M/S Sri Krishna Hardware vs. The Union Of INDIA
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The petitioner challenged an ex parte adjudication order and an appellate order denying Input Tax Credit (ITC) for the period 2019-20, alleging excess ITC claims. The petitioner contended that non-service of notices and issues with out-of-state suppliers prevented them from producing necessary certificates to prove genuine transactions.
Held
The High Court quashed both the adjudication and appellate orders, restoring the proceedings. It granted the petitioner liberty to file all original documents and requisite certificates with the Assistant Commissioner by 31.08.2026 for reconsideration, with the petitioner agreeing not to pursue the constitutional challenge to Section 16(2)(c).
Key Issues
Whether the petitioner was rightly denied Input Tax Credit due to non-production of certificates and if the ex parte adjudication and appellate orders were valid given the petitioner's claims of non-service and genuine transactions.
Sections Cited
Section 16(2)(c), Section 73
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER PASSED BY THE 5TH RESPONDENT DATED 29.12.2025 FOR TAX PERIODS FALLING IN THE PERIOD 2019-20 IN APPEAL GST.AP. NO.974/24-25 (ANNEXURE-A) IS WITHOUT THE AUTHORITY OF LAW.
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 constitutionality of Section 16[2][c] of the Central Goods and Services Tax Act, 2017/State Goods and HC-KAR NC: 2026:KHC:33827 Services Tax Act, 2017 [CGST/SGST Act] while impugning the Appellate Authority's Order dated 29.12.2025 [Annexure-A] and the Order of Adjudication dated 17.08.2024 [Annexure-B] under Section 73 of the 'CGST/SGST Act. The proceedings under Section 73 of the CGST/SGST Act are initiated against the petitioner on the ground that the petitioner has claimed excess Input Tax Credit [ITC].
The petitioner is issued with both the Intimation in Form GST DRC-01A on 21.08.2023 and Show Cause Notice in Form GST DRC-01 on 14.09.2023. However, the petitioner has filed no response resulting in the Adjudication Order dated 17.08.2024. The Appellate Authority has partly allowed the appeal but observing that the petitioner has failed to produce Certificates in terms of the extant Circular and therefore is not eligible to any relief in the appeal. HC-KAR NC: 2026:KHC:33827
Sri R. Chandrashekar, the learned counsel for the petitioner, and Sri K. Hema Kumar, a learned Additional Government Advocate, are heard for the disposal of the petition. The petitioner has enclosed invoices and certain ledger extracts to assert that the reason for the allegation of excess availment of ITC is because a supplier has belatedly uploaded the details while another supplier has made certain erroneous declarations and that the petitioner could not prevail upon such suppliers in time because the suppliers are outside the State of Karnataka.
Sri R. Chandrashekar argues that the petitioner could not produce Certificates, which would be permissible in terms of the Circulars dated 27.12.2022 and 17.07.2023, to justify the claim of genuine transactions because the petitioner was not served with either the Intimation or Show Cause Notice. Sri K. Hema Kumar is heard on whether there must be interference limited to the extent of restoring HC-KAR NC: 2026:KHC:33827 the proceedings for reconsideration, with Sri R. Chandrasekhar categorically stating that if there is a restoration of the proceedings, the petitioner will not pursue its grievance on the constitutionality of Section 16[2][c] of the CGST/SGST Act.
The Adjudication Order is an ex parte order, and the Appellate Order is because the petitioner has not filed the requisite Certificates. The petitioner relies upon certain invoices and ledger extracts to justify the genuineness of the transaction and the ITC claimed. The petitioner is also categorical that in terms of the afore Circulars, the petitioner can file Certificates. If the petitioner files such Certificates as permissible in terms of the Circulars, there could be a re-examination without further precipitation, and a remand for these purposes would be more efficacious than relegating the petitioner to the second appellate remedy. Hence the following HC-KAR NC: 2026:KHC:33827 ORDER The petition stands disposed of quashing the Adjudication Order dated 17.08.2024 [Annexure- B] and the Order-in-Appeal dated 29.12.2025 [Annexure-A] restoring the proceedings with liberty to the petitioner to file all originals with requisite Certificates, without further notice, by 31.08.2026 with the fourth respondent. (B M SHYAM PRASAD) JUDGE
NV List No.: 3 Sl No.: 5
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.