Judgment
- 1 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF AUGUST, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 14225 OF 2026 (T-RES) BETWEEN:
M/S SRI VINAYAKA ELECRICALS A SOLE PROPRIETORSHIP, HAVING ITS PLACE OF BUSINESS AT NO. 109, WARD 17, KOARACHARA COLONY, KR EXTENSION, MADHUGIRI, TUMAKURU, KARNATAKA - 572 132, REPRESENTED BY ITS PROPRIETOR, MR. NAGARAJ AGED ABOUT 44 YEARS, S/O NARAYANAPPA, RESIDING AT NO. 16, 2ND MAIN ROAD, KUNIGAL ROAD, BANASHANKARI, TUMAKURU, KARNATAKA-572 102.
…PETITIONER (BY SRI.JOSEPH VARGHESE., ADVOCATE) AND:
1.
COMMERCIAL TAX OFFICER (AUDIT)-6.2, DGSTO - 6 HAVING ITS OFFICE AT 3RD FLOOR, KIADB BUILDING, 14TH CROSS, 2ND STAGE, PEENYA INDUSTRIAL AREA, BENGALURU-560058.
Digitally signed by VANAMALA N Location:
HIGH COURT OF KARNATAKA
- 2 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
2.
COMMERCIAL TAX OFFICER, (ENFORCEMENT)-3 TUMAKURU, HAVING ITS OFFICE AT VANIJYA THERIGE SANKIRNA, SIDDARAMESHWARA LAYOUT.
TUMAKURU-572 102.
3.
JOINT COMMISSIONER OF COMMERCIAL TAXES, (ADMINISTRATION) - DGSTO-06, HAVING ITS OFFICE AT 3RD FLOOR, KIADB BUILDING, 14TH CROSS, 2ND STAGE, PEENYA, BENGALURU-560 058.
…RESPONDENTS (BY SMT. MALAVIKA PRASAD., HCGP)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE IMPUGNED INSPECTION REPORT DATED 20.10.2022 BEARING NO. JCCT(VIG)/CTO(ENF- 3), TMK AND BEARING INS 05/2022-23 ISSUED BY THE RESPONDENT NO. 2 (ANNEXURE A); II. QUASHING THE IMPUGNED PRE-INTIMATION TO SHOW CAUSE NOTICE BEARING NO.
CTO (AUDIT)-6.2/2023-24 DATED 17.05.2023 ISSUED BY THE RESPONDENT NO.1 (ANNEXURE B);
III QUASHING THE IMPUGNED ELECTRONIC INTIMATION OF TAX ASCERTAINED ISSUED IN FORM GST DRC 01 A UNDER SECTION 73(5) OF THE KGST ACT, 2017 BEARING REF NO.
- 3 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
ZD290523011780K, CASE ID AD290523010899P DATED 18.05.2023 ISSUED BY R1 (ANNEXURE-B1);
IV. QUASHING THE IMPUGNED SHOW CAUSE NOTICE ISSUED UNDER SECTION 73(1) OF THE KGST ACT, 2017 BEARING NO.
DGTSO-06/CTO(A)-6.2/ADJ- 02/S.73/2023-24 DATED 15.06.2023 ISSUED BY THE RESPONDENT NO. 1(ANNEXURE C); V. DIRECTION, QUASHING THE IMPUGNED SUMMARY OF SHOW CAUSE NOTICE ISSUED IN FORM GST DRC-01 BEARING REFERENCE NO. ZD290623014256G DATED 15.06.2023 ISSUED BY THE RESPONDENT NO. 1 (ANNEXURE C1); VI. QUASHING THE IMPUGNED ORDER OF ADJUDICATION PASSED UNDER SECTION 73(9) OF THE KGST ACT, 2017, BEARING NO. DGSTO-06/CTO(A)- 62/ADJ/ORD-134/24-25 DATED 20.02.2025 PASSED BY THE RESPONDENT NO.
1 (ANNEXURE E);
VII. QUASHING THE IMPUGNED SUMMARY OF THE ORDER OF ADJUDICATION ISSUED IN FORM GST DRC- 07 BEARING REFERENCE NO.
ZD290225083122K DATED 20.02.2025 ISSUED BY THE RESPONDENT NO. 1 (ANNEXURE E1); VIII. QUASHING THE IMPUGNED GARNISHEE NOTICE ISSUED IN FORM GST DRC-13 BEARING NO.
