Sharana Basaveswara Mining Company Vs Commissioner of Commercial Taxes (Karnataka High Court)
Summary: The Karnataka High Court, Dharwad Bench, in Sharana Basaveswara Mining Company Vs Commissioner of Commercial Taxes, allowed a writ petition challenging the rejection of a GST appeal filed beyond the statutory limitation period prescribed under Section 107 of the GST Act, 2017. The petitioner, engaged in mining activities and registered under the Karnataka Goods and Services Tax Act and Central Goods and Services Tax Act, had filed returns and discharged its declared tax liabilities for FY 2018-19. Subsequently, the department issued Form GST DRC-01A on 01.09.2023 alleging excess availment of input tax credit and non-payment of GST under the reverse charge mechanism on royalty paid to the Department of Mines and Geology. A show cause notice dated 25.09.2023 was thereafter issued under Section 73 of the KGST/CGST Act, alleging discrepancies between GSTR-3B and GSTR-2A and proposing tax, interest and penalty. According to the petitioner, the notices were not duly served, and the adjudicating authority passed an order dated 06.12.2023 under Section 73(9) read with Section 50 without providing an effective opportunity to produce books of account, purchase invoices and supporting documents.
The petitioner challenged the adjudication order before the Joint Commissioner of Commercial Taxes (Appeals). However, the appeal was filed beyond the permissible limitation period and was dismissed by order dated 12.06.2026, with observations extending to the merits. Before the High Court, the petitioner argued that the appellate authority could not decide the substantive dispute without first condoning the delay. The State maintained that Section 107(12) required the appellate authority to frame and decide points for consideration, including those relating to merits. The petitioner relied upon the coordinate Bench decision in M/s. Trupti Agro Needs Vs Assistant Commissioner of Commercial Taxes and Others, W.P. No. 102348/2026, decided on 19.06.2026, wherein the High Court had exercised its writ jurisdiction to condone delay and restore a GST appeal. That decision had referred to Yallappa R. Patil, Jai Hind Enterprises and Bandigisab Maheboobsab Bijapur, in which relief had been granted in matters involving delayed statutory appeals.
Justice T.M. Nadaf observed that although statutory appellate authorities cannot condone delay beyond the prescribed 120-day period, the delay in the present case was only 24 days beyond that period. Considering that the petitioner had not been notified of the earlier notices and demand, the Court held that denying an opportunity to pursue the appeal on the technical ground of a short delay would amount to denial of a substantive right. Exercising its jurisdiction under Article 226 of the Constitution of India, the High Court allowed the writ petition, set aside the appellate order dated 12.06.2026, condoned the delay and restored the matter for fresh adjudication on merits after providing an appropriate opportunity to the petitioner. All contentions of both parties were expressly kept open. Consequently, the High Court did not determine the substantive correctness of the proposed ITC disallowance, royalty-related RCM liability, interest or penalty.
Cases Discussed
1. M/s. Trupti Agro Needs Vs Assistant Commissioner of Commercial Taxes and Others (Karnataka High Court) — W.P. No. 102348/2026; 19/06/2026. The principal precedent expressly relied upon by the petitioner and considered by the High Court. The coordinate Bench had condoned delay in a GST appeal, set aside the appellate order and directed fresh consideration on merits. An independently verified exact TaxGuru judgment URL was not located.
2. Yallappa Patil Vs Assistant Commissioner and Others (Karnataka High Court) — Cited in the extracted decision in Trupti Agro Needs. The Division Bench permitted pursuit of a delayed statutory appeal and directed consideration without a limitation objection.
3. Jai Hind Enterprises Vs Assistant Commissioner of Commercial Taxes and Others (Karnataka High Court) — Cited within Trupti Agro Needs concerning relief against the rejection of delayed GST appeals, including appeals arising from cancellation of GST registration.
