M/S S.M. Constructions vs. The Assistant Commissioner Of Commercial Tax
Original PDF →Facts
M/s. S. M. Constructions, a proprietorship firm represented by its 78-year-old authorized representative, filed a writ petition challenging a show cause notice dated September 4, 2023, issued by the Assistant Commissioner of Commercial Tax under Section 73(1) of the CGST Act, and an adjudication order dated December 21, 2023, issued under Section 73(9). The petitioner claimed to have closed its business in early 2023 due to the proprietor's age and inability to continue construction work. The show cause notice was uploaded on the GST portal, which the petitioner, having stopped visiting the portal after business closure, did not see. Consequently, the adjudication order was passed without the petitioner's participation. The petitioner had filed 'NIL' returns, indicating cessation of business.
Held
The Court allowed the writ petition. It quashed the Order of Adjudication dated December 21, 2023, passed by the respondent. The Court reasoned that while the petitioner was required to inform the authorities about the business closure and cancel their registration, considering the proprietor's age (78 years) and the fact that no business had been conducted, the petitioner should be granted one more opportunity to present their documents. The Court found the respondent's submission that the show cause notice was sent by email unconvincing without proof of delivery or opening. Therefore, the petitioner was permitted to file a reply to the show cause notice dated September 4, 2023, on or before August 22, 2025. The respondent was directed to consider this reply and pass appropriate orders in accordance with the law. The issue of whether the show cause notice was validly served was implicitly decided in favor of the petitioner by allowing them to reply.
Key Issues
1. Whether the adjudication order dated 21.12.2023, passed under Section 73(9) of the CGST Act, is liable to be quashed for being without the authority of law, considering the petitioner did not participate in the proceedings? 2. Whether the show cause notice dated 04.09.2023, issued under Section 73(1) of the CGST Act, is liable to be quashed for being without the authority of law, given the petitioner's alleged non-receipt and the circumstances of business closure? Petitioner's Arguments: The petitioner argued that both the show cause notice and the adjudication order were passed without proper authority of law. They contended that due to the closure of business and the age of the authorized representative, they did not see the show cause notice uploaded on the GST portal, leading to an ex-parte adjudication order. They sought an opportunity to be heard and to present their case. Respondent's Arguments: The learned Assistant Government Advocate (AGA) for the respondent submitted that the show cause notice was sent by email. However, the Court noted the lack of proof of delivery or opening of the email.
Sections Cited
Section 73(1), Section 73(9)
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Cause title — parties, addresses and appearances
ORAL ORDER
Learned AGA accepts notice for the respondent.
Petitioner is before this Court seeking for the following reliefs: (i) Issue a Writ of Certiorari quashing show Cause Notice bearing no. ACCT/LGSTO-040/DRC-01A/2022-23 dated 04.09.2023 issued by the Respondent under sec.73 (1), for being without the authority of law (Annexure-A).
(ii) Issue a Writ of Certiorari quashing Order of Adjudication No. ACCT/LGSTO-040/I DRC-07/3/2023- 24 dated 21.12.2023 passed by the Respondent under sec.73 (9), for being without the authority of law (Annexure-B).
(iii) To issue Order(s), Directions, Writ(s) or any other relief, holding that the actions of the Respondent are illegal and award a Cost appropriate as this Hon'ble Court deems it fit and proper in the facts and circumstances of the case in the interest of justice and equity.
(iv) To issue Order(s), Directions, Writ(s) or any other relief as this Hon'ble Court deems it fit and proper in the facts and circumstances of the case in the interest of justice and equity.
Alternatively,
(v) Issue a Writ of Mandamus, directing Respondent to reconsider the case on hand in fresh adjudication, while providing Petitioner an opportunity of being heard.
A short grievance of the petitioner is that the petitioner had closed his business in the beginning of the year 2023 i.e., after COVID-19. Since the Authorised Representative HC-KAR NC: 2025:KHC:28010 of the petitioner was 78 years old, he could not carry on the business of construction. The impugned Show Cause Notice having been issued on 04.09.2023, uploaded on the GST portal, was not seen by the petitioner as the petitioner has stopped visiting the GST portal. In pursuance of which, the adjudication order was passed on 21.12.2023 at Annexure-B without the petitioner participating in the said proceedings.
A perusal of the documents filed indicates that 'NIL' returns have been filed by the petitioner, which establishes that the petitioner has apparently stopped the business and it gives credence to the submission that on the closure of the business, the petitioner did not visit the GST portal. Though it was required for the petitioner to have informed the respondents about such closure of business and cancel the registration, considering that the proprietor of the petitioner is 78 years old and that no business has been conducted, the petitioner is required to be provided one more opportunity to place all the documents on record before the respondent-Authorities. HC-KAR NC: 2025:KHC:28010
The submission of Sri K.Hemakumar, learned AGA for the respondent that the show cause notice has been sent by E-mail, is at present, cannot be accepted without any proof of delivery or proof of petitioner having opened the said email. In one other matter, this Court has directed the respondents to implement such a system.
In that view of the matter, I pass the following order: i) Writ petition is allowed.
ii) The order of Adjudication dated 21.12.2023 (Annexure-B) passed by the respondent is quashed.
iii) Petitioner is permitted to reply to the show cause notice dated 04.09.2023 at Annexure-A, which reply shall be submitted to the respondent, without requirement of any further notice, on or before 22.08.2025, which shall be considered by the respondent and appropriate orders be passed in accordance with law. (SURAJ GOVINDARAJ) JUDGE
VM List No.: 1 Sl No.: 43
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.