M/S Vayuputra Electricals vs. Assistant Commissioner Of Commercial Taxes (Audit-1)
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The petitioner challenged an adjudication order under Section 73(9) and a demand notice under Section 79(1)(c) for the tax period 2019-2020, where Input Tax Credit was denied based on audit observations. The order was passed ex-parte as the petitioner failed to respond to the show cause notice issued under Section 73.
Held
The High Court held that a personal hearing under Section 75(4) is mandatory when an adverse order is contemplated, irrespective of whether the assessee requested it or responded to the show cause notice. The adjudication order and demand notice were quashed, providing the petitioner an opportunity to file a response, documents, and receive a personal hearing, subject to depositing 10% of the demanded tax.
Key Issues
The key issues were whether a personal hearing is mandatory under Section 75(4) of the KGST/CGST Act even if the assessee fails to respond to a show cause notice, and the validity of an ex-parte adjudication order passed without such a hearing.
Sections Cited
Section 73, Section 73(9), Section 75(4), Section 79(1)(c)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER The petitioner's grievance is with the Adjudication Order dated 09.08.2024 [Annexure-B] under Section 73 (9) of Karnataka Goods and Services Tax Act, 2017 and Central Goods and Services Tax Act, 2017 [for short, the KGST/CGST Act’]. The petitioner has also called in question the Demand in Form GST DRC - 13, [Annexure- HC-KAR NC: 2026:KHC:33978 C.] The Adjudication Order reads that the petitioner is served with a show cause notice by RPAD on 20.04.2024 but the petitioner has not filed any reply. The show cause notice is preceded by intimation in Form GST DRC - 01A dated 14.03.2024. The petitioner is denied the Input Tax Credit based on the audit observation on verification of GSTR-7 and GSTR-3B.
Ms. Monisha Sen, the learned counsel for the petitioner, argues for this Court's interference contending that it was incumbent upon the Adjudicating Officer to extend an opportunity of hearing as contemplated under Section 75(4) of the KGST/CGST Act, but the petitioner is not extended such opportunity. The learned counsel submits that if the opportunity of personal hearing is extended, the petitioner can demonstrate that the declarations in Form [Form GSTR-3B] are based on genuine invoices and transactions. The learned counsel also proposes to argue for this Court's interference on the ground that the Adjudication Order is a mirror image of the show cause notice. HC-KAR NC: 2026:KHC:33978
However, this Court must at the very outset observe that this Court is not persuaded to interfere on these two grounds. The petitioner has not filed a response despite being served with the show cause notice under RPAD and through email ID/dealer login ID. The petitioner has also had access to the show cause notice on the portal. The Officer has reiterated the contents of the show cause notice only because the petitioner has not filed a response. This Court is inclined to observe that if there is no response to the intimation or the show cause notice despite these circumstances, the Courts cannot take exception with the reiteration of the contents of such notice in the impugned Adjudication Order.
Sri K. Hema Kumar, the learned Additional Government Advocate who accepts notice for the respondent, is heard on whether this Court must interfere on the ground that the petitioner is not extended with a personal hearing and whether this Court must extend such personal hearing in the light of the petitioner's specific case that the petitioner can justify all transactions by producing documents even at this stage. HC-KAR NC: 2026:KHC:33978 This Court must observe that an opportunity of personal hearing cannot be made contingent upon the assessee making a request in view of Section 75 (4) of KGST/CGST Act, especially when an adverse order is contemplated against the noticee. The petitioner asserts that it can produce documents to justify the genuineness of the transactions. This Court must also observe that in similar circumstances this Court has interfered in extending an opportunity without relegating the concerned to avail the appellate remedy. However, the petitioner must be put on just terms. In the light of the afore, the following: ORDER [A] The petition is allowed-in-part quashing the Adjudication Order dated 09.08.2024 [Annexure-B] and the Notice in Form GST DRC- 13 [Annexure-C] with liberty to the petitioner to file response to the show cause notice along with an opportunity to file documents observing that the Adjudicating Officer shall extend personal hearing as part of the opportunity provided. HC-KAR NC: 2026:KHC:33978 [B] The petitioner shall file a response with documents by 24.08.2026 and the petitioner shall also deposit 10% of the tax in demand by such date subject to the final orders in the assessment proceedings. (B M SHYAM PRASAD) JUDGE
SA Ct:sr
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.