M/S Pepper Square Software Services Pvt. Ltd., Vs… — Writ and Judicial Review | Karnataka HC (2026)

M/S Pepper Square Software Services Pvt. Ltd., Vs… — Writ and Judicial Review | Karnataka HC (2026)

What the court decided

AI extract

Outcome

Petition allowed-in-part: impugned Order-in-Original dated 09.08.2021 (Annexure-B) quashed and proceedings restored to the first respondent for reconsideration; petitioner permitted to file response with the first respondent by 02.07.2026 without waiting for certified copy; first respondent directed to consider all circumstances without non-suiting the petitioner on the ground of delay.

Issue for consideration

Whether this Court should entertain the writ petition under Articles 226/227 although the impugned order is appealable under Section 107 of the Finance Act, 1994. +1 more

Court's answer

Notwithstanding that the petition was filed almost four years after the impugned order, the outcome turned on the petitioner's assertion that it was not served with notice nor extended an opportunity otherwise, and the petitioner's proposed reliance on statutory provisions to contend the transaction attracted no tax liability; these circumstances had to be considered before a liability was fastened on the petitioner.

Ratio / Principle

The petition is allowed in part; the impugned Order-in-Original dated 09.08.2021 (Annexure-B) is quashed and the proceedings are restored to the first respondent for reconsideration.

Key takeaways

The petitioner shall, without further notice, file any response with the first respondent by 02.07.2026, even without waiting for a certified copy of the order.ratio¶53
The first respondent shall consider all the circumstances and shall not non-suit the petitioner on the ground of delay.ratio¶54

Detailed headnote1 paragraphs

Writ Petition (T-RES) under Articles 226 and 227 of the Constitution of India by M/s Pepper Square Software Services Pvt Ltd against an Order-in-Original dated 09.08.2021 under the Finance Act, 1994, passed by the Deputy Commissioner of Central Tax, West Division-5, Bengaluru, following a show cause notice dated 25.06.2020; the order was contended to be ex parte, without due service of notice, and based on information furnished by the Income Tax Department under a CBDT-CBIC agreement. Though the order was appealable under Section 107 of the Act and the petition was filed almost four years later, the Court - turning on the petitioner's assertion of non-service and want of opportunity, and relying on a Co-ordinate Bench decision in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax, W.P. No.11154/2023 and connected matters dated 03.07.2024 - allowed the petition in part, quashed the Order-in-Original (Annexure-B), restored the proceedings to the first respondent for reconsideration, permitted the petitioner to file its response by 02.07.2026, and directed the first respondent to decide all circumstances without non-suiting the petitioner on the ground of delay.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 9^TH DAY OF JUNE, 2026

BEFORE

THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 16485 OF 2026 (T-RES)

BETWEEN:

M/S PEPPER SQUARE SOFTWARE SERVICES PVT LTD., (A PRIVATE LIMITED COMPANY, REGISTERED UNDER THE ERSTWHILE PROVISION OF FINANCE ACT, 1994)

NO. 294, (NEW NO 56), KANAKPURA ROAD, JAYANAGAR, BENGALURU-560070

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

(REPRESENTED BY ITS DIRECTOR MUKI REGUNATHAN S/O REGUNATHAN RAJAGOPALACHARI, AGED ABOUT 56 YEARS)

…PETITIONER

(BY SRI. PRAKASH D., ADVOCATE)

AND:

THE DEPUTY COMMISSIONER OF CENTRAL TAX WEST DIVISION - 5

BENGALURU WEST COMMISSIONERATE,

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1ST FLOOR, TTMC COMPLEX, BMTC BUS STAND, BANASHANKARI, BENGALURU- 560 070

THE ASSISTANT COMMISSIONER OF CENTRAL TAX, WEST DIVISION - 5 BENGALURU WEST COMMISSIONERATE, 1ST FLOOR, BMTC BUILDING, KANAKPURA ROAD, BANASHANKARI, BENGALURU-560070.

…RESPONDENTS (BY SRI. ARAVIND V. CHAVAN, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI, OR SUCH OTHER WRIT, ORDER OR DIRECTION AS THIS HON'BLE COURT AS MAY BE DEEMED FIT AND QUASH ORDER IN ORIGINAL NO PASSED BY RESPONDENT NO. 1.(B) REMAND THE MATTER TO RESPONDENT NO.2 FOR FRESH ADJUDICATION OF SHOW CAUSE NOTICE BEARING C. NO. V/99/12/23/2020-CWD-5 DATED 25.06.2020 AT ANNEXURE - A

THIS PETITION, COMING ON FOR

PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner is aggrieved by the Order-inOriginal dated 09.08.2021 under the Finance Act, 1994 [for short, ' the Act' ]. The petitioner cannot dispute that this is an order that could be appealed under Section 107 of the Act, but the petitioner has invoked this Court's jurisdiction relying upon the judgment of a Co-ordinate Bench of this Court in

M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax in W.P. No.11154/2023 and connected matters dated 03.07.2024 .

2. Mr. Prakash D, the learned counsel for the petitioner, submits that the impugned Order-inOriginal is an ex parte order without due service of notice and is based on an information furnished by the Income Tax Department acting under an agreement signed between the Central Board for

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Direct Taxes and the Central Board for Indirect Taxes but without due opportunity. The learned counsel argues that in very similar circumstances based on an undertaking given by the concerned from the department, a Co-ordinate Bench of this Court has disposed of the writ petition in W.P.No.11154/2023 and other matters [such as in W.P.No.20351/2024] restoring the proceedings for reconsideration with due opportunity.

3. Mr. Aravind V. Chavan, a learned

Standing counsel who is called upon to accept notice for the respondents, is heard and when queried, the learned counsel submits that the undertaking as recorded in W.P.No.11154/2023 was to ensure that the designated officers looked into complaints of similar nature but with march of time, the jurisdictional Officers, such as the respondents in the present case, are empowered to extend an

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opportunity and decide on the merits of the cause that could be shown.

4. This Court finds that the outcome in the

writ petition must turn in the light of the afore circumstances notwithstanding the fact that the petition is filed almost after four years from the date of the impugned order because the petitioner asserts that it has not been served with notice or been extended an opportunity othwerwise, and more importantly, the petitioner proposes to rely upon the statutory provisions to contend that the subject transaction does not result in any consequence to pay certain taxes. This Court finds that all these circumstances must be considered before a liability is fastened on the petitioner. Hence the following:

ORDER

[A] The petition is allowed-in-part and the impugned Order-in-Original dated 09.08.2021 [ Annexure - B ] is quashed

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restoring the proceedings to the first

respondent for reconsideration.

[B] The petitioner shall, without further notice, file response, if any, with the first respondent by 02.07.2026 even without waiting for a certified copy of this order.

[C] The first respondent shall consider all the circumstances without non-suiting the petitioner on the ground of delay.

Sd/(B M SHYAM PRASAD) JUDGE

RB