Case Law Details
Access Developers Private Limited Vs Assistant Commissioner of Central Tax (Karnataka High Court)
The petitioner challenged an Order-in-Original dated 09.09.2022 passed under the Finance Act, 1994. Although the order was appealable under Section 107 of the Act, the petitioner invoked the writ jurisdiction of the Karnataka High Court relying on an earlier decision of a Co-ordinate Bench in Karnataka Chinmaya Seva Trust and connected matters.
The petitioner contended that the impugned order had been passed ex parte without due service of notice or an opportunity of hearing. It was submitted that the proceedings were based on information furnished by the Income Tax Department under an arrangement between the Central Board for Direct Taxes and the Central Board for Indirect Taxes. The petitioner argued that in similar cases, the High Court had restored proceedings for reconsideration after ensuring an opportunity to the affected parties.
The respondent submitted that jurisdictional officers were empowered to grant an opportunity and decide matters on merits.
The High Court observed that the petitioner had asserted that it had neither been served with notice nor been granted an opportunity of hearing. The Court further noted that the petitioner intended to rely upon statutory provisions to contend that the transaction in question did not result in tax liability. The Court held that these circumstances required consideration before fastening liability, notwithstanding that the writ petition had been filed almost four years after the impugned order.
Accordingly, the Court partly allowed the writ petition, quashed the Order-in-Original and the demand notice for tax, cess, interest and penalty dated 01.2026, and restored the proceedings for reconsideration. The petitioner was directed to file its response by 08.2026, and the respondent was directed to decide the matter without rejecting it on the ground of delay.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is aggrieved by the Order-in-Original dated 09.09.2022 under the Finance Act, 1994 [for short, ‘the Act’]. The petitioner cannot dispute that this is an order that could be appealed under Section 107 of the Act, but the petitioner has invoked this Court’s jurisdiction relying upon the judgment of a Co-ordinate Bench of this Court in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax in W.P. No.11154/2023 and connected matters dated 03.07.2024.
2. Mr. Pradyumna Hejib, the learned counsel for the petitioner, submits that the impugned Order-in-Original is an ex parte order without due service of notice and is based on an information furnished by the Income Tax Department acting under an agreement signed between the Central Board for Direct Taxes and the Central Board for Indirect Taxes but without due opportunity. The learned counsel argues that in very similar circumstances based on an undertaking given by the concerned from the department, a Co-ordinate Bench of this Court has disposed of the writ petition in W.P.No.11154/2023 and other matters [such as in W.P.No.20351/2024] restoring the proceedings for reconsideration with due opportunity.
3. Mr. Shishir Amaranath, a learned Standing counsel who is called upon to accept notice for the respondent, is heard and when queried, the learned counsel submits that the undertaking as recorded in W.P.No.11154/2023 was to ensure that the designated officers looked into complaints of similar nature but with march of time, the jurisdictional Officers, such as the respondent in the present case, are empowered to extend an opportunity and decide on the merits of the cause that could be shown.
4. This Court finds that the outcome in the writ petition must turn in the light of the afore circumstances notwithstanding the fact that the petition is filed almost four years from the date of the impugned order because the petitioner asserts that it has not been served with notice or been extended an opportunity othwerwise, and more importantly, the petitioner proposes to rely upon the statutory provisions to contend that the subject transaction does not result in any consequence to pay certain taxes. This Court finds that all these circumstances must be considered before a liability is fastened on the petitioner. Hence the following:
ORDER
A. The petition is allowed-in-part and the impugned Order-in-Original and the demand notice for tax, cess, interest and penalty dated 01.2026 [Annexure – A] are quashed restoring the proceedings to the respondent for reconsideration.
B. The petitioner shall, without further notice, file response, if any, with the respondent by 08.2026 even without waiting for a certified copy of this order.
C. The respondent shall consider all the circumstances without non-suiting the petitioner on the ground of delay.
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