Karnataka High Court Sets Aside Ex-Parte GST Assessment Order
Passed Due to Non-Response to Portal Notices and Restores Matter for Fresh
Adjudication
M/s Pragathi Associates v. Commissioner of Commercial Taxes
& Others / High Court of Karnataka / Date of Judgment: 7 January 2026 /
W.P. No. 37461 of 2025 (T-RES)
Introduction
of the Case
The Karnataka High Court
in M/s Pragathi Associates v. Commissioner of Commercial Taxes & Others
dealt with the validity of an ex-parte adjudication order passed under Section
73(9) of the KGST/CGST Act where the taxpayer failed to respond to notices
uploaded electronically on the GST portal.
The petitioner challenged
the adjudication order and consequential DRC-07 order on the ground that it was
unaware of the electronic service of notices and therefore could not submit a
reply to the show cause notice. The Court examined whether another opportunity
should be granted to the taxpayer in the interest of justice despite multiple
opportunities allegedly provided by the department.
The judgment reiterates
the justice-oriented approach adopted by courts in GST matters involving
ex-parte orders and emphasizes that substantive rights should not be prejudiced
merely because opportunities could not be availed due to bona fide reasons.
Facts of
the Case
M/s Pragathi Associates,
a proprietary concern situated in Kolar District, Karnataka, filed a writ
petition before the Karnataka High Court challenging the adjudication order
dated 04.02.2025 passed under Section 73(9) of the KGST/CGST Act for the tax period
2020-21.
The petitioner also
challenged the consequential Form GST DRC-07 issued pursuant to the
adjudication order.
According to the
petitioner, notices issued by the department were communicated electronically
through the GST portal, but the petitioner was not aware of such electronic
service. As a result, no reply could be submitted to the show cause notice and
the proceedings culminated in an ex-parte adjudication order.
The petitioner further
submitted before the Court that the opportunities granted by the department
could not be availed due to bona fide reasons.
Submissions
by the Petitioner
The petitioner argued
that the adjudication order was passed without participation because the
petitioner was unaware of the notices uploaded electronically on the GST
portal.
It was submitted that due
to bona fide circumstances, the petitioner could not respond to the show cause
notice or avail the opportunities provided by the department. The petitioner
therefore requested the Court to set aside the ex-parte order and permit
participation in fresh adjudication proceedings by filing a reply on merits.
Submissions
by the Respondents
The Revenue authorities
opposed the writ petition and submitted that several opportunities had already
been provided to the petitioner during the course of proceedings.
According to the
department, the petitioner failed to respond despite sufficient opportunity and
therefore the adjudication proceedings were rightly completed.
Analysis
and Judgment of the Court
The Karnataka High Court
examined the impugned adjudication order and observed that the proceedings had
culminated without any reply being filed by the petitioner to the show cause
notice.
The Court noted the
serious consequences flowing from the adjudication order and held that in such
circumstances, it would be appropriate to grant another opportunity to the
petitioner to participate in the proceedings and place its defence on merits.
The Court further
observed that although the Revenue authorities contended that multiple
opportunities had already been granted, the ends of justice would still be
served by restoring the proceedings subject to conditions.
Accordingly, the High
Court set aside the adjudication order passed under Section 73(9) of the
KGST/CGST Act as well as the consequential DRC-07 order. The matter was
restored back to the stage of filing reply to the show cause notice.
However, considering the
lapse on the part of the petitioner in not responding earlier, the Court
imposed a cost of Rs.10,000/- payable to the High Court Legal Services
Committee.
The Court directed the
petitioner to file reply to the show cause notice within two weeks and also
directed the petitioner to appear before the adjudicating authority on or
before 29.01.2026. The Court further clarified that if the petitioner failed to
appear before the authority, the benefit granted under the order would
automatically stand withdrawn.
All contentions on merits
were kept open for fresh adjudication.
Conclusion
The judgment in M/s
Pragathi Associates v. Commissioner of Commercial Taxes & Others reiterates
the importance of granting adequate opportunity to taxpayers in GST
adjudication proceedings, particularly in cases involving ex-parte orders
arising due to non-response to electronic notices uploaded on the GST portal.
The Karnataka High Court
adopted a justice-oriented approach by restoring the proceedings to the stage
of filing reply so that the taxpayer could contest the matter on merits. At the
same time, the Court balanced equities by imposing costs upon the petitioner
for failure to diligently participate in the earlier proceedings.
The ruling emphasizes
that substantive rights should not ordinarily be defeated due to procedural
lapses where taxpayers demonstrate bona fide reasons and willingness to
participate in fresh adjudication proceedings.
Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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