The Karnataka High Court has set aside a GST adjudication order and the subsequent appellate order after finding that the tax department had dispatched the adjudication order to an address in Kolar, even though the taxpayer’s registered address was in Doddaballapur.
The bench observed that Justice B.M. Shyam Prasad observed that the three-month limitation period for filing an appeal under Section 107 of the Central Goods and Services Tax Act, 2017 must be calculated from the date on which the disputed decision or order is communicated to the taxpayer.
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The Court held that the appellate authority should have called for the departmental records and verified whether the adjudication order was actually sent to the taxpayer’s correct address before dismissing the appeal.
The petitioner contended that it was never served with the intimation in Form GST DRC-01A or the show cause notice in Form GST DRC-01. According to the petitioner, copies of these documents were also unavailable on the GST portal.
It was submitted that the firm had no knowledge of the proceedings initiated under Section 74 or the adjudication order passed against it until a departmental officer contacted it for compliance with the demand.
The petitioner subsequently obtained information indicating that, although its correct address was available in the departmental records and mentioned in the proceedings, the adjudication order had been sent to a different address in Kolar. The petitioner’s registered address was in Doddaballapur, Bengaluru Rural.
After obtaining a copy of the adjudication order from the office of the Deputy Commissioner of Central Tax, the petitioner filed an appeal under Section 107 of the CGST Act.
However, the appellate authority rejected the appeal based on a response received from the dispatch section. The petitioner alleged that the authority failed to examine the underlying records to determine whether the adjudication order had actually been dispatched to its correct address.
The petitioner argued that Section 107 provides a period of three months for filing an appeal from the date on which the decision or order is communicated to the aggrieved person.
Since the appeal was filed within 30 days of the petitioner obtaining the adjudication order, it was contended that the appeal was within the statutory limitation period.
The High Court accepted the petitioner’s contention regarding the relevance of actual communication of the order. It noted that the material placed before it showed that the adjudication order had been addressed to someone in Kolar, whereas the petitioner’s address was in Doddaballapur.
“It remains salient that the limitation of three months as contemplated under Section 107 of the Act must be reckoned from the date of communication of the order,” the Court observed.
The Court held that the appellate authority should not have relied merely on a report or response from the dispatch section. It ought to have secured and examined the relevant records to verify whether the order was sent to the petitioner’s registered address.
Accordingly, the High Court found that interference with the appellate order was justified because the appellate authority had failed to verify a material circumstance directly affecting the computation of limitation.
On the merits of the tax dispute, the petitioner submitted that the proceedings were initiated because of a mismatch between the details reflected in Form GSTR-2A and Form GSTR-3B.
The firm argued that it could produce invoices, bank statements and other supporting material to establish that the transactions were genuine. It contended that no tax liability could be fastened upon it if the genuineness of the underlying purchases and transactions was established through documentary evidence.
The petitioner further submitted that relevant circulars permitted it to furnish documents and certificates to prove the genuineness of the transactions.
The High Court took note of the undisputed assertion that the DRC-01A intimation and the DRC-01 show cause notice were neither served separately upon the petitioner nor made available on the GST portal.
In view of the absence of proper service and the petitioner’s request for an opportunity to produce supporting documents, the Court decided to restore the proceedings.
The High Court allowed the writ petition and quashed both the adjudication order dated February 28, 2022 and the order-in-appeal dated March 25, 2026.
The relief was, however, made subject to the petitioner depositing 10% of the disputed demand.
The Court restored the proceedings to the Joint Commissioner of Central Tax (Appeals-II) for fresh consideration. It permitted the petitioner to submit a certified copy of the High Court’s order before the appellate authority.
The appellate authority was directed to provide the petitioner with copies of the intimation in Form GST DRC-01A and the show cause notice in Form GST DRC-01 on the date fixed for the petitioner’s first appearance, namely September 21, 2026.
The authority was also directed to grant the petitioner a proper opportunity to file a detailed response along with invoices, bank statements and other supporting documents.
The petitioner was ordered to produce the relevant documents within the time allowed by the appellate authority. After considering the documents and the petitioner’s response, the authority must conclude the proceedings through a reasoned order.
The Court further directed the petitioner to deposit 10% of the demand by September 21, 2026.
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