4. Bandigisab Maheboobsab Bijapur Vs Assistant Commissioner and Others (Karnataka High Court) — Cited within Trupti Agro Needs as a coordinate Bench decision granting relief and directing consideration of a delayed GST appeal on merits.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
This petition is filed by the petitioner seeking following reliefs:
“(i) Issue Writ of Certiorari or in the like nature of Certiorari quashing the Adjudication order dated 06.12.2023 vide No.ACCT/ENF/GVT/Order/2023-24/606, bearing ref no. ZD290923001244K, for the assessment year 2018-19 passed by 2nd respondent is herewith enclosed as ANNEXURE-D; and the order passed by the Hon’ble JCCT(A) dated 12.06.2026 for the period 2018-19 vide Appeal No.KGST/AP-654/2024-25 is herewith enclose as ANNEXURE-F passed by 3rd respondent.
(ii) Issue Writ of Prohibition, not to proceed further steps or measures or any such kind of initiatives pertaining to recovery(s) over the impugned the Adjudication order dated 06.12.2023 vide No.ACCT/ENF/GVT/Order/2023-24/605, bearing ref no. ZD290923001244K for the assessment year 2018-19 passed by 2nd respondent is herewith enclosed as ANNEXURE-D; and the order passed by the Hon’ble JCCT(A) dated 12.06.2026 for the period 2018-19 vide Appeal No.KGST/AP-654/2024-25 is herewith enclose as ANNEXURE-F passed by 3rd respondent.
(iii) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of this case, in the interest of justice and equity.”
2. Heard, Sri. Rajashekar Gunjalli, learned counsel appearing for the petitioner and Sri.Sharad V. Magadum, learned AGA appearing for respondents- State.
3. The facts germane to file the present petition are as under.
4. The petitioner is a registered dealer under the KGST and CGST Acts carrying on mining business. The petitioner has filed returns for the Financial Year 2018-19 and discharged the tax debt declared therein.
5. As the matter stood thus, on 01.09.2023, respondent No.2 issued Form GST DRC-01A, proposing liability towards alleged excess availment of ITC and tax payable under the RCM on royalty paid to the Department of Mines and Geology. However, the said intimation was not duly served upon the petitioner.
6. Subsequently, on 25.09.2023, respondent No.2 issued a show cause notice under Section 73 of KGST/CGST Act, alleging excess ITC claimed in GSTR-3B, as compared with GSTR-2A and non-payment of tax under RCM on royalty, proposing tax interest and penalty.
7. The said notice was also according to the petitioner, not served on it. Thereafter, on 06.12.2023, without affording any opportunity of hearing and without granting petitioner an effective opportunity to place its books of accounts, purchasing invoices and other supporting documents, respondent No.2 passed the adjudication order under Section 73(9) read with Section 50 of KGST/ CGST Act and issued DRC-07, confirming the proposed liability.
8. The petitioner immediately after noticing the order impugned under DRC-07, preferred an appeal as provided under the Act before the Joint Commissioner Commercial Tax (Appeals) challenging the order dated 06.12.2023. Since, the appeal was filed beyond the permissible time limit before the concerned authority under the statutory provisions, the appeal was dismissed on the ground of delay stating that the grounds urged in the appeal were not urged before respondent No.2 and also on merits. Aggrieved by the same, the petitioner is before this Court.
9. Learned counsel for the petitioner submits that once there is a delay in filing the appeal, it goes to the root of jurisdiction to entertain the appeal. Without condoning the delay, the authority ought not to have decided the case on merits, as the same is not enjoined under Section 107 of GST Act, 2017.
10. Per contra, Sri.Sharad V. Magadum, learned AGA submits that the power under Section 107 can be exercised even on merits of the case. In terms of Section 107(12), the authority is bound under law to frame points for consideration and answer each point for consideration, even on the merits. In that view of the matter, the order does not suffer from any infirmity and sought to dismiss the petition.
