M/S Acruti Design Services vs. Office Of The Deputy Commissioner Of Commercial Taxes
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Cause title — parties, addresses and appearances
ORAL ORDER
Petitioner has called in question the validity of the order at Annexure-A passed under Section 74 of the HC-KAR NC: 2026:KHC:16852 Central Goods and Services Tax Act, 2017 (for short 'the Act').
It is the case of the petitioner that the petitioner was not aware of the proceedings as the notice was not served. It is further submitted that the premise under which the proceedings were initiated is regarding wrongful availment of Input Tax Credit. It is submitted that in the absence of reply to the show cause notice, the authorities have proceeded to adjudicate and pass order at Annexure-A raising the demand. It is accordingly submitted that the order may be set aside and petitioner may be given an opportunity to reply to the show cause notice by placing relevant material to demonstrate that the supplier does exist.
In light of such stand of the petitioner and noticing that the order passed at Annexure-A is an ex-parte order without the benefit of any reply by the petitioner, it would be appropriate considering the HC-KAR NC: 2026:KHC:16852 consequences that would follow from upholding the order at Annexure-A, to set aside the order at Annexure-A while reserving liberty to make out reply to the show cause notice.
Accordingly, the order at Annexure-A is set aside and the matter is remitted to the stage of reply to the show cause notice, copy of which is enclosed at Annexure-G. In light of setting aside of the order at Annexure-A, notices issued by the respondents to third parties under Section 79(1)(c) of the CGST Act, are required to be rescinded forthwith.
It is also noticed that pursuant to the order at Annexure-A, there has been recovery by adjustment in the Electronic Credit Ledger with respect to certain amount of tax dues. Needless to state, the adjustment in the Electronic Credit Ledger would be subject to adjudication to be made as directed. HC-KAR NC: 2026:KHC:16852
Insofar as the notice at Annexure-B is concerned, learned counsel for the petitioner submits that it amounts to parallel proceedings as the subject matter overlaps with the show cause notice at Annexure-G. It is submitted that the said proceeding also requires to be set aside.
The proceedings as regards Annexure-B is still at the stage of reply. It would be appropriate, considering that the proceedings as regards the order at Annexure-A is set aside and the matter is remitted to the stage of reply to the show cause notice enclosed at Annexure-G, that the proceedings at Annexure-B would also be clubbed along with the proceedings of the show cause notice at Annexure-G.
Petitioner is at liberty to make out reply to both the said show cause notices at Annexures-G and B. All contentions of the petitioner as raised herein insofar as the notice at Annexure-B is kept open. HC-KAR NC: 2026:KHC:16852
The matter is remitted before respondent No.1 who is to conduct proceedings with respect to show cause notices at Annexure-G as well as Annexure-B. Petitioner to appear before respondent No.1 without further notice on 24.04.2026. 10. The petitioner to pay costs of Rs.10,000/- to the Karnataka Advocate Clerks Benevolent Trust, High Court Building, Bangalore.
In light of the above, writ petition is disposed of. All contentions are kept open. (S SUNIL DUTT YADAV) JUDGE
VP
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.