The Karnataka High Court has held that implementing a tax appellate order and granting consequential relief does not prevent reconsideration of the dispute when the court subsequently interferes with that order and directs a fresh examination.

The Bench of Justice S.G. Pandit and Justice K.V. Aravind dismissed a review petition rejecting its argument that completed audit proceedings made an earlier direction for reconsideration incapable of being carried out. 

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The bench emphasised that actions taken to implement an order under challenge remain subject to the outcome of the proceedings challenging it.

The review petition arose from the High Court’s judgment. Through that judgment, the court had set aside the Tribunal’s order and remitted the matter to the appellate authority for reconsideration in light of the principles laid down by the Supreme Court in State of Karnataka v. Ecom Gill Coffee Trading Private Limited, reported in (2023) 111 GSTR 1.

Seeking review of that decision, Sardar Electric House approached the High Court under Section 114 read with Order XLVII Rule 1 of the Code of Civil Procedure, 1908.

The review petition was decided on September 25, 2026. Justice K.V. Aravind delivered the oral order for the Bench.

Counsel for the taxpayer drew the court’s attention to audit proceedings dated June 14, 2023. According to the taxpayer, those proceedings had already given effect to the appellate authority’s order dated February 28, 2023, in STA No. 93 of 2022, and consequential relief had been granted.

On that basis, the taxpayer argued that no proceedings remained pending before the appellate authority for reconsideration. Its contention was that, once the appellate order had been implemented through the audit proceedings, the High Court’s subsequent direction for reconsideration could not be carried out.

Counsel appearing for the tax authorities opposed the submission.

Rejecting the taxpayer’s argument, the Bench held that implementation of an order under challenge does not extinguish an aggrieved person’s right to contest it.

The court explained that, where authorities give effect to an impugned order during the pendency of an appeal or revision before the High Court, the consequential actions must be redone in accordance with the directions ultimately issued by the court.

The High Court had interfered with the order and directed the appellate authority to reconsider the matter. Consequently, relief granted pursuant to that order could not prevent the court’s direction from being implemented.

“Any effect given to the impugned order during the pendency of the proceedings would always remain subject to the outcome,” the Bench observed. 

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