M/S Srikanreshwara Traders vs. The Assistant Commissioner Of Commercial Taxes
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Cause title — parties, addresses and appearances
ORAL ORDER The petitioner has sought for setting aside of the Order of Adjudication dated 09.08.2024. 2. It is the case of the petitioner that it has suffered an exparte order and had failed to make out reply to the show cause notice due to bonafide reasons. It is further submitted that the auditor did not communicate to the petitioner regarding the notices that were sent, which was in the knowledge of the auditor. It is submitted that the premise on which the authority has adjudicated the issue is as regards wrongful claim of ITC. It is submitted that the observation made that the supplier was non-existent is erroneous and the petitioner would demonstrate the same by producing necessary HC-KAR NC: 2026:KHC:22132 records. Accordingly, it is submitted that the impugned order may be set aside and matter remitted for re-consideration. It is further submitted that the petitioner would make out reply to the show cause notice on its merits and meet the grounds raised and produce necessary documents to substantiate that the availment of ITC was in order.
Sri K. Hema Kumar, learned Additional Government Advocate submits that the petitioner had not responded to the show cause notice and the authority was constrained to pass orders on the basis of material available. It is submitted that the appeal filed by the petitioner was also rejected on the ground of delay.
Perused the Order of Adjudication. It is noticed that the premise on which the adjudication has been finalized is as regards wrongful claim of ITC. The authority has observed regarding supplier being non-existent.
The aspect of wrongful availment of ITC being densely factual is an aspect that requires to be adjudicated after affording an opportunity to the petitioner. In light of the HC-KAR NC: 2026:KHC:22132 assertion of the petitioner that it would demonstrate that the supply was genuine and has documents including bank statements to demonstrate actual transaction and payment, it would be appropriate to afford an opportunity to the petitioner to make out its reply to the show cause notice by remitting the matter back for re-consideration to the adjudicating authority.
Noticing that the appeal was filed belatedly and has been rejected solely on the ground of delay as there is no merger of the order-in-original, this Court could enter into the correctness of the order-in-original.
Taking note of the above observations and also stand of the petitioner that it would meet the ground made out in the show cause notice, it would be appropriate to set aside the order-in-original at Annexure-B and remit the matter back for re-consideration. It is also to be noticed that the learned counsel for the petitioner submits that necessary debit has been made in electronic credit ledger as regards demand of tax. Such aspect is also taken note of apart from the submission that 10% of demand of tax has already been made HC-KAR NC: 2026:KHC:22132 good before the First Appellate Authority. All contentions are kept open.
In light of setting aside of the order-in-original and remitting the matter back, the respondent authorities to rescind instructions given to the bank pursuant to the steps for recovery, forthwith.
The petitioner to appear before respondent No.2 without further notice on 25.05.2026. (S SUNIL DUTT YADAV) JUDGE
MD List No.: 1 Sl No.: 2
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.