Case Law Details
Pokala Malleswara Reddy Vs Commercial Tax Officer (Karnataka High Court)
The petitioner challenged the Adjudication Order dated 24.02.2026 passed under Section 74(9) of the Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017, along with the summary of the order. The adjudication followed proceedings initiated after a mismatch between Form GSTR-3B and Form GSTR-2A.
The Joint Commissioner of Commercial Taxes had issued summons on 20.01.2025, calling upon the petitioner to explain the mismatch. Although the petitioner’s representative appeared, no response was filed, resulting in a Show Cause Notice dated 30.09.2025 in Form GST DRC-01 proposing proceedings under Section 74 of the Act.
The petitioner contended that the authorities could invoke Section 74 only by alleging acts amounting to fraud or wilful misstatement, but the show cause notice contained no such allegation. It was also submitted that while the proceedings related to the period April 2019 to March 2020, a notice had been issued for the subsequent period April 2020 to March 2021 under Section 73, and Section 74 had been invoked only to overcome limitation.
The High Court observed that the show cause notice did not refer to any circumstance from which an allegation of fraud or deliberate suppression could be inferred. It also recorded that the Additional Government Advocate could not dispute that the notice was completely silent regarding fraud or deliberate suppression, which were jurisdictional facts for assuming jurisdiction under Section 74. The Court held that the writ petition had to succeed on the ground of lack of jurisdiction.
The Court further noted that the petitioner’s representative had appeared during the proceedings and sought time to file a response, undertaking to produce documents by 07.02.2026, but failed to do so. Thereafter, the adjudication order was passed on 24.02.2026.
Accordingly, the High Court allowed the writ petition and quashed the Adjudication Order dated 24.02.2026 and its summary.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is aggrieved by the Adjudication Order dated 24.02.2026 under Section 74[9] of the Central Goods and Services Tax Act/ Karnataka Goods and Services Tax Act, 2017 [for short, ‘the Ace] and other relevant provisions. This Adjudication Order dated 24.02.2026 and the summary of this order are produced as Annexures-A and Al.
2. The Joint Commissioner of Commercial Taxes has issued summons on 20.01.2025 to the petitioner, and the petitioner is called upon to respond on the mismatch in the details between Form GSTR-3B and GSTR-2A. The petitioner’s representative has appeared, but he has filed no response resulting in the Show Cause Notice dated 30.09.2025 in Form GST-DRC-01 for proceedings under Section 74 of the Act.
3. Sri Sandeepani A Neglur, the learned counsel for the petitioner, submits that:
[a] The authorities to assume jurisdiction under Section 74 of the Act must allege commission of certain acts which would qualify either as a fraud or a willful misstatement but there is no such assertion in the Show Cause Notice, and therefore, this Court must intervene, and
[b] If these proceedings are for the financial year April 2019 to March 2020, the petitioner has been issued with notice for the subsequent year [April 2020 to March 2021] for proceedings under Section 73 of the Act and that the provisions of Section 74 are invoked only to overcome limitation.
4. The Show Cause Notice does not refer to any circumstance from which there could be an inference of allegations of fraud or deliberate suppression, a condition precedent to justify the commencement of proceedings under Section 74 of the Act. Sri K Hemakumar, a learned Additional Government Advocate, who is called upon to accept notice for the respondents, cannot controvert that the Show Cause Notice is completely silent about the imputation of fraud or deliberate suppression which are jurisdictional facts for the authority to assume jurisdiction. The outcome in the writ petition must turn in favour of the petitioner because of the lack of jurisdiction.
5. Further, this Court must note that the petitioner’s representative has once again appeared and sought time to file a response stating some difficulty for its representation. The petitioner’s representative undertook to file documents by 07.02.2026 but has not, and the Adjudication Order is passed on 24.02.2026. Hence the following:
ORDER
[a] The petition is allowed.
[b] The impugned Adjudication Order dated 24.02.2026 and the summary of such order also dated 24.02.2026 [Annexures-A and Al] are quashed.
Author Bio
