Case Law Details
Reliflex Exim Services (OPC) Pvt. Ltd. Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
The matter before the Karnataka High Court concerned a challenge to two adjudication orders passed under Section 73 of the CGST/KGST Acts for the financial year 2019–2020. The petitioner sought to set aside orders dated 21.04.2023 and 28.08.2024, which were passed ex-parte due to non-filing of a reply to the show-cause notice. The petitioner submitted that the failure to respond was due to circumstances beyond its control, including the COVID-19 pandemic, and requested an opportunity to present its case.
The dispute involved rejection of Input Tax Credit (ITC). In one order, the claim was denied as belated under Section 16(4) of the Karnataka Goods and Services Tax Act, 2017. In the other, the authority noted excess ITC claimed in Form GSTR-3B compared to Form GSTR-2A. The petitioner argued that such discrepancies required reconciliation and could be addressed with supporting material.
The Court considered the submissions and noted that the petitioner was willing to appear before the authority and contest the issues raised. Taking into account the undertaking to deposit 10% of the disputed tax to safeguard revenue interests, the Court found it appropriate to set aside both impugned orders. The matter was remitted back to the stage of replying to the show-cause notice, thereby granting the petitioner an opportunity for fresh adjudication.
The Court directed the petitioner to appear before the authority on 08.04.2026 without further notice and to deposit 10% of the disputed demand within three weeks. All contentions were kept open. It was also clarified that failure to appear would result in withdrawal of the relief granted. The petition was accordingly disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Sri Hema Kumar, learned Additional Government Advocate is directed to accept notice for the respondent.
2. The petitioner has sought for setting aside of the impugned ‘Order of Adjudication’ dated 21.04.2023 passed by the Respondent under Section 73 of KGST/CGST Act for the Financial Year, April, 2019,- March, 2020 and impugned Order dated 28.08.2024 passed by the respondent under the CGST/KGST Acts for the Financial Year 2019-2020 respectively at Annexure-‘A’ and ‘A1’.
3. It is submitted that, the petitioner did not file reply to the Show-Cause notice due to certain reasons beyond their control including COVID-19 Pandemic.
4. It is submitted that the Orders passed are exparte Orders and the petitioner may be afforded an opportunity to satisfy the Authority regarding alleged discrepancies between Form GSTR-3B and Form GSTR-2A.
5. Perused the impugned ‘Orders’ at Annexure-‘A’ and Annexure-‘A1’.
6. The petitioner submits that the discrepancy as allegedly noticed by the revenue regarding the ITC available as per GSTR-3B and ITC available as per GSTR-2A is a matter for reconciliation which would be demonstrated by placing appropriate material.
7. Insofar as impugned ‘Order’ at Annexure-‘A’ is concerned, the Authority has rejected the claim of ITC on the ground that the claim was made belatedly. It is further observed that, in light of Section 16(4) of the Karnataka Goods and Services Tax Act, 2017, (for short ‘KGST Act’) filing of returns beyond due date prescribed for filing of annual returns would render the claim for ITC in-eligible.
8. Insofar as the impugned Order at Annexure-‘A1’ is concerned, it is noticed that the Authority has concluded the proceedings ex-parte, while observing that there is an excess claim of ITC in GSTR-3B return as compared to GSTR-2A return, uploaded by the supplier.
9. In both these matters, the petitioner submits that they would appear before the Authority and make out their case and meet the grounds raised in the Show-Cause Notice.
10. Accordingly, in light of the submission made by the petitioner and as the petitioner undertakes to make deposit of 10% of the disputed tax in both the Order at Annexure-‘A’ and Annexure-‘A1’, Order could be passed putting the petitioner on terms. As the petitioner has offered to make payment to ensure that there will be no revenue loss for the present, it would be appropriate to set aside Order at Annexures-‘A’ and ‘A1’, and remit the matter back to the stage of reply to the Show-Cause Notice.
11. The petitioner would appear before the respondent on 08.04.2026 without further notice.
12. 10% of the disputed demand raised insofar as the Order at Annexures-‘A’ and ‘A1’ respectively to be satisfied within 3 weeks from today.
13. All contentions are kept open. Needless to state that, if petitioner is absent on the next date, indulgence granted by this Court would stand rescinded. The petitioner also undertakes to co-operate in conclusion of the proceedings as per law.
Accordingly, the petition is disposed of.
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