M/S R N Steels vs. The Deputy Commissioner Of Commercial Taxes (Audit)

Held

The Court held that the petitioner's non-participation in the proceedings was bona fide, given the medical circumstances documented in Annexure-C. The medical records indicated that the proprietor was undergoing treatment for various conditions prior to the impugned order and was advised complete bed rest and against travel even in January 2025. These circumstances persuaded the Court to accept the petitioner's cause for non-participation. Consequently, the Court decided to restore the proceedings. The Adjudication Order dated 23.08.2024 was quashed, and the matter was remitted to the respondent for reconsideration. The petitioner was directed to file a response to the show cause notice, along with reconciliation statements, by November 6, 2026. Additionally, the petitioner was required to deposit 10% of the tax amount covered under the impugned adjudication order, subject to the outcome of the fresh proceedings.

Facts

The petitioner, M/s R N Steels, represented by its proprietor Javeed Pasha M, filed a writ petition challenging an Adjudication Order dated August 23, 2024, passed by the Deputy Commissioner of Commercial Taxes (Audit), Tumakuru. This order, under Section 73 of the CGST/KGST Act, 2017, was issued in relation to alleged mismatches between Forms GSTR-3B and GSTR-2A for the financial years 2019-20 and 2020-21. The petitioner also sought to quash the consequential demand order in Form GST DRC-07 and recovery proceedings, as well as the proceedings initiated by a Show Cause Notice dated April 25, 2024. The petitioner contended that the impugned ex-parte order was passed without effective service and a meaningful opportunity of hearing, citing the proprietor's medical condition due to obesity as the reason for non-participation.

Key Issues

1. Whether the Adjudication Order dated 23.08.2024, passed under Section 73(9) of the CGST/KGST Act, 2017, is liable to be quashed for want of effective service and a meaningful opportunity of hearing to the petitioner? The petitioner argued that the Adjudication Order was passed ex-parte without proper service of the Show Cause Notice and without affording a meaningful opportunity to present their case. They relied on medical records (Annexure-C) indicating the proprietor's obesity and subsequent medical treatment, including advice for complete bed rest, which prevented them from responding to the notices. The petitioner sought an opportunity to file a response and produce documents, including reconciliation statements, to address the alleged mismatch between GSTR-3B and GSTR-2A. The respondent, represented by the High Court Government Pleader, did not present any specific arguments but was heard on the matter.