Case Law Details
Ebix Smartclass Educational Services Pvt. Ltd. Vs Commercial Tax Officer (Karnataka High Court)
Ebix Smartclass Educational Services Pvt. Ltd. approached the Karnataka High Court challenging an adjudication order and related notices issued by the Commercial Tax Officer for the financial year 2018-19. The petitioner had voluntarily canceled its GST registration in June 2022 due to discontinued business activities. However, a show-cause notice was issued via email in December 2023, which the petitioner did not access as its business operations had ceased. An ex-parte assessment order followed in February 2024, and the petitioner only became aware of it in October 2024 when checking the GST portal. The petitioner argued that it had no opportunity to respond to the notice and sought a chance to present its case.
The court noted that the petitioner had not been served the show-cause notice effectively due to the canceled registration. Acknowledging the procedural lapse, the High Court set aside the assessment and demand orders and remanded the case to the Adjudicating Authority. The petitioner was granted two weeks to file a reply, with a hearing scheduled on January 23, 2025. The authorities were directed to proceed per legal procedures, ensuring the petitioner’s right to be heard. The writ petition was allowed, and the related endorsements were quashed.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is before this Court under Article 226 of the Constitution of India, with the following prayer:
(i) Issue a Writ of Certiorari or any other Writ or Order or direction of appropriate nature to call for the records of the case and after scrutinizing the same, to strike down and quash the Adjudication Order dated 17.02.2024 in Form DRC 07 vide Ref No: ZD290224040284L passed by the Respondent-1 for the period FY 2018-19 vide Order No. CTO/LGSTO-40/DRC07/66/2023-24 vide ANNEXURE-A.
(ii) Issue a Writ of Certiorari or any other Writ or Order or direction of appropriate nature to call for the records of the case and after scrutinizing the same, to strike down and quash the Endorsement vide CTO/LGSTO-40/END/T No: 579/2024-2025 dated 08-10-2024 passed by the Respondent-1 vide ANNEXURE-B.
(iii) Issue a Writ of Certiorari or any other Writ or Order or direction of appropriate nature to call for the records of the case and after scrutinizing the same, to strike down and quash the Recovery Notice in Form GST DRC-13 vide No: ACCT/LGSTO-040/T-No.821/2024-25 dated 07-11-2024 received by Banker HDFC Bank on 16-11-2024 issued by the Respondent-1 vide ANNEXURE-C.
2. Heard learned counsel Smt.Vinitha.M., for Sri. P.B.Harish, learned counsel for the petitioner and Sri. K. Hemakumar, learned Additional Government Advocate for respondent No.1.
3. Notice to respondent No.2 is dispensed with as no relief is sought. No notice would be necessary for respondent No.2 at this stage. The matter is taken up for disposal with the consent of learned counsels for the petitioner as well as respondent No.1.
4. Learned counsel for the petitioner would submit that the petitioner submitted an application for voluntary cancellation of its GST registration due to discontinuation of business activities and based on the said application, by order dated 02.06.2022, GST registration of the petitioner was cancelled. It is stated that show-cause notice dated 19.12.2023 was sent by E-mail to the petitioner and since the petitioner had cancelled the registration, the petitioner had not opened E-mail relating to the Company. It is submitted that thereafter, Assessment Order was passed on 17.02.2024 (Annexure-A) and the petitioner was aware of show-cause notice as well as impugned order of assessment only on 01.10.2024 i.e., when the petitioner had opened the portal of the Department. Learned counsel would further submit that the impugned order of Assessment as well as subsequent Demand Notice are result of the ex-parte order and the petitioner had no opportunity to participate in the proceedings. It is prayed for an opportunity to participate in the proceedings to put forth their plea on record.
5. Learned Additional Government Advocate on instructions submits that since the petitioner had no opportunity to participate in the proceedings for whatever reason, the matter may be remitted back to the Adjudicating Authority with a direction to the petitioner to submit reply to the show-cause notice and participate in the proceedings.
6. The submissions of the learned counsels appearing for the parties are considered in light of the facts stated above.
7. Admittedly, the petitioner had no opportunity to participate in the proceedings as the petitioner was not served with show-cause notice since its registration was cancelled by order dated 02.06.2022. To provide an opportunity to the petitioner to submit reply and to participate in the proceedings, impugned orders are set aside and the matter is remitted back to the Adjudicating Authority-respondent No.1. Since now the petitioner has received the show-cause notice, at the request of the petitioner, two weeks time is granted to submit reply to the show-cause notice from today. Wherefore, the following:
ORDER
(a) Writ Petition is allowed;
(b) Order bearing No.CTO/LGSTO-40/DRC07/66/2023-24 dated 17.02.2024 (Annexure-A) and Endorsement bearing No.CTO/LGSTO-40/END/T No: 579/20242025 dated 08.10.2024 (Annexure-B) are quashed;
(c) The petitioner shall file reply to the show-cause notice by appearing before respondent No.1 on 23.01.2025 at 11.00 a.m. Thereafter, respondent No.1 to proceed in accordance with law.
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