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Sri Bal Kishan Agarwal Vs the Assistant… — Writ and Judicial Review | Karnataka HC (2026)

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Karnataka HC
2026
Sri Bal Kishan Agarwal Vs the Assistant CommissionerSri Bal Kishan Agarwal v. the Assistant Commissioner Central

Disposed¶58

Sri Bal Kishan Agarwal v. the Assistant Commissioner Central Tax

Service tax – Demand based on CBDT inputs against retailer of provisions and grocery

Karnataka HC8 Apr 2026WP/9013/2026

Case brief

AI extract

What is this about?

Service tax demand built on CBDT inputs against proprietor of provision store (retail sale of goods); Finance Act, 1994; Section 65B(44); negative list; exemption Notification No.25/2012-ST dated 28.06.2012; Rule 2(1)(d); limitation; ex parte adjudication without opportunity to reply; Order-in-Original set aside; remitted to stage of reply to show-cause notice; appearance directed on 18.05.2026; certiorari under Articles 226 and 227; relies on W.P.No.11154/2023 and connected matters dated 03.07.2024; demand Rs.13,07,933/- plus penalties Rs.13,07,933 (S.78) and Rs.40,000 (S.77), total Rs.26,55,866/- with interest under S.75.

What did the court decide?

Order-in-Original at Annexure-A set aside; matter remitted to the stage of reply to the show-cause notice; petitioner directed to appear before respondent no.1 without further notice on 18.05.2026.

Why is it important?

In light of the contentions raised and the observations made in W.P.No.11154/2023 and connected matters dated 03.07.2024, the Order-in-Original at Annexure-A is set aside and the matter is remitted to the stage of reply to the show-cause notice. ¶54-55

What the court decided

AI extract

Outcome

Order-in-Original at Annexure-A set aside; matter remitted to the stage of reply to the show-cause notice; petitioner directed to appear before respondent no.1 without further notice on 18.05.2026.

Issue for consideration

Whether the Order-in-Original raising service tax demand founded on inputs received from the Central Board of Direct Taxes (CBDT) is valid. +2 more

Ratio / Principle

In light of the contentions raised and the observations made in W.P.No.11154/2023 and connected matters dated 03.07.2024, the Order-in-Original at Annexure-A is set aside and the matter is remitted to the stage of reply to the show-cause notice.

Detailed headnote1 paragraphs

Service tax - Demand based on CBDT inputs against retailer of provisions and grocery - Writ under Articles 226/227 challenging Order-in-Original SI.No.17/2021 SD-4 dated 15.02.2021 passed by Assistant Commissioner, Central Tax for FY 2014-15 (AY 2015-16), alleging service tax demand of Rs.13,07,933/-, penalty under S.78 of Rs.13,07,933 and penalty under S.77 of Rs.40,000/- (total Rs.26,55,866/-) plus interest under S.75 of the Finance Act, 1994, communicated by recovery intimation dated 27.02.2026; petitioner contended the adjudication was ex parte and that sale of goods in a provision store attracts no service tax. Applying the observations in this Court's earlier order in W.P.No.11154/2023 and connected matters dated 03.07.2024 (five-point checklist: Section 65B(44) qualification, negative list, exemption under Notification No.25/2012-ST dated 28.06.2012, Rule 2(1)(d) liability, limitation), the High Court set aside the Order-in-Original and remitted the matter to the stage of reply to the show-cause notice, directing the petitioner to appear before respondent no.1 on 18.05.2026 without further notice; petition disposed of (S Sunil Dutt Yadav J).

A

1 - NC: 2026:KHC:19480 WP No. 9013 of 2026

HC-KAR

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 8^TH DAY OF APRIL, 2026

BEFORE

THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 9013 OF 2026 (T-RES)

BETWEEN:

SRI BAL KISHAN AGARWAL PROP. OF M/S. HARI OM STORES S/O FUL CHAND AGARWAL AGED ABOUT 59 YEARS, OPP. L AND T CITY APARTMENT, NO.155, 4^TH CROSS, 2^ND STAGE, AREKERE MICO LAYOUT, B.G.ROAD, BENGALURU-560 076.

… PETITIONER

(BY SRI. ARUNA BHAT, ADVOCATE)

AND:

Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA

THE ASSISTANT COMMISSIONER CENTRAL TAX, SOUTH DIV-4