DGSTO-6/CTO-(A)-6.2/DRC-13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO. 1 TO THE CITY CORPORATION, BH ROAD, SHIVAMOGGA- 577 201 TO REMIT THE IMPUGNED DEMAND FROM THEIR PAYABLES TO THE PETITIONER (ANNEXURE F);
IX. QUASHING THE IMPUGNED GARNISHEE NOTICE
- 4 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
ISSUED IN FORM GST DRC-13 BEARING NO. DGSTO- 6/CTO-(A)-6.2/DRC-13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO.1 TO THE MUNICIPAL COMMISSIONER GADAG BETAGERI, GADAG-582 101, TO REMIT THE IMPUGNED DEMAND FROM THEIR PAYABLES TO THE PETITIONER (ANNEXURE F1); X. ALTERNATIVELY, DIRECT THE RESPONDENT NO.1 TO ISSUE A FRESH SHOW CAUSE NOTICE IN ACCORDANCE WITH LAW, BY QUASHING THE IMPUGNED SHOW CAUSE NOTICE ISSUED UNDER SECTION 73(1) OF THE KGST ACT, 2017 BEARING NO.
DGTSO-06/CTO(A)-6.2/ADJ-02/S.73/2023-24 DATED 15.06.2023 ISSUED BY THE RESPONDENT NO.1(ANNEXURE C), THE IMPUGNED SUMMARY OF SHOW CAUSE NOTICE ISSUED IN FORM GST DRC-01 BEARING REFERENCE NO. ZD290623014256G DATED 15.06.2023 ISSUED BY THE RESPONDENT NO.1(ANNEXURE C1), THE IMPUGNED ORDER OF ADJUDICATION PASSED UNDER SECTION 73(9) OF THE KGST ACT, 2017, BEARING NO. DGSTO-06/CTO(A)- 6.2/ADJ/ORD-134/24-25 DATED 20.02.2025 PASSED BY THE RESPONDENT NO.1(ANNEXURE E), THE IMPUGNED SUMMARY OF THE ORDER OF ADJUDICATION ISSUED IN FORM GST DRC-07 BEARING REFERENCE NO. ZD290225083122K DATED 20.02.2025 ISSUED BY THE RESPONDENT NO.1 (ANNEXURE E1), THE IMPUGNED GARNISHEE NOTICE ISSUED IN FORM GST DRC-13 BEARING NO. DGSTO-
- 5 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
6/CTO-(A)-6.2/DRC-13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO.I TO THE CITY CORPORATION, BH ROAD, SHIVAMOGGA 577 201 TO REMIT THE IMPUGNED DEMAND FROM THEIR PAYABLES TO THE PETITIONER (ANNEXURE F), THE IMPUGNED GARNISHEE NOTICE ISSUED IN FORM GST DRC-13 BEARING NO.
DGSTO-6/CTO-(A)-6.2/DRC- 13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO.1 TO THE MUNICIPAL COMMISSIONER GADAG BETAGERI, GADAG-582 101(ANNEXURE F1) ANDGRANT AN INTERIM PRAYER TO STAY ALL FURTHER PROCEEDINGS PURSUANT TO THE IMPUGNED ORDER OF ADJUDICATION PASSED UNDER SECTION 73(9) OF THE KGST ACT, 2017, BEARING NO.
DGSTO-06/CTO(A)-6.2/ADJ/ORD- 134/24-25 DATED 20.02.2025 PASSED BY THE RESPONDENT NO.1(ANNEXURE E), THE IMPUGNED SUMMARY OF THE ORDER OF ADJUDICATION ISSUED IN FORM GST DRC-07 BEARING REFERENCE NO.
ZD290225083122K DATED 20.02.2025 ISSUED BY THE RESPONDENT NO. 1 (ANNEXURE E1), THE IMPUGNED GARNISHEE NOTICE ISSUED IN FORM GST DRC-13 BEARING NO.
