M/S. Evergreen Enterprises vs. The Assistant Commissioner Of Commercial Taxes
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Cause title — parties, addresses and appearances
A) QUASHING THE IMPUGNED ADJUDICATION ORDER DATE NO.19/2024.26 DATED 20.02.2025 PASSED BY RESPONDENT INSOFAR AS IT DETERMINES AN INTEREST LIABILITY OF RS.7,04,778/- (ANNEXURE - F); B) CONSEQUENTLY, QUASHING THE FORM GST DRC- 07 BEARING REFERENCE NO. ZD2902250863760 DATED 21.02.2025 (ANNEXURE G).
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 is aggrieved by the Adjudication Order dated 20.02.2025 [Annexure-F] under Section 73 of Karnataka Goods and Services Tax Act, 2017/Central Goods and Services Act, 2017 [for short, 'the Act']. This Order relates to the financial year 2020-21. The petitioner is issued with the Show Cause Notice in Form GST DRC-01 after Intimation in Form GST DRC-01A. On 06.12.2024, the petitioner HC-KAR
CNR: KAHC010451862026 NC: 2026:KHC:36133 has responded to the Show Cause Notice in Form GST DRC-01, and it has voluntarily discharged the tax liability through Form GST DRC-03 on 19.11.2024. The petitioner does not make a grievance with the Demand and the payment thereof, and the petitioner's grievance is with the Demand for a sum of Rs.7,04,778/- as interest at the rate of 1.5% per month.
Sri Gaurav Datta, the learned counsel for the petitioner, submits that the petitioner was not aware of the impugned Order as it was being handled by a Tax Practitioner who is no longer assisting the petitioner and that the petitioner has come to know about the order only when its representative could re- access the portal in June 2026 with the assistance of another Tax Practitioner. The learned counsel argues that if the petitioner is to be called upon to pay interest, the details of the computation must be made known to the petitioner, and the learned counsel also HC-KAR
CNR: KAHC010451862026 NC: 2026:KHC:36133 seeks to elaborate on why the petitioner cannot be made liable to answer interest as well as the Demand.
Sri K Hema Kumar, a learned Additional Government Advocate who accepts notice for the respondent, is heard in the light of this grievance. On perusal of the impugned Order, this Court must observe that it cannot be gainsaid that the impugned Order does not refer to computation except mentioning that the interest is at the rate of 1.5% per month. As such, this Court finds considerable force in the submissions that the petitioner cannot be called upon to answer a liability to pay interest without computation, but as pointed out by Sri K Hema Kumar, the interference in the present case must be limited to that aspect and not to dissolve or quash the entire Order. HC-KAR
CNR: KAHC010451862026 NC: 2026:KHC:36133
This Court is of the opinion that with the matter being restored, the respondent can treat the restored proceedings as rectification proceedings, extend an opportunity to the petitioner to file a response on the computation that could be and decide on the case on the demand for interest afresh. In the light of the afore, the following. ORDER [A] The petition stands disposed of restoring the proceedings to the respondent to be taken up on board as rectification proceedings insofar as the claim for interest.
[B] The petitioner shall appear before the respondent on 31.08.2026. [C] The petitioner shall be served with computation of interest in terms of the Adjudication Order dated HC-KAR
CNR: KAHC010451862026 NC: 2026:KHC:36133
2025 and the petitioner will be at liberty to file response thereto.
[D] If the petitioner files response as now permitted within such time as may be found proper by the respondent, the same shall be considered for a just order. (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.