M/S K Ramakrishna Reddy Vs the Commerical Taxes Officer

M/S. K.RAMAKRISHNA REDDY, A PROPRIETARY CONCERN, HAVING OFFICE AT NO.9, SARJAPURA MAIN ROAD, JAKKASANDRA, BENGALURU, KARNATAKA - 560 034. (GTIN: 29ACTPK0793R1ZF) REPRESENTED BY ITS PROPRIETOR, MR. RAMAKRISHNA REDDY KALAKOTA, S/O LATE K.R.MOHAN REDDY, AGED ABOUT 57 YEARS.

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…PETITIONER

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(BY SRI. RAJEEV CHANNAPPA NULVI, ADVOCATE)

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Digitally signed by NAGAVENI Location: HIGH COURT OF KARNATAKA

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AND:

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THE COMMERICAL TAXES OFFICER, (AUDIT) - 4.10, DGSTO - 4, BENGALURU, ROOM NO.507, 6^TH FLOOR, BMTC BUILDING, KORMANGALA, BENGALURU - 560 095.

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…RESPONDENT

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(BY SMT. JYOTI M.MARADI, HCGP)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF ISSUE A WRIT OF CERTIORARI OR A DIRECTION IN THE NATURE OF WRIT OF CERTIORARI QUASHING THE ADJUDICATION ORDER U/S 73(9) OF THE KGST/CGST ACT,

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2 - NC: 2025:KHC:31516 WP No. 21954 of 2025

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HC-KAR

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2017 DATED 04/02/2025 FOR THE TAX PERIOD APRIL, 2020 MARCH, 2021 REF.NO.CTO AUDIT – 4.10/DRC-07/2024-25 PASSED BY THE COMMERCIAL TAXES OFFICER, (AUDIT) - 4.10, DGSTO-4, BANGALORE (ANNEXURE- D) AND ETC.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA

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ORAL ORDER

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The petitioner is before this Court seeking the following

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prayers:

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"(a) Issue a Writ of issue a Writ of Certiorari or a direction in the nature of Writ of Certiorari quashing the Adjudication order u/s 73(9) of the KGST/CGST Act, 2017 dated 04/02/2025 for the tax period April, 2020 - March, 2021 Ref.No.CTO Audit–4.10/DRC-07/2024-25 passed by The Commercial Taxes Officer, (Audit) - 4.10, DGSTO-4, Bangalore ( ANNEXURE-'D' );

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(b) Issue a Writ of Certiorari or a direction in the nature of Writ of Certiorari quashing the FORM GST-DRC07 vide Ref No.ZD290225010500Z dated 04/02/2025 for the tax period April, 2020 - March, 2021 issued by The Commercial Taxes Officer, (Audit) - 4.10, DGSTO-4, Bangalore and thereby not to implement the demand along-with interest and penalty ( ANNEXURE-'E');

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(c) To pass any such other Writ, Order or Direction as this Hon'ble court might deem fit to be issued in the fact and circumstances of the case in the interest of justice and equity;

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(d) To direct the Respondents to pay the costs of this Writ Petition as this Hon'ble Court deems fit."

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3 - NC: 2025:KHC:31516 WP No. 21954 of 2025

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HC-KAR

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Heard Sri.Rajeev Channappa Nulvi, learned counsel

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appearing for the petitioner, Smt.Jyoti M. Maradi, learned HCGP appearing for the respondents and have perused the material on record.

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An order comes to be passed by the Assistant Commissioner of Commercial Tax on 29.10.2024. Learned counsel for the petitioner submits that the said order is drawing up proceedings ex parte , as the petitioner was not put to notice. Learned counsel for the respondent would dispute the position that the petitioner though notice was issued, did not choose to appear before the authority. In identical circumstances, the Apex Court in the case of CHIEF COMMISSIONER OF GOODS AND SERVICES TAX AND OTHERS vs. SAFARI RETREATS PRIVATE LIMITED AND OTHERS, [2024] 167 Taxmann.com 73 has held that ex parte orders are unsustainable in law, and has remitted the matter back to the hands of the concerned authority, to hear the matter afresh after hearing the petitioners therein.

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NC: 2025:KHC:31516 WP No. 21954 of 2025

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HC-KAR

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Following the said judgment of the Apex Court in

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SAFARI RETREATS supra , a Coordinate Bench of this Court in identical circumstance has held as follows.

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"The petitioner, who is engaged in the business of letting out commercial properties for rent and on lease, has filed this petition calling in question the first respondent's Order-of-Adjudication dated 28.02.2025 [Annexure-A]. The first respondent's order dated 28.02.2025 is under Section 73(9) read with certain other provisions of the Karnataka Goods and Services Tax Act, 2017/the Central Goods and Services Tax Act, 2017 [for short, 'the GST Act'] read with relevant Rules and for the tax period between 01.04.2020 and 31.03.2021. The petitioner has also called in question the summary of the Order of Adjudication dated 28.02.2025 [Annexure-A1] while seeking a declaration of entitlement to the benefit of Input Tax Credit [ITC] for a certain value.