DGSTO-6/CTO-(A)-6.2/DRC-13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO.1 TO THE CITY CORPORATION, BH ROAD, SHIVAMOGGA - 577 201 TO REMIT THE IMPUGNED DEMAND FROM THEIR PAYABLES TO THE PETITIONER (ANNEXURE F), THE IMPUGNED GARNISHEE NOTICE ISSUED IN FORM
- 6 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
GST DRC-13 BEARING NO. DGSTO-6/CTO-(A)-6.2/DRC- 13/25-26 DATED 29.12.2025 ISSUED BY THE RESPONDENT NO.1 TO THE MUNICIPAL COMMISSIONER GADAG BETAGERI, GADAG -582 101, TO REMIT THE IMPUGNED DEMAND FROM THEIR PAYABLES TO THE PETITIONER (ANNEXURE F1).
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
ORAL ORDER
The petitioner has called in question the following and these are for the financial year 2020- 2021.
Sl.
No.
Notices/ Orders Date Provisions of KGST Act and Rules, 2017 Annexures 1 Inspection Report 20.10.2022
A 2 Pre-Intimation to Show Cause Notice 17.05.2023 Rule 142[1A] B 3 Intimation in DRC-01A 18.05.2023 Rule 142[1A] B1 4 Show Cause Notice in DRC- 01 15.06.2023 73[1] C 5 Summary of Show Cause Notice 15.06.2023
C1 6 Adjudication 20.02.2025 73[9] E
- 7 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
Order 7 Summary of Adjudication Order 20.02.2025
E1 8 Garnishee Notice 29.12.2025 79[1][c] F 9 Garnishee Notice 29.12.2025 79[1][c] F1
The proceedings are initiated under Section 73 of the Karnataka Goods and Services Tax Act, 2017 [for short, the Act’] with the issuance of the impugned Show Cause Notice dated 15.06.2023 because of a mismatch between Form GSTR-1 and Form GSTR-3B.
2.
The petitioner has supplied goods and services relating to maintenance of streetlights for different Government departments and agencies, and the petitioner claims exemption under the Notification No.12/2017 dated 28.06.2017 asserting that the value of the goods supplied is below 25% of the works contract value and therefore it is entitled to exemption. The first respondent has passed the impugned Adjudication Order observing that, despite
- 8 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
three reminders, the petitioner has not filed any Reply or discharged the tax liability.
3.
Mr. Joseph Varghese, the learned counsel for the petitioner, and Ms. Malavika Prasad, a learned High Court Government Pleader, are heard on whether this Court must interfere and the terms of the interference that should be with the petitioner asserting that the first respondent's observation is despite the fact that the petitioner has filed Reply on 17.07.2023 in terms of Annexure-D1. The petitioner has indeed responded to the Show Cause Notice in the prescribed form but the first respondent has not considered the same.
4.
Crucially, the petitioner's case is that it can produce even at this stage the works contract, sales invoices and other documents to demonstrate that the value of the goods supplied is less than 25% of the works contract value and therefore entitled to
- 9 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
exemption. This Court must observe that there is a definite failure in considering the petitioner's Reply to the Show Cause Notice and therefore there must be interference restoring the proceedings for reconsideration. Hence the following:
ORDER The petition is allowed-in-part and the following Orders/Garnishee Notices are quashed subject to the following terms.
Sl.
No.
Notices/ Orders Date Provisions of KGST Act and Rules, 2017 Annexures 1 Adjudication Order 20.02.2025 73[9] E 2 Summary of Adjudication Order 20.02.2025
E1 3 Garnishee Notice 29.12.2025 79[1][c] F 4 Garnishee Notice 29.12.2025 79[1][c] F1
[i] The proceedings are restored to the first respondent for due consideration subject
- 10 - HC-KAR
CNR: KAHC010314152026 NC: 2026:KHC:46881 WP No. 14225 of 2026
to the petitioner depositing 10% of the tax in demand by 30.09.2026 subject to the outcome in the restored proceedings.
[ii] The petitioner is permitted to file, along with the certified copy of this Order, the copies of the documents to show the genuineness of the transactions.
[iii] The petitioner shall produce these documents by 30.09.2026 and the first respondent shall consider these documents and then conclude the proceedings by a reasoned order.
Sd/- (B M SHYAM PRASAD) JUDGE
AN/-