Karnataka High Court Sets Aside Ex-Parte GST Assessment and
Non-Speaking Appellate Order for Failure to Consider Taxpayer’s Contentions and
Documents
M/s Pacific Sales Corporation v. Joint Commissioner of
Commercial Taxes Appeals & Another / High Court of Karnataka / Date of
Judgment: 28 January 2026 / W.P. No. 39523 of 2025 (T-RES)
Introduction
of the Case
The Karnataka High Court
in M/s Pacific Sales Corporation v. Joint Commissioner of Commercial Taxes
Appeals & Another dealt with the validity of an ex-parte GST adjudication
order and a non-speaking appellate order passed without proper consideration of
the taxpayer’s submissions and supporting documents.
The petitioner challenged
both the original assessment order passed under Section 73(9) of the CGST/KGST
Act and the appellate order affirming the assessment. The primary grievance of
the petitioner was that the adjudication order had been passed ex-parte due to
non-service of notice and that the appellate authority failed to consider the
detailed contentions, tax invoices, E-way bills, and transport documents
produced during appellate proceedings.
The case highlights the
requirement that appellate authorities must pass reasoned and speaking orders
while dealing with GST disputes and also reiterates the justice-oriented
approach adopted by courts in matters involving ex-parte assessments.
Facts of
the Case
M/s Pacific Sales
Corporation, a proprietary concern registered under GST in Bengaluru, filed a
writ petition challenging the appellate order dated 15.10.2025 passed in GST AP
No.246/24-25 as well as the adjudication order dated 13.12.2023 passed under Section
73(9) of the GST Act.
The dispute related to
the tax period from July 2017 to March 2018. The adjudication authority had
passed the assessment order in Form GST DRC-07, which was subsequently upheld
by the appellate authority.
The petitioner contended
that the assessment order itself was passed ex-parte because the show cause
notice was not properly served. It was further submitted that during appellate
proceedings, the petitioner had produced relevant materials including tax invoices,
E-way bills, lorry receipt copies, and a detailed memo explaining the
transactions. However, according to the petitioner, the appellate authority
failed to consider these documents while dismissing the appeal.
Submissions
by the Petitioner
The petitioner argued
that the appellate order was not a reasoned or speaking order. It was submitted
that except for making general observations, the appellate authority had failed
to deal with the specific contentions raised by the petitioner.
The petitioner further
contended that the assessment order passed under Section 73(9) of the CGST/KGST
Act was admittedly an ex-parte order. According to the petitioner, the ex-parte
assessment occurred because the show cause notice had not been properly served.
The petitioner requested
the Court to set aside both the appellate order and the original adjudication
order and remand the matter back to the stage of reply to the show cause notice
so that supporting documents and explanations could be properly considered by
the adjudicating authority.
Submissions
by the Respondents
The State authorities
opposed the writ petition and argued that notices had been served through all
available modes including e-mail and uploading on the GST portal.
According to the
department, the petitioner failed to respond despite availability of
opportunity and therefore the ex-parte assessment order was solely attributable
to the petitioner’s lack of diligence.
The respondents contended
that the petitioner could not seek relief after failing to participate properly
in the proceedings before the adjudicating authority.
Analysis
and Judgment of the Court
The Karnataka High Court
examined both the adjudication order and the appellate order. The Court
observed that the appellate authority had not dealt with the specific
contentions raised by the petitioner in detail and had instead relied only upon
general observations.
The Court further noted
that the petitioner had produced materials such as tax invoices, E-way bills,
lorry receipt copies, and written submissions during the appellate proceedings,
but the appellate authority had failed to advert to those materials while
passing the order.
With respect to the
original assessment order, the Court observed that it was admittedly an
ex-parte order. Although the Government Pleader strongly argued that the
petitioner was responsible for non-participation, the Court considered the
serious consequences arising from the ex-parte assessment and held that one
more opportunity should be granted in the interest of justice.
The High Court therefore
held that the assessment order passed under Section 73(9) of the CGST/KGST Act
deserved to be set aside and the matter required to be remanded back to the
stage of reply to the show cause notice.
However, the Court also
noted the lapse on the part of the petitioner in not diligently prosecuting the
proceedings before the adjudicating authority. Therefore, while granting
relief, the Court imposed a cost of Rs.10,000/- payable to the High Court Legal
Services Committee.
Accordingly, the Court
set aside both the appellate order and the adjudication order and remitted the
matter back to the adjudicating authority for fresh proceedings from the stage
of filing reply to the show cause notice. The petitioner was directed to appear
before the authority on 16.02.2026 without awaiting further notice.
The Court further
clarified that if the petitioner failed to appear on the specified date, the
relief granted by the Court would automatically stand revoked. The Court also
recorded the petitioner’s submission regarding payment of statutory pre-deposit
during appellate proceedings and clarified that such amount would remain
subject to further orders.
Conclusion
The judgment in M/s
Pacific Sales Corporation v. Joint Commissioner of Commercial Taxes Appeals
& Another reiterates the importance of reasoned adjudication and proper
consideration of taxpayer submissions in GST proceedings. The Karnataka High
Court emphasized that appellate authorities must specifically deal with the
contentions and documents produced by taxpayers instead of passing generalized
orders.
The ruling also
highlights that ex-parte assessment orders involving serious financial
consequences may be set aside in the interest of justice where taxpayers
demonstrate willingness to 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 earlier proceedings. The decision strengthens
procedural fairness and reinforces the requirement of speaking orders under GST
adjudication.
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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