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The petitioner has impugned the aforesaid orders on the grounds such as that [a] the first respondent has started, conducted and completed the audit proceedings under Section 65 of the GST Act and having thus completed audit proceedings, the first respondent has also assumed jurisdiction to adjudicate under Section 73 of the GST Act, [b] this should be impermissible because adjudication will entail an examination of the merits of the audit observation, [c] the Apex Court in Chief Commissioner of Central Goods and Services Tax and others vs. Safari Retreats Private Limited and others [2024] 167 Taxmann.com 73 has opined that the expression ‘the plant or machinery’ as found in Section 17(5)(d) of the GST Act, cannot be given the same meaning as the expression ‘the plant and machinery’ as defined by the Explanation to Section 17, and [d] whether a building can be classified as a 'plant' within the meaning of the expression 'the plant or machinery' as used in Section 17(5)(d) of the GST Act is a factual question which is to be determined keeping in mind the business of the

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HC-KAR

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registered person and the role that the building plays in the said business.

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Sri Sandeep Huilgol, the learned counsel for the petitioner, while emphasizing the afore grounds and asserting that the first respondent has failed to consider these aspects in concluding the Order of adjudication resulting in demand, places reliance upon the orders of this Court in W.P. No.4835/2025 [This petition is decided on 05.03.2025] to contend that proceedings are restored for re-consideration in very similar circumstances where the Order of adjudication was concluded without actually examining whether a building can be called ’a plant'’ as is mentioned under Section 17(5)(d) of the GST Act. The learned counsel submits that the petitioner has raised all these contentions in the Reply dated 26.12.2024, and notwithstanding the same, the first respondent has failed to consider these objections, and therefore, the proceedings must be restored to the first respondent for due consideration.

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Ms. Jyothi. M. M., the learned High Court Government Pleader, and Sri R. Madanan Pillai, the learned Central Government Standing Counsel, who is on record for the fourth respondent, are heard for disposal of the petition in the light of the grounds urged. This Court must observe that it becomes imperative with the decision of the Apex Court in Commissioner of Central Goods and Services Tax vs. Safari Retreats Private Limited supra, it will be incumbent upon the Assessing Officer to decide whether there is cause for proceedings under Section 73 regarding a Building constructed for letting on lease and whether such Building would be within the meaning of ‘a plant' as is contemplated under Section 17(5)(d) of the GST Act. The first respondent has not considered this question at all and therefore, there must be limited interference restoring the proceedings to the first respondent with opportunity to the petitioner to file a fresh reply directing the first respondent to reconsider all grounds including the grounds on its jurisdiction to conduct the adjudicatory proceedings

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HC-KAR

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under Section 73 of the GST Act after completing the audit proceedings.

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At this stage, Sri Sandeep Huilgol submits that the petitioner has already deposited 10% of the amount in demand consequent to the impugned Order-ofadjudication and that this amount may be directed to be held by the respondents subject to the conclusion of the restored proceedings. This Court opines that just observations must also be made to ensure that there is complete adjudication. In the light of the afore, the following:

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ORDER

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[A] The petition is allowed in part and the impugned Order-of-adjudication dated 28.02.2025 in No. CTO (AUDIT 1.2)/(ADJ)1931/2024-25 passed by the first respondent and the summary of the Orders dated 28.02.2025 [Annexures - A and A1] are quashed restoring the proceedings to the first respondent for reconsideration as required under Chief Commissioner of Central Goods and Services Tax and others vs. Safari Retreats Private Limited and others [supra] and also other grounds.

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[B] The petitioner shall appear before the first respondent without further notice on 07.07.2025 and shall be at liberty to file additional replies/responses/documents and the first respondent is called upon to consider the earlier reply as also the additional reply and documents filed in terms of the liberty reserved by this Court."

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In the light of the undisputed fact that the issue

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being similar, the petition deserves to succeed albeit in part, as

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HC-KAR

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is observed by the Coordinate Bench in the judgment quoted supra . The petitioner is also entitled to the same:

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ORDER

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[A] The petition is allowed in part and the impugned Order-of-adjudication dated 04.02.2025 in No.CTO Audit4.10/DRC-07/2024-25 passed by the respondent vide Annexure-D stands are quashed restoring the proceedings to the respondent for reconsideration as required under Chief

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Commissioner of Central Goods and Services Tax and others vs. Safari Retreats Private Limited and others [supra] and also other grounds.

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[B] The petitioner shall appear before the respondent without further notice on 01.09.2025 at 2.30 p.m. and shall be at liberty to file additional replies/responses/documents and the first respondent is called upon to consider the earlier reply as also the additional reply and documents filed in terms of the liberty reserved by this Court.

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In the event, the petitioner would not avail the opportunity as granted by this Court in terms of the aforesaid

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HC-KAR

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order, the authority is at liberty to pass necessary orders in accordance with law and the petitioner will be precluded from projecting that the order is passed in violation of principles of natural justice.

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No separate notice need be issued to the petitioner for such appearance. In the event, he would not appear, the petitioner would loose the benefit of the order.

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Ordered accordingly.

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Sd/(M.NAGAPRASANNA) JUDGE

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CBC List No.: 1 Sl No.: 41 CT:SS

M/S K Ramakrishna Reddy v. the Commerical Taxes Officer

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M/S K Ramakrishna Reddy v. the Commerical Taxes Officer

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