The Karnataka High Court has set aside an ex parte GST adjudication order after accepting the taxpayer’s explanation that notices and hearing communications were sent to an email address operated by its former auditor, with whom it was no longer in contact.
The bench of Justice B.M. Shyam Prasad found the reasons offered by the taxpayer to be “plausible and bona fide” and restored the proceedings to the adjudicating authority. The relief was made conditional upon the taxpayer depositing 10% of the disputed tax and filing its response and supporting documents by October 5, 2026.
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The ruling was delivered in a writ petition filed by M/s AT Creations, a proprietary concern represented by its proprietor, Saleem Fathima Asma Jan. The petitioner challenged the adjudication order and its summary dated December 31, 2025, passed under Section 73 of the Karnataka Goods and Services Tax Act, 2017.
The petitioner also questioned the show-cause notice dated September 29, 2025, and its summary issued in Form GST DRC-01 for the tax period from April 2021 to March 2025.
The petitioner argued that the GST proceedings had been concluded ex parte without granting the taxpayer a complete and effective opportunity to present its case.
According to the petitioner, after its initial appearance, no effective proceedings were undertaken for nearly one year. The Commercial Tax Officer subsequently issued the show-cause notice in Form GST DRC-01 on September 29, 2025, followed by reminders and personal-hearing notices.
However, the petitioner claimed that all these communications were sent only to the email address of its erstwhile auditor. Since the petitioner was no longer in contact with that auditor, neither the proprietor nor the present auditor became aware of the proceedings or the dates fixed for personal hearing.
The petitioner contended that it consequently had no effective notice of the adjudication proceedings and was denied a meaningful opportunity to respond before the final order was passed.
The High Court noted that the petitioner did not dispute that the show-cause notice and its summary had been sent to the email address registered on the relevant portal.
The taxpayer’s specific case, however, was that the registered email credentials belonged to the erstwhile auditor, who was no longer in touch with the petitioner. This, the petitioner maintained, explained its failure to respond to the notice and attend the hearings.
After considering the circumstances and hearing the State, the Court accepted this explanation. It observed that the reasons given for the taxpayer’s non-participation appeared plausible and bona fide.
The High Court accordingly allowed the writ petition and quashed the adjudication order along with the corresponding summary of the order.
The Court did not terminate the underlying Section 73 proceedings. Instead, it restored the matter to the Assistant Commissioner of Commercial Taxes for fresh consideration, subject to conditions intended to balance the interests of the taxpayer and the Revenue.
The restoration was made conditional upon AT Creations depositing 10% of the tax demanded by October 5, 2026. The Court clarified that the deposit would remain subject to the outcome of the restored adjudication proceedings.
The High Court permitted the taxpayer to file a response to the September 29, 2025 show-cause notice. The response must be accompanied by a certified copy of the High Court’s order and documents relied upon to establish the genuineness of the disputed transactions.
The taxpayer was directed to submit its reply and supporting documents by October 5, 2026.
After receiving the response, the adjudicating authority must examine the documents and conclude the proceedings by passing a reasoned order. The ruling therefore gives the taxpayer a fresh opportunity to contest the proposed demand on merits while keeping the original show-cause proceedings alive.
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