11. Learned counsel Sri. Rajashekar Gunjalli, relied on the judgment of Coordinate Bench of this Court in the case of M/S.TRUPTI AGRO NEEDS VS. THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES AND OTHERS1, wherein the Coordinate Bench of this Court, exercising power under Article 226 of Constitution of India, condoned the delay. The relevant portion of the order passed in TRUPTI AGRO NEEDS supra, read as under:
“2. The facts, in a nutshell, are that the petitioner, a partnership firm, registered under the provisions of the Goods and Services Tax Act, 20171, was issued a showcause under Section 73(1) of the Act. Consequent thereto, an adjudication order dated 26.09.2023 (Annexure-A to the writ petition) was passed by respondent No.1 – Assistant Commissioner. The said order was assailed by the petitioner in an appeal filed under Section 107 of the Act before respondent No.2 – Joint Commissioner. Respondent No.2, by the impugned order dated 03.03.2026 (Annexure-B to the writ petition), dismissed the appeal on the ground that there was a delay exceeding 226 days in filing the said appeal.
3. Being aggrieved, the present petition is filed.
4. Learned counsel for the petitioner submits that, in similar facts and circumstances, a Division Bench of this Court in the case of Yallappa Patil vs. Assistant Commissioner and Others2, permitted an appeal to be filed within four weeks and ordered that the same shall be adjudicated without raising any objection on limitation. A Co-ordinate Bench of this Court, in various cases, i.e., in the case of Jai Hind Enterprises vs. Assistant Commissioner of Commercial Taxes and Others3 as well as in the case of Bandigisab Maheboobsab Bijapur vs. Assistant Commissioner and Others4, in a similar factual matrix, granted relief and ordered as under:
ORDER
a. The petition is allowed in-part.
b. The petitioner is permitted to file an appeal against the cancellation of registration before the Appellate Authority within four weeks from the date of the receipt of a copy of this order.
c. In the event, the appeal is preferred within four weeks as aforesaid, it shall be considered on its merit and not reject the appeal on the ground of limitation.
d. In the event, the petitioner would not prefer an appeal within four weeks as permitted above, the benefit of the order rendered in the subject petition would not be available to the petitioner.”
5. Although the learned AGA vehemently contends that there is no provision to condone the delay, having regard to the judgments of the Division Bench and the Coordinate Benches, as noticed above, the writ petition merits consideration.
6. Hence, the following:
ORDER
a) The writ petition is allowed in part;
b) The order dated 03.03.2026 passed in Appeal No.GST-416/2023-24/13-1670 passed by respondent No.2 – Joint Commissioner is set aside;
c) The Appeal No.GST-416/2023-24/13-1670 passed by respondent No.2 – Joint Commissioner is restored to file. The delay in filing the said appeal is condoned;
d) The respondent No.2 shall adjudicate the said appeal on merits in accordance with law;
e) All contentions of the parties, on merits of the matter, are kept open.”
12. Though, condoning delay beyond 120 days is not amenable to the statutory authorities under the statute. The delay stated in this petition is 24 days i.e., beyond 120 days. Considering the fact that the petitioner was not notified in respect of the notice earlier issued and demand made, denial of any opportunity on technicality of short delay in the case on hand amounts to denial of substantive right. In that view of the matter, considering the judgment stated supra, this Court proceeds to pass the following:
ORDER
i. The Writ Petition is allowed.
ii. The order dated 12.06.2026 passed in Appeal No.KGST/AP-654/2024-25 by respondent No.3 is set aside.
iii. The Appeal No.ACCT/ENF/GVT/Order/2023-24/606 passed by respondent No.2 is restored to file. The delay in filing the said appeal is condoned.
iv. The matter stands remanded to respondent No.3 to adjudicate the said appeal on merits strictly adhering to Rule 11 and 12 of 107, after affording appropriate opportunity to the petitioner.
v. All contentions of the parties, are left open.
Notes:
1 W.P.NO.102348/2026, disposed of on 19.06.2026
