Hotel Royal Suits Vs State of Karnataka (Karnataka High Court)
In Hotel Royal Suits vs State of Karnataka, the Karnataka High Court examined the validity of an adjudication order passed under Section 73(9) of the Karnataka Goods and Services Act, 2017 on the ground of short declaration of tax liability. The authority had proceeded to decide the matter based on available material, noting that despite communication of notices, including recovery proceedings, the petitioner failed to submit a reply to the show-cause notice.
The petitioner contended that the failure to respond was due to a bona fide lapse and that relevant material was available to address the allegations. The Court observed that the adjudication order was effectively ex-parte, as it was passed without the benefit of the petitioner’s reply. Considering this, the Court held that it would be appropriate to set aside the order and provide an opportunity to respond.
Accordingly, the impugned order was quashed and the matter remitted to the stage of reply to the show-cause notice. The petitioner was directed to appear before the authority on the specified date and deposit 10% of the tax due, subject to final adjudication. The Court clarified that failure to avail the opportunity would result in withdrawal of the relief granted, with all contentions kept open.
