Case Law Details
Pathways Marketing and Consulting Group Vs Assistant Commissioner of Commercial Tax (Karnataka High Court)
The Karnataka High Court disposed of a writ petition challenging two adjudication orders relating to assessment years 2020-21 and 2021-22. The petitioner sought relief against ex-parte adjudication orders passed by the commercial tax authorities.
With respect to the adjudication order for the year 2020-21 (Annexure-A1), the petitioner contended that the order had been passed ex parte on the basis of an alleged discrepancy between GSTR-3B and GSTR-2A returns. The petitioner submitted that if an opportunity were granted, it would be able to demonstrate that no such discrepancy actually existed.
The Court examined the adjudication order and noted that the authority had completed the proceedings after observing discrepancies between GSTR-3B and GSTR-2A and recording that the taxpayer had failed to submit a reply despite opportunities being granted.
Taking note of the fact that the order was passed ex parte and considering the petitioner’s stand that supporting material was available to establish absence of discrepancies, the Court held that it would be appropriate to set aside the order. Accordingly, the adjudication order at Annexure-A1 was quashed and the matter was remitted back to the stage of reply to the show cause notice.
The Court directed the petitioner to deposit 10% of the tax demand relating to the proceedings under Annexure-A1. The petitioner was also directed to appear before the concerned authority without further notice on 05.2026. All contentions were left open.
In relation to the adjudication order for the assessment year 2021-22 (Annexure-B1), the petitioner similarly argued that the order had been passed ex parte without any reply being considered. The petitioner further contended that there were several grounds challenging the validity of the proceedings, including alleged violation of principles of natural justice. It was specifically argued that the notice issued prior to audit did not comply with the time requirement prescribed under Section 65(3) of the CGST Act.
Upon examining the order, the Court noted that the adjudication had indeed been completed ex parte without the benefit of a reply from the petitioner. The Court also took note of the petitioner’s objections concerning the procedure adopted before conducting the audit.
Considering these aspects, the Court held that the adjudication order at Annexure-B1 should also be set aside. The matter was remitted back to the stage of reply to the show cause notice.
The petitioner was directed to deposit 10% of the tax demand relating to the proceedings under Annexure-B1 and to appear before the concerned authority without further notice on 04.05.2026. The Court clarified that all contentions remained open for consideration.
Accordingly, the writ petition was disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Petitioner has called in question the correctness of the order of adjudication at Annexure-A1 for the year 2020-21 as well as the order of adjudication at Annexure-B1 for the year 2021-22.
2. Various contentions have been raised while challenging the orders.
3. Insofar as Annexure-A1 is concerned, it is submitted that the order passed is an ex-parte order and the Authority has completed adjudication on the premise that there was discrepancy between GSTR-3B and GSTR-2A. It is the case of the petitioner that if an opportunity is granted, the petitioner would demonstrate that no such discrepancy exists.
4. Perused the order of the adjudication at Annexure-A1. The authority has completed the adjudication, noticing the discrepancy between GSTR-3B and GSTR-2A. The order also observes that despite sufficient opportunity granted, the taxpayer has not made out his reply.
5. Taking note that the order passed is an ex parte order and the stand of the petitioner that he has material to demonstrate that the discrepancy as pointed out does not exist, it would be appropriate to set aside the order at Annexure-A1.
6. Accordingly, the order at Annexure-A1 is set aside. The matter is remitted to the stage of reply to the show cause notice.
7. Petitioner is put on terms and directed to pay 10% of the tax demand, insofar as the proceedings at Annexure-A1 is concerned. Petitioner to appear before respondent No.1 without further notice on 05.2026. All contentions are kept open
8. Insofar as the adjudication order at Annexure-B1 for the year 2021-22 is concerned, petitioner submits that the order passed is an ex-parte order without the benefit of any reply on behalf of the petitioner. Petitioner submits that there are several grounds to assail the validity of the proceedings and further submits that there has been violation of principles of natural justice insofar as notice prior to audit is less than the time stipulated under Section 65(3) of the CGST Act. Certain other contentions have been raised as well.
9. Perused the order at Annexure-B1. Noticing that the order passed is an ex-parte order without the benefit of any reply to the show cause notice and noticing the contentions raised by the petitioner regarding the validity of the procedure before conducting audit, it would be appropriate to set aside the order at Annexure-B1.
10. Accordingly, the order at Annexure-B1 is set aside. The matter is remitted to the stage of reply to the show cause notice.
11. Petitioner is put on terms and directed to pay 10% of the tax demand, insofar as the proceedings at Annexure-B1 is concerned. Petitioner to appear before respondent No.2 without further notice on 04.05.2026. All contentions are kept open.
12. Accordingly, petition is disposed of.
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