Sree Lakshmi Service Station vs. The Deputy Commissioner Of Commercial Taxes (Audit) 6.2 Dgsto - 6
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Cause title — parties, addresses and appearances
ORDER BEARING NO. DCCT (AUDIT)-6.2/GST-DRC-07/2025-26 DATED 11.11.2025 PASSED BY THE RESPONDENT (ANNEXURE-A), (B) QUASH RECOVERY NOTICE IN FORM GST DRC-13 BEARING NO. DCCT(A)-6.2/DGSTO-6/26-27 T. NO. 146/26-27 DATED 18/06/2026 ISSUED BY THE RESPONDENT TO HDFC BANK, BRUNDAVAN NAGAR, SBM LAYOUT, BENGALURU (ANNX-B).
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's grievance is with the Adjudication Order dated 11.11.2025 [Annexure-A] under Section 73(9) of the Central Goods and Services Tax Act/Karnataka Goods and Services Tax Act, 2017 [for short, ‘the Act’] and the Recovery Notice in Form GST DRC-13 dated 18.06.2026 [Annexure-B]. The petitioner is issued with the Show Cause Notice HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600 in Form GST DRC -01 on 28.08.2025 [Annexure-E] alleging excess claim of ITC because of the mismatch between Forms GSTR-2A and GSTR-3B. The petitioner is called upon to show cause against the Tax demand of Rs.93,41,076/- apart from interest and penalty.
The petitioner is issued with another Show Cause Notice but on 08.09.2025 [Annexure-D], and this time the petitioner is called upon to show cause against the same issue and two other issues such as that the petitioner has failed to produce documents to justify declaration on sundry creditors and interest on the late payment of tax through cash in monthly returns [GSTR-3B]. The petitioner has responded to the first Show Cause Notice in Form GST DRC - 01 on 28.08.2025. However, for the second Show Cause Notice in Form GST DRC -01 dated 08.09.2025, the petitioner has sought time to respond without actually responding. HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600
Sri Pradyumna G.H., the learned counsel for the petitioner, arguing for interference with the Adjudication Order and the Recovery Notice with an opportunity to file a detailed response, submits the following. [i] The petitioner is in the business as a Retailer for M/s. Bharat Petroleum dealing with Petrol, Diesel, Lubricants and LPG Gases/Auto-Gases/CNG. [ii] The petitioner has filed Returns disclosing the Turnover and the Taxable turnover. [iii] The petitioner could not secure the required Certificates from M/s Bharat Petroleum, and this has resulted in a default in uploading the invoices from its end. [iv] The petitioner was bona fide in believing that his reply to the Show Cause Notice HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600 dated 28.08.2025 would be treated as a response to even the next Show Cause Notice dated 08.09.2025 even if the petitioner has not participated in the proceedings. [v] The respondent should have examined all the records in terms of the declaration to verify whether the petitioner could indeed be called upon to pay tax in a sum of Rs.93,41,076/- which relate to the sale of Petrol and Diesel.
Sri K Hema Kumar., the learned Additional Government Advocate who accepts notice on behalf of the respondent, is heard for the disposal of the petition in the light of the petitioner's request for restoration of the proceedings with liberty to the petitioner to file a response. The learned Additional Government Advocate submits that the petitioner has HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600 not availed the alternative remedy when it was open and that the petitioner, having failed to avail such remedy, cannot now plead bona fides. When queried, the learned Additional Government Advocate submits that Show Cause Notices have been sent by email as acknowledged by the petitioner. However, what remains undisputed is that the petitioner, when served with the Show Cause Notice dated 28.08.2025, has made a request for an opportunity to file an additional response and for an opportunity of hearing, but that has not been extended.
When queried, Sri Pradyumna G.H. is categorical in stating that notwithstanding the petitioner's defense against the claim for tax and penalty on the sale of Petrol and Diesel, which is not exigible under this enactment, the petitioner will deposit 10% of Rs.93,41,076/-[tax in demand] to show bona fides and to enable a complete adjudication. In the circumstances, this Court is of HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600 the view that there must be interference with the impugned Adjudication Order and the Recovery Notice as per Annexure - A and Annexure- B but in the following terms. ORDER [A] The petition is allowed in-part. [B] The impugned Adjudication Order dated 11.11.2025 [Annexure-A] and the Recovery Notice dated 18.06.2026 [Annexure-B] are quashed subject to the following terms.
[a] The proceedings are restored to the respondent for due consideration, subject to the petitioner depositing 10% of the tax in demand by 31.08.2026 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 HC-KAR
CNR: KAHC010469452026 NC: 2026:KHC:37600 to show the genuineness of the transactions along with the reconciliation, if any. [c] The petitioner shall produce these documents by 31.08.2026 and the respondent shall consider these documents and then conclude the proceedings by a reasoned order. (B M SHYAM PRASAD) JUDGE
SA List No.: 2 Sl No.: 4
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.