M/S 3 Pace Power System vs. The State Of Karnataka

Held

The Court allowed the writ petition and quashed the Adjudication Order dated 15.12.2025 and the Garnishee Notice dated 17.08.2026. The Court found that the petitioner had indeed filed a response on 19.09.2024 to the Intimation in Form GST ASMT-10, explaining that the discrepancy in the GSTR-9 return for the financial year 2021-22 was due to a clerical error, where SGST was mistakenly declared as Rs. 2,09,38,539/- instead of Rs. 20,93,839/-. The Court noted that this explanation was on record and should have been considered by the adjudicating authority before passing the order. The Court held that this was not a case of petitioner negligence, but a genuine clerical mistake. The operative direction was that the petitioner shall file a detailed response to the Show Cause Notice with the third respondent by 27.10.2026. The issue of whether the petitioner should be permitted to rectify the error or if the authorities should rectify it themselves under Section 161 of the KGST Act was implicitly addressed by quashing the impugned orders and directing a fresh response, allowing for the error to be considered.

Facts

The petitioner, M/s 3 Pace Power System, filed a writ petition challenging an Adjudication Order dated 15.12.2025 and a Garnishee Notice dated 17.08.2026, both issued by the Assistant Commissioner of Commercial Taxes (3rd respondent). The tax period in question is April 2021 to March 2022. The petitioner's grievance stems from a clerical error in their GSTR-9 return for the financial year 2021-22, where SGST was declared as Rs. 2,09,38,539/- instead of Rs. 20,93,839/-. The petitioner claims to have responded to the Audit Note (GST ASMT-10) and subsequent notices, explaining the clerical mistake. The respondents are the State of Karnataka and various tax authorities.

Key Issues

1. Whether the Adjudication Order dated 15.12.2025 and the Garnishee Notice dated 17.08.2026, issued by the Assistant Commissioner of Commercial Taxes, are liable to be quashed, considering the petitioner's explanation of a clerical error in their GSTR-9 return for the financial year 2021-22? (Question of law and fact, turning on the interpretation and application of relevant GST provisions concerning rectification of errors and adjudication proceedings). Petitioner's contentions: The petitioner argues that the Adjudication Order was passed without considering their response dated 19.09.2024 to the Intimation in Form GST ASMT-10, which clearly explained the clerical error in the GSTR-9 return. They contend that the error was a simple typographical mistake in declaring the SGST amount, and not a case of short payment of tax. They rely on the fact that the Audit Note was subsequently dropped by the Assistant Commissioner. They seek directions to rectify the clerical error under Section 161 of the Karnataka Goods and Services Tax Act, 2017. Revenue's contentions: The judgment does not record any specific arguments made by the revenue or state respondents.