M/S Purva Metal Sections Private Limited vs. State Of Karnataka
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Before: DR. B.R. AMBEDKAR VEEDHI,
The petitioner has challenged the validity of the Audit Observations at Annexure-'A' dated 24.05.2022, Audit Observations-2 at Annexure-'B' dated 27.06.2022 as well as the Audit Report at Annexure-'C' dated 16.08.2022 passed by respondent No.4 and the Show Cause Notice at Annexure-'D' dated 13.10.2022 issued by respondent No.
The petitioner has also challenged the order of adjudication at Annexure-'E' dated 23.12.2022 passed by respondent No.4 and the Summary of Order at Annexure-'F' dated 23.12.2022 and has sought for setting aside of the demand of tax, interest and penalty.
The petitioner submits that the Show Cause Notice at Annexure-'D' being cryptic has resulted in an ineffective reply and accordingly, the Order of Adjudication passed at Annexure-'E' is vitiated for not having afforded sufficient opportunity to the petitioner.
It is further contended that in light of the Show Cause Notice at Annexure-'D' not detailing the grounds
- 4 - sufficiently, the petitioner has been deprived of the opportunity to putforth his case, as the demand would sustain on the ground made out in the Show Cause Notice.
Sri K. Hemakumar learned Additional Government Advocate appearing for the Revenue submits that the Show Cause Notice makes appropriate reference to the Audit Report under Section 65(6) of KGST and CGST Act, 2017 and also the Intimation of Tax ascertained found at Reference No.4 in the Show Cause Notice at Annexure-'D' and the reply of the petitioner 17.09.2022 and the same having been referred in the notice, there is no substance in the contention raised.
Taking note of the contention raised, this Court finds that it would be appropriate if the observations in the Audit Report and the intimation given by the Department be read as part and parcel of the Show Cause Notice and while observing so, the petitioner would be at liberty to make out a fresh reply in light of the observations made,
- 5 - thereby the Show Cause Notice at Annexure-'D' dated 13.10.2022 is now deemed to include the observations in the Audit Report as well as the Intimation of Tax ascertained at Reference-4 and such reply to the Show Cause Notice to be made out by the petitioner within four weeks from the date of receipt of Certified Copy of today's order.
It is noticed rightly that the petitioner's reply has adverted to only certain aspects and not to the entirety of the observations made in the Audit Report and accordingly, the contention of the petitioner that Show Cause Notice at Annexure-'D' by itself does not contain all the grounds, requires acceptance, in the facts of the present case.
In light of the same, all proceedings that has been conducted thereafter viz., including the Order of Adjudication at Annexure-'E' and demand raised at Annexure-'F' are set aside. Annexure-'A' - the Audit Page Nos.5 and 6 are re-typed and replaced vide order dated 13.10.2023. - 6 - Observations dated 24.05.2022, Annexure-'B - Audit Observations-2 dated 27.06.2022, Annexure-'C' - the Audit Report dated 16.08.2022 and the Show Cause Notice at Annexure-'D' dated 13.10.2022 remain intact. The order of Adjudication at Annexure-'E' dated 23.12.2022 and the Summary of Order at Annexure-'F' dated 23.12.2022 are set aside. The matter is remitted back to the Authority. The petitioner to make out a reply as aforestated and the respondent is at liberty to proceed in the matter, in accordance with law. All contentions are kept open.
The writ petition is accordingly disposed off. JUDGE VGR Page Nos.5 and 6 are re-typed and replaced vide order dated 13.10.2023.
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.