Sri. Nanjundeshwara Traders Vs Commissioner of Commercial Taxes Karnataka (Karnataka High Court)
In the case of Sri. Nanjundeshwara Traders Vs Commissioner of Commercial Taxes Karnataka, the Karnataka High Court addressed a petition challenging an adjudication order that denied an Input Tax Credit (ITC) claim. The petitioner, Sri. Nanjundeshwara Traders, sought to quash an order for the period of April 2019 to March 2020. The key issue was the delayed claim of ITC for the financial year 2018-19, which was instead filed in the subsequent year, 2019-20, on a Reverse Charge Mechanism (RCM) basis.
The High Court referenced its own prior ruling in the case of M/S NL TILE ART PVT LTD vs. Commissioner of Commercial Taxes, Karnataka & Ors., which was decided on July 23, 2025. In that precedent, the court had established that when ITC is claimed in a different year, the tax department must consider the annual returns and reconcile the accounts. The court emphasized that such reconciliation is possible even without a reply from the petitioner, as all necessary records are available with the department.
Applying this principle, the Karnataka High Court quashed the adjudication order against Sri. Nanjundeshwara Traders. The court held that the tax department should have considered the available records and conducted a reconciliation, irrespective of whether the petitioner had responded to the show-cause notice. The matter was remitted back to the Commercial Tax Officer for fresh consideration. The court directed the petitioner to appear before the officer on August 21, 2025, to submit a reply to the show-cause notice, effectively giving the petitioner an opportunity to present their case.
