Sri.M.G.Ravikumar vs. The Assistant Commissioner Of Commercial Taxes Lgsto- 140

Held

The Court held that while the petitioner did not participate in the proceedings, if the petitioner could demonstrate that the proceedings erroneously included loan and intra-party account transactions as taxable turnover, these aspects warranted due consideration. The Court found that the petitioner's specific contention regarding loans being made taxable needed to be addressed. Therefore, the Court decided that the proceedings should be restored to the first respondent to allow the petitioner an opportunity to file a detailed response explaining the nature of these transactions. The Adjudication Order and the Recovery Notice were quashed. The petitioner was granted liberty to file a detailed response by 30.10.2026, which the first respondent was directed to consider before passing a just order. The Court also noted that if the petitioner raised any new causes after reconsideration, they would have to avail the alternative remedy under Section 107.

Facts

The petitioner, Sri. M.G. Ravikumar, proprietor of M/s MG Ravikumar, challenged several notices and an order issued by the Assistant Commissioner of Commercial Taxes (LGSTO-140) concerning the tax period April 2021 to March 2022. The challenged actions include a pre-intimation notice dated 20.09.2025 (Annexure-B), a show cause notice dated 30.09.2025 (Annexure-C) under Section 73 of the CGST/KGST Act, an adjudication order dated 09.12.2025 (Annexure-E) under Section 73(9), and a garnishee notice dated 23.04.2026 (Annexure-F) to Vijaya Bank (now Bank of Baroda). The adjudication order was passed ex-parte, noting the petitioner's failure to respond to the prior notices, which alleged non-declaration of income received through UPI platforms.

Key Issues

1. Whether the first respondent had the jurisdiction to initiate proceedings against the petitioner under Section 73 of the CGST/KGST Act, considering the nature of transactions alleged to be taxable? 2. Whether the petitioner was afforded a reasonable opportunity to present their case, particularly concerning the inclusion of loan transactions and inter-account transfers as taxable turnover? Petitioner's Arguments: The petitioner argued that the first respondent should have ensured notices were sent through all modes contemplated under Section 169 of the CGST/KGST Act. Furthermore, the petitioner contended that the entire turnover was treated as taxable, despite bank statements showing loans and transactions between the petitioner's own accounts, which should not be considered taxable turnover. Revenue's Arguments: The learned Additional Government Advocate for the respondents submitted that the petitioner should be relegated to the alternative remedy under Section 107 of the KGST/CGST Act, especially since the petitioner approached the High Court after the rejection of a Rectification Application. The respondents highlighted the Rejection Order dated 23.06.2026.