The Karnataka High Court, setting aside the GST recovery proceedings, has emphasised that the objective of Section 75(4) of the Goods and Services Tax ( GST Act ), 2017 is to ensure that a fair opportunity for hearing must be provided before passing any adverse order.
The petitioner, Breakbounce India Pvt Ltd had challenged the adjudication order dated November 21, 2023, and the associated summary order issued by the second respondent, along with the subsequent recovery actions.
The petitioner argued that based on an audit report, the second respondent directed them to discharge tax dues with interest. Although the petitioner had submitted the audited balance sheet and other relevant documents in response to the audit report, these were allegedly not considered, and the adjudication was concluded without proper notice.
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The petitioner claimed that the notice was served via email, but due to genuine reasons, they were unaware of it and requested another opportunity to participate in the adjudication process in light of Section 75(4) of the Karnataka Goods and Services Tax Act, 2017.
The Additional Government Advocate, Sri K. Hemakumar, contended that sufficient notice had been provided as required by law, and the petitioner’s claim of being unaware of the emailed notice was insufficient grounds for granting a new opportunity.
Justice S. Sunil Dutt Yadadv heard both sides. The court noted that the order was issued ex-parte without the petitioner’s input. While acknowledging that electronic service of notice may generally suffice, the court determined that, in this case, substantive rights were at stake, warranting a remand to allow the petitioner another chance to respond to the show-cause notice dated September 27, 2023.
The court emphasised that the objective of Section 75(4) is to ensure an opportunity is given before any adverse order is passed.
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Thus, the high court set aside the orders and the recovery proceedings. The matter was restored to the stage of the show-cause notice, permitting the petitioner to respond within four weeks of receiving a certified copy of the court order.
The court clarified that issues of limitation would not arise, and all contentions remain open for consideration. The petition was accordingly disposed of.
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