Sudarshan Reddy Dhanireddy Vs Additional Commissioner of Central Tax (Karnataka High Court)
Summary: Karnataka High Court partly allowed the writ petition challenging the Order-in-Original dated 06.02.2023 passed under Section 73 of the Finance Act, 1994. The adjudication order was based on information received from the Central Board of Direct Taxes. The petitioner contended that no Show Cause Notice had been served and submitted that, had such notice been served, he could have demonstrated that the returns reflected in his Income Tax Returns arose from trading in farm products which, according to him, were exempt from Goods and Services Tax. Reliance was placed on M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax, W.P. No.11154/2023 and connected matters dated 03.07.2024, where proceedings in similar circumstances had been restored for reconsideration with an opportunity to file a detailed response and produce documents, as well as an Order dated 28.08.2025 in W.P. No.24577/2025. The respondents pointed to the finding in paragraph 7 of the impugned order that the petitioner had neither filed a response nor attended personal hearings.
The High Court, however, considered it crucial that the question whether the turnover of the petitioner’s services, described as trading in farm products, would be exigible to service tax had not been examined. It held that this aspect required due consideration before a sustainable liability could arise. Accordingly, the Court quashed the Order-in-Original dated 06.02.2023 and restored the proceedings to the first respondent for reconsideration. The petitioner was directed to file his response, if any, by 08.10.2026 without further notice and without waiting for a certified copy of the order. The first respondent was directed to consider all the circumstances without non-suiting the petitioner on the ground of delay.
Cases Discussed
- M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax (Karnataka High Court) — W.P. No.11154/2023 and connected matters, dated 03.07.2024 — relied upon for restoration of proceedings for reconsideration with opportunity to file a detailed response and produce documents.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the Order-in-original dated 06.02.2023 [Annexure-A] under Section 73 of the Finance Act, 1994, and this Adjudication Order is based on the information received from the Central Board of Direct Taxes. Sri Gowrishankar Prasad H R, the learned counsel for the petitioner, submits that the petitioner is not served with a Show Cause Notice and if the petitioner was served with a Show Cause Notice, the petitioner could have shown that the Returns in the Income Tax Returns are from trading in farm products that are exempted from ‘Goods and Services Tax’.
Sri Gowrishankar Prasad H R emphasizes that this Court, in similar circumstances, has restored the proceedings for reconsideration with an opportunity to file a detailed Response and produce documents, and the learned counsel relies upon the decision 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 and also the Order dated 28.08.2025 in the writ petition in W.P. No.24577/2025.
Sri Aravind V Chavan, a learned standing counsel for the respondents who is called upon to accept notice for the respondents, is heard for disposal of the petition in the light of the afore. The first respondent has recorded in paragraph-7 of the impugned Order that the petitioner has not filed a Response or attended the personal hearings. This Court is persuaded to opine that it is crucial that whether the turnover of the petitioner’s services [trading in farm products] would be exigible to service tax is not examined and there must be due consideration of this aspect before there can be sustainable liability. In the light of the afore, the following:
ORDER
[A] The petition is allowed in-part and the first respondent’s impugned Order-in-Original dated 06.02.2023 [Annexure-A] is quashed restoring the proceedings to the first respondent for reconsideration.
[B] The petitioner shall file response, if any, with the first respondent by 08.10.2026 without further notice, without waiting for a certified copy of this order.
[C] The first respondent shall consider all the circumstances without non-suiting the petitioner on the ground of delay.
