GST Interest and Penalty order passed without Proper Hearing Despite Request: Karnataka HC orders Fresh Adjudication [Read Order]

The High Court of Karnataka has set aside an ex-parte adjudication order issued under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Karnataka Goods and Services Tax Act, 2017 (KGST Act) ruling that the authority must re-decide the matter only after the Supreme Court concludes its examination of the validity of government notifications that extended statutory limitation.

M/s. Siri Kanakadurgaha Agencies challenged a show cause notice and an ex-parte order passed by the Deputy Commissioner of Commercial Taxes. The proceedings originated from alleged discrepancies identified by the Assessing Officer in the petitioner’s Goods and Services Tax declarations. Despite a reply being filed and a specific request for a personal hearing, the adjudication order in Form GST DRC-07 was passed without granting any hearing opportunity.

The petitioner, represented by Advocate Raghavendra B. Hanjer, argued that the order violated the principles of natural justice. Additionally, the limitation for issuing the order depended on notifications whose validity is currently under challenge before the Supreme Court in Special Leave to Appeal (C) No. 4240 of 2025.

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A Single Judge Bench of Justice M. Nagaprasanna observed that a Co-ordinate Bench adjudicating an identical issue held that adjudication orders passed while the validity of limitation-extension notifications is pending before the Supreme Court cannot be sustained, especially when passed without granting a personal hearing.

Applying the same reasoning, the Court held that the petitioner was entitled to a fresh adjudication after the Supreme Court rendered its verdict. The Court noted that allowing the proceedings to continue while the Apex Court is seized of the matter could result in conflicting legal positions.

The Court therefore, set aside the impugned adjudication and remanded the matter to the Deputy Commissioner of Commercial Taxes for fresh adjudication in accordance with law after disposal of SLP (C) No. 4240 of 2025.

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