M/S. Ushan Holdings vs. Assistant Commissioner Of Commercial Taxes
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Cause title — parties, addresses and appearances
ORDER BEARING FILE NO. ACCT/LGSTO/20/T.NO-/2024-25 IN CASE-ID/ARN NO.AD2903240065011 DATED 30.07.2024 ISSUED BY THE FIRST RESPONDENT (ANNEXURE-A), AND QUASH THE SAME AS ARBITRARY, ILLEGAL, VIOLATIVE OF PRINCIPLES OF NATURAL JUSTICE AND NON-EST IN LAW AND/OR TO CONDONE THE DELAY IN FILING APPEAL AS AGAINST THE SAID ORDER AND/OR TO REMAND THE MATTER FOR DE-NOVO CONSIDERATION AND THUS IN THE FACTS AND CIRCUMSTANCES RENDER JUSTICE; (II) DIRECTION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA BY DECLARING HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 IMPUGNED NOTIFICATIONS NUMBERED AS 56/2023- CT DATED 28.12.2023 AND 25/2023 FD 20 CSL 2023 DATED 29.12.2023 (ANNEXURE- B AND ANNEXURE-B.1) ISSUED BY THE 3RD AND 4TH RESPONDENTS, RESPECTIVELY, AS BEING ULTRA VIRES SECTION 168A READ WITH SECTION 73 OF CGST/KGST ACT, 2017. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD
ORAL ORDER
The petitioner is aggrieved by the Adjudication Order dated 30.07.2024 [Annexure-A] passed by the first respondent. The Adjudication order is for the period between April 2019-March 2020. This Adjudication Order is premised in the assertion that the Show Cause Notice is issued to the petitioner, but it has filed no response.
Sri Aryaman Ghulati, the learned counsel for the petitioner, contends on merits that the proceedings under Section 73 of the Act are in the premise that the petitioner has not paid any tax for the relevant period 2019-20 but this is factually HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 incorrect as could be seen from Form GSTR-9 filed for the relevant period and that the petitioner has indeed offered taxes both as CGST and SGST. The learned counsel invites this Court’s attention to the following averment in the memorandum of petition. “Thereafter, without any verification by the first respondent in its capacity as a quasi- judicial authority, has merely confirmed the proposals of the Show Cause Notice in a mechanical manner and sans any opportunity of hearing being provided to the petitioner vide ex-parte Order dated 30.07.2024. It is submitted that the local auditor has neither checked the same nor informed the petitioner of such proceedings having been instituted. It is only on the receipt of the call from the Department, that the petitioner was made aware of the impugned proceedings.”
Sri Aryaman Ghulati also submits that this Court in WP No. 4917/20211 [M/s Instakart Services Pvt. Ltd. V. Union of India and others]
1 This Court’s order is dated 09.02.2026 HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 has read down Section 16[2][c] of the CGST/ KGST Act, 2017 and Rule 36[4] of the CGST/ KGST Rules, 2017 allowing the benefit of ITC to bonafide recipients/RTP provided that such recipient/person has complied with all conditions under these provisions even of there is any default by a supplier.
Sri K Hema Kumar, a learned Additional Government Advocate who accepts notice for the first and fourth respondents, Sri Jeevan J Neeralgi, a learned standing counsel for the second and third respondents who accepts notice for these respondents, are heard for the disposal of the petition. The learned Additional Government Advocate submits that the Union of India has filed an intra-court appeal as against the decision in M/s Instakart Services Pvt. Ltd. V. Union of India and others [supra] and that State Government also proposes to file such appeal emphasizing that the HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 question whether there could be reading down of the afore provisions will still be at large.
This Court, in the circumstances, examines whether the petitioner must be admitted to another reasonable opportunity. The respondent has referred to the Show Cause Notice in GST DRC-01 dated 03.04.2024 but without referring to details of the opportunity so extended. Crucially, the petitioner contends that the mismatch between Forms GSTR-3B and GSTR-9 can be explained with the support of documents, When all the circumstances are considered, this Court is of the view that the petition must be disposed of extending another opportunity to the petitioner without expressing any view on reading down Section 16[2][c] of the CGST/ KGST Act, 2017 and Rule 36[4] of the CGST/ KGST Rules, 2017. Hence, the following. HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 ORDER
The petition is allowed and the Adjudication Order dated 30.07.2024 [Annexure-A] is quashed subject to the following terms.
[a] The proceedings are restored to the first respondent for due consideration subject to the petitioner depositing 10% of the tax in demand by 05.10.2026 subject to the outcome in the restored proceedings
[b] 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 along with the reconciliation, if any.
[c] The petitioner shall produce these documents by 05.10.2026 and the first respondent shall consider these HC-KAR
CNR: KAHC010264652026 NC: 2026:KHC:38397 documents and then conclude the proceedings by a reasoned order.
[d] Insofar as the petitioner’s grievance with the Notifications in No. 56/2023-CT dated 28.12.2023 and No. 25/2023 FD 20CSL 2023 dated 29.12.2023, it is observed that the petitioner is reserved with liberty subject to the outcome in the restored proceedings. (B M SHYAM PRASAD) JUDGE
AN/-
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.