M/S. Karnataka Steel Suppliers vs. Union Of INDIA

Held

The Court held that a cause for interference was made out because the petitioner's response to the Show Cause Notice was not considered by the adjudicating authority. The Court reasoned that the failure to consider a submitted reply violates the principles of natural justice and the procedural requirements under the relevant provisions of the CGST/KGST Act. Therefore, the impugned Order-in-Original and the Summary Order were quashed. The proceedings were restored with liberty granted to the petitioner to file their previously filed reply and any additional response by October 26, 2026. The third respondent was directed to consider the petitioner's submissions in accordance with the law.

Facts

The petitioner, M/s. Karnataka Steel Suppliers, filed a writ petition challenging an Order-in-Original dated March 18, 2026, and a consequential Summary Order in Form GST DRC-07 dated March 27, 2026. These orders were passed by the Superintendent of Central Tax, Respondent No. 3, under Section 74 of the CGST/KGST Act, 2017. The petitioner contended that they had filed a detailed para-wise response to the Show Cause Notice dated September 25, 2025, on March 11, 2026, explaining their position on GST paid under Reverse Charge Mechanism and the alleged non-reversal of Input Tax Credit (ITC) on credit notes. However, the adjudication order was passed on the premise that no response was filed and no opportunity for personal hearing was availed.

Key Issues

1. Whether the impugned Order-in-Original and Summary Order are liable to be quashed for failure to consider the petitioner's reply to the Show Cause Notice, as contemplated under Section 74 of the CGST/KGST Act, 2017? The petitioner argued that they had submitted a comprehensive reply on March 11, 2026, addressing the allegations in the Show Cause Notice, including payment of GST under Reverse Charge Mechanism and explanations for ITC reversal. They contended that the adjudication order erroneously concluded that no response was filed and no personal hearing was availed, despite their detailed submission. The respondents, represented by the learned standing counsel, could not deny these assertions.