The Karnataka High Court has quashed GST assessment orders and consequential demands raised against a taxpayer for three financial years after finding it appropriate to provide the taxpayer an opportunity to contest the proceedings before the jurisdictional Commercial Tax Officer.
The bench of Justice C.M. Poonacha observed that the taxpayer had not contested the proceedings before the officer who ultimately passed the assessment orders. Since several factual assertions had been raised to challenge those orders, the Court held that the taxpayer should be permitted to file objections and present its case before the authority.
The bench, however, did not decide the disputed legal question of whether a fresh notice was required to be issued when the proceedings were assigned to another officer. It expressly left the rival contentions of the parties open.
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The writ petition was filed by a proprietorship concern engaged in the sale of fish. The petitioner challenged GST orders relating to the financial years 2021-22, 2022-23 and 2023-24, along with the corresponding demands issued in Form GST DRC-07.
The orders for the financial years 2021-22 and 2022-23 were passed on September 3, 2025 under Section 73 of the Central Goods and Services Tax Act and the Karnataka Goods and Services Tax Act. A separate order for the financial year 2023-24 was passed on November 25, 2025 under Section 74 of the respective GST enactments.
The petitioner also challenged a subsequent communication dated May 19, 2026 and sought the return of books of account and other documents seized by the tax authorities on January 3, 2024.
Another important contention concerned the GST treatment of fresh and chilled fish. The petitioner sought a declaration that turnover from the sale of fresh and chilled fish falling under HSN Code 0302 was exempt from GST and could not be included in its taxable turnover.
The petitioner submitted that a show-cause notice in Form GST DRC-01 had initially been issued on November 27, 2024. Thereafter, the proceedings were assigned to the third respondent, the Commercial Tax Officer.
According to the petitioner, the Commercial Tax Officer did not issue a fresh notice after the assignment of the proceedings. It was contended that the petitioner consequently did not contest the matter before that officer, who proceeded to pass the disputed orders and raise the corresponding demands.
The State opposed the argument and submitted that the officer was not required to issue a fresh notice merely because the proceedings had been assigned to him. The State further maintained that a reminder had been issued to the petitioner.
The High Court declined to adjudicate the competing arguments on whether the Commercial Tax Officer was legally required to issue a fresh notice after the proceedings were assigned to him.
Instead, the Court considered the undisputed circumstance that the petitioner had not contested the proceedings before the officer who passed the final orders.
“Having regard to the fact that the petitioner has not contested the proceedings before the respondent No.3 which has culminated in passing of the orders,” the Court observed that it was expedient to provide the petitioner an opportunity to contest the proceedings and place its case before the authority.
The Court further noted that the petitioner had raised various factual assertions while assailing the assessment orders. Such factual matters, it indicated, should appropriately be considered by the adjudicating authority after receiving the petitioner’s objections and granting it an adequate opportunity of hearing.
The petitioner was therefore permitted to submit objections to the show-cause notice dated November 27, 2024.
Allowing the writ petition in part, the High Court quashed the communication dated May 19, 2026.
The Court also quashed the assessment order dated September 3, 2025 for the financial year 2021-22 and the consequential demand issued on the same date. The separate order and consequential demand dated September 3, 2025 for the financial year 2022-23 were similarly set aside.
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