M/S Maruthi Marketing INDIA vs. State Of Karnataka

Held

The Court allowed the petition. It held that the petitioner's claims of bonafide reasons, including accidents and the email being in the spam folder, along with the assertion of having voluntarily reversed ITC and possessing a valid reconciliation of invoices, were persuasive. The Court opined that these circumstances warranted an opportunity for the petitioner to present their case fully. Consequently, the impugned Adjudication Order dated August 16, 2024, and the Order-in-Appeal dated January 16, 2026, were quashed. The proceedings were restored to the stage of the Show Cause Notice dated May 16, 2024. The petitioner was granted liberty to file a detailed response, including reconciliation invoices and relevant GSTR forms, with the third respondent by November 30, 2026. The Court did not expressly leave any issue undecided.

Facts

The petitioner, M/s Maruthi Marketing India, a sole proprietorship, filed a writ petition challenging an Order-in-Appeal dated January 16, 2026, passed by the Joint Commissioner of Commercial Taxes (Appeals)-7, which dismissed their statutory appeal on the grounds of limitation. The appeal was against an Order-in-Original dated August 16, 2024, passed by the Assistant Commissioner of Commercial Taxes (Audit)-1.10 DGSTO-1. The adjudication order, for the financial year 2019-20, was passed ex-parte. The petitioner contended that they could not participate in the adjudication proceedings due to bonafide reasons, including accidents suffered by the proprietor and his brother, and that they were unaware of the adjudication order until departmental personnel contacted them for recovery. The show cause notice was dated May 16, 2024.

Key Issues

1. Whether the petitioner's statutory appeal before the Joint Commissioner of Commercial Taxes (Appeals)-7, dismissed on grounds of limitation, should be entertained on merits? Petitioner's arguments: The petitioner argued that their failure to participate in the adjudication proceedings and file the appeal within the prescribed time was due to bonafide reasons, specifically mentioning accidents that required prolonged hospitalization for the proprietor and his brother who assisted in the business. They also contended that the show cause notice and intimation were received in their email's spam folder, leading to a lack of awareness. The petitioner asserted that they had voluntarily reversed Input Tax Credit (ITC) within timelines and that a reconciliation of invoices would demonstrate no wrongful availment of ITC. They claimed to have a good case on merits, which was not considered due to the dismissal on limitation. Revenue's arguments: The judgment does not record specific arguments made by the respondents (State of Karnataka and its officials).