M/S Pragathi Associates Vs the Commissioner of… — GST and Indirect Tax | Karnataka HC (2026)

M/S Pragathi Associates Vs the Commissioner of… — GST and Indirect Tax | Karnataka HC (2026)

What the court decided

AI extract

Outcome

Adjudication order at Annexure-D and consequent DRC-07 at Annexure-D1 set aside; proceedings restored to the stage of reply to the show cause notice, conditional on payment of Rs.10,000/- cost to the High Court Legal Services Committee, submission of reply within two weeks, and marking of appearance before respondent No.2 on or before 29.01.2026 (failing which the indulgence is withdrawn); all contentions on merits kept open.

Issue for consideration

Whether the adjudication order dated 04.02.2025 under Section 73(9) of the KGST / CGST Act, 2017 for the period 2020-21 (Annexure-D) and the consequent DRC-07 (Annexure-D1) should be set aside, the petitioner having contended that it was unaware of the electronically served show cause notice and therefore did not reply.

Court's answer

In order to ensure that substantive rights are not prejudiced due to non-availing of opportunity, the adjudication order at Annexure-D is set aside and, consequently, the DRC-07 at Annexure-D1 is also set aside.

Ratio / Principle

The proceedings are restored to the stage of reply to the show cause notice; the petitioner is to make out a reply to the show cause notice within two weeks.

Key takeaways

The petitioner must mark its appearance before respondent No.2 on or before 29.01.2026; if it fails to do so, the indulgence shown will stand withdrawn and the petitioner will lose the benefit of participating in the proceedings afresh.ratio¶36
In light of the lapse on the part of the petitioner, the petitioner is put on terms and is liable to pay cost of Rs.10,000/- to the High Court Legal Services Committee.ratio¶32
All contentions on merits are kept open.

Detailed headnote1 paragraphs

Indirect tax - KGST/CGST Act, 2017 - adjudication under Section 73(9) for FY 2020-21 (order dated 04.02.2025, No. ACCT/AUDIT-4.4/2024-25, Annexure-D) with consequential DRC-07 Ref. ZD290225016843D (Annexure-D1) - assessee pleaded unawareness of show cause notice served electronically via portal, hence no reply and proceedings culminated without participation - court set aside Annexure-D and, consequently, Annexure-D1 so that substantive rights are not prejudiced by non-availing of opportunity - proceedings restored to the stage of reply to show cause notice - petitioner directed to reply within two weeks and to mark appearance before respondent No.2 on or before 29.01.2026, failing which the indulgence would stand withdrawn and the benefit of fresh participation lost - petitioner put on terms: cost of Rs.10,000/- to the High Court Legal Services Committee for its lapse - all contentions on merits kept open - petition disposed of (single judge, oral order).

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NC: 2026:KHC:726 WP No. 37461 of 2025

HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 7^TH DAY OF JANUARY, 2026

BEFORE

THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

WRIT PETITION NO. 37461 OF 2025 (T-RES)

BETWEEN:

M/S PRAGATHI ASSOCIATES K.G. HALLI TEKAL HOBLI, MALUR TALUK, KOLAR, KARNATAKA-563 137 REPRESENTED BY ITS PROPRIETOR SMT. KAREGOWDA RENUKA

… PETITIONER

(BY SRI. NADEEM AHMED, ADVOCATE FOR SRI BHARGAVI S V., ADVOCATE)

AND:

Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

THE COMMISSIONER OF COMMERCIAL TAXES VANIJYA THERIGE BHAVAN, GANDHINAGAR, BENGALURU-560 009

THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, (AUDIT)-4.4, DGSTO-04, TTMC BUILDING, 5^TH FLOOR, BMTC BUS DEPOT, 80 FEET ROAD, KORAMANGALA, BENGALURU-560 095 KARNATAKA - 560 095

2 - NC: 2026:KHC:726 WP No. 37461 of 2025

HC-KAR

THE COMMERCIAL TAX OFFICER (ENFORCEMENT)-2 ANTHARAGANGE ROAD, KUVEMPUNAGAR, KOLAR-563 101

… RESPONDENTS

(BY SRI. HEMA KUMAR, AGA)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASHING THE ADJUDICATION ORDER FOR THE PERIOD 2020-21 VIDE ORDER DATED 04.02.2025 VIDE NO. ACCT/AUDIT-4.4/2024-25, AND THE DRC-07 BEARING REF NO. ZD290225016843D PASSED BY 2^ND RESPONDENT IS ENCLOSED AS ANNEXURE - D AND D1 AND ETC.

THIS PETITION COMING ON FOR PRELIMINARY HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

ORAL ORDER

Petitioner has called in question the correctness of the order passed under Section 73(9) of the KGST / CGST Act, 2017.

It is the case of the petitioner - assessee that they were not aware of serving of notice that was communicated electronically through the portal and accordingly the authority has proceeded without any reply

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NC: 2026:KHC:726 WP No. 37461 of 2025

HC-KAR

to the show cause notice. Petitioner submits that opportunities that were sought to be provided could not be availed due to bonafide reasons.

Perused the impugned order. It is noticed that the proceedings have culminated without any reply by the petitioner. In light of the consequences that have flown from the order, it would be appropriate to afford another opportunity to the petitioner to participate and place stand on merits.

Learned counsel for the revenue would submit that several opportunities have been provided. It would meet the ends of justice by restoring the proceedings to enable the petitioner to take their stand on merits to the show cause notice by putting the petitioner on terms. In light of the lapse on the part of the petitioner, petitioner is liable to pay cost. Petitioner to pay cost of Rs.10,000/- to the High Court Legal Services Committee.

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NC: 2026:KHC:726 WP No. 37461 of 2025

HC-KAR

Accordingly, in order to ensure that substantive rights are not prejudiced due to non-availing of opportunity, the order at Annexure-D is set aside. Consequently, the order at Annexure-D1 is also set aside. The matter is restored to the stage of reply to the show cause notice. Petitioner to make out reply to the show cause notice within two weeks from today. Petitioner to also mark their appearance before respondent No.2 on or before 29.01.2026. It is made clear that if the petitioner fails to mark their appearance, the indulgence shown would stand withdrawn and the petitioner would lose the benefit of participating in the proceedings afresh. Accordingly petition is disposed of . All contentions on merits are kept open.

Sd/(S SUNIL DUTT YADAV) JUDGE

VP