HC Sets Aside Ex Parte Order, Grants Fresh Hearing on "Sufficient Cause" Plea.

HC Sets Aside Ex Parte Order, Grants Fresh Hearing on “Sufficient Cause” Plea.

Issue

Whether an ex parte assessment order passed under Section 73 should be set aside on the grounds of natural justice, even if the taxpayer failed to file a reply to the show-cause notice (SCN), provided the taxpayer asserts bona fide reasons for the omission.

Facts

The petitioner received an intimation in Form GST ASMT-10, to which they filed replies.
Subsequently, the department issued a formal show-cause notice (SCN) under Section 73, alleging excess Input Tax Credit (ITC).
The petitioner did not submit a reply to this specific SCN.
The authority passed an ex parte order under Section 73(9), confirming the demand for tax, interest, and penalty.
The petitioner challenged this order, asserting they had bona fide reasons and sufficient cause for their failure to reply.

Decision

The High Court, adopting a “justice-oriented approach,” set aside the impugned ex parte order.
It acknowledged the petitioner’s assertion of having “sufficient cause” for the omission.
The matter was remitted (remanded) back to the adjudicating authority for reconsideration.
The authority was directed to start the proceedings afresh from the stage of filing the reply to the SCN, afford a “sufficient and reasonable opportunity” to the petitioner, and then pass a new order in accordance with the law.

Key Takeaways

Writ Jurisdiction for Natural Justice: A High Court can exercise its writ jurisdiction to set aside an ex parte order, even if the taxpayer was at fault for not replying, if it is in the interest of justice.
“Sufficient Cause” is Key: A taxpayer’s failure to reply to an SCN can be excused if they can later provide bona fide reasons or “sufficient cause” for the omission.
Justice-Oriented Approach: The court prioritized providing a fair hearing on the merits over a procedural default, opting for a “justice-oriented approach.”
Remand for Fresh Hearing: The standard remedy in such cases is not to quash the SCN, but to set aside the final order and remand the case for a fresh hearing, allowing the taxpayer to present their defense.

HIGH COURT OF KARNATAKA

Jothi Polymers (P.) Ltd.

Commissioner of Commercial Taxes

S.R.Krishna Kumar, J.

WRIT PETITION NO. 26842 OF 2025 (T-RES)

OCTOBER 13, 2025

Gowrishankar Prasad H. R. for the Petitioner. Smt. Jyoti M Maradi for the Respondent.

ORDER

1. In this petition, the petitioner seeks following reliefs:

(a) To issue a writ of certiorari or mandamus or any other writ or direction in the nature of a writ quashing the impugned order bearing Adjudication Order No.ACCT.P/3Bvs2A/2019-20/188 dated 12.07.2024 and consequential summary order in DRC-07 bearing reference No.ZD290724036917U dated 12.07.2024 (Annexures-A and B) passed by the Assistant Commissioner of Commercial Taxes, LGSTO-026, Bengaluru,

(b) To issue a direction for refund/re-credit and adjustment of the ITC for shortfall, if any, being already recovered by the 2^nd Respondent in the interim period, post completion of readjudication process for the impugned FY 20192020; and

(c) To Pass any such other Writ, Order or Direction as this Hon’ble Court might deem fit to be issued in the facts and circumstances of the case in the interest of justice and equity.

2. Heard learned counsel for the petitioner and learned HCGP for the respondents and perused the material on record.

3. A perusal of material on record will indicate that pursuant to pre-intimation in Form GST ASMT-10 dated 11.08.2023, the petitioner filed its replies dated 16.08.2023 and 25.08.2023. Subsequently, respondent No.2 issued a show-cause notice dated 22.03.2024 under Section 73 of the CGST/KGST Act, 2017 alleging that the petitioner had wrongly/excessively availed ITC in contraventions of the provisions of the Act. Since the petitioner did not submit his reply to the said show-cause notice, respondent No.2 proceeded to pass the impugned order dated 12.07.2024 under Section 73(9) of the KGST/CGST Act, 2017 confirming the total demand of Rs.33,47,194/- including the tax, interest and penalty. Aggrieved by the said impugned order the petitioner having no option has approached this Court by way of present petition.

4. Learned counsel for the petitioner submits that the said show-cause notice was uploaded under the head “View Additional Notices and Order”, in the GST Portal and not on the main column i.e. “Notices/Orders” and the same went un-noticed by the petitioner. Since the respondents uploaded the show-cause notice under different head and the same were not brought to the notice of the petitioner, the petitioner couldn’t submit replies/documents to the show-cause notice under section 73(1) of the CGST/KGST Act, 2017. Pursuant to the adjudication order being passed by the respondents, the petitioner with no option has approached this Court by way of the present petition interalia contending that the inability and omission on the part of the petitioner to submit a reply to the show-cause notice was due to bonafide reasons, unavoidable circumstances and sufficient cause and submits that if one more opportunity is provided by setting aside the impugned order, the and contest the proceedings.

5. Per contra, learned HCGP for the respondents submits that since the show-cause notice was duly communicated electronically to the petitioner by uploading the same on GST portal as well as e-mail, the petitioner cannot complain that he was not aware of impugned notice and as such, there is no merit in the petition and the same is liable to be dismissed.

6. Though several contentions have been urged by both sides as regards to the petitioner not having noticed show-cause notice and his inability and omission to reply to the said show cause notice, is a matter of record and an undisputed fact that the petitioner did not submit his reply to the show-cause notice, which culminated in the impugned ex-parte order.

7. Under these circumstances, having regard to the specific assertion on the part of the petitioner that his inability and omission to submit replies and contest the proceedings was due to bonafide reasons, unavoidable circumstances and sufficient cause, I deem it just and appropriate to adopt a justice oriented approach and provide one more opportunity to the petitioner by setting aside the impugned order dated 12.07.2024 and remitting the matter back to respondent No.2 for reconsideration of the matter afresh, in accordance with law, from the stage of petitioner submitting reply to the impugned show-cause notice dated 22.03.2024.

8. In the result, I pass the following:

ORDER

(i) The petition is hereby allowed.

(ii) The impugned order dated 12.07.2024 under Section 73(9) of the Act at Annexure-A passed by respondent No. 2 is hereby set aside.

(iii) The matter is remitted back to respondent No.2 for reconsideration afresh in accordance with law, from the stage of petitioner submitting its reply to the show cause notice dated 22.03.2024 issued under Section 73(1) of the CGST/KGST Act, 2017 at Annexure-F.

(iv) The petitioner is directed to appear before the respondent No.2 on 17.11.2025 without awaiting further notice from respondent No. 2.

(v) Liberty is reserved in favour of the petitioner to submit replies, pleadings, documents etc., which shall be considered by respondent No.2 who shall provide sufficient and reasonable opportunity to the petitioner and hear them and proceed further in accordance with law.

(vi) In the event, the Petitioner does not appear before respondent No.2 on 17.11.2025 as stated supra, present order shall stand automatically recalled without further orders.