cause notice in Form GST DRC-01 is issued on 28.12.2023 and the adjudication proceedings are closed on the ground that this notice when sent by RPAD is returned with a remark that the petitioner had left the premises without instruction and that this is because the premises was under the banker’s lock and key. To support the request for interference and an opportunity to file a detailed response to the show cause notice dated 28.12.2023, the learned counsel, relying upon the petitioner’s bank account, submits that a sum of ₹ 25,00,000 is recovered from the personal account of the petitioner’s representative [Sri Sreejith Kumar P.].
3. Sri K. Hema Kumar, a learned Additional Government Advocate who accepts notice for the respondents, is heard on whether this Court must interfere to restore the proceedings with opportunity to the petitioner to file a detailed response to the show cause notice dated 28.12.2023. The learned Additional Government Advocate submits that the petitioner has filed this petition almost three years after the Adjudication Order and that he cannot, based on the entries in the bank statement, affirm that the recovery relates to the impugned Adjudication Order.
4. However, this Court must observe that the petitioner’s case that there were distress proceedings by its bankers for certain default and its premises were locked is not in dispute. This affords reason for answering the question in the affirmative to extend an opportunity to the petitioner to respond to the show cause notice dated 28.12.2023. The petitioner, who was constrained with the proceedings initiated because of a default, must have an opportunity to show cause against the demand and justify the recovery of a sum of Rs.25,00,000/- as mentioned in Annexure-E, but this Court must also observe that if this recovery does not relate to the subject period that would be a cause not just for recall of this order but also for dismissal of the petition. In the light of the afore, the following:
ORDER
A. The petition is allowed quashing the impugned Adjudication Order/Summary of such order dated 09.02.2024 [Annexures- A and B] and the Recovery Notice dated 20.05.2024 [Annexure-F] with liberty to the petitioner to file response to the show cause notice dated 28.12.2023.
B. The petitioner shall file the response along with the documents without further notice by 10.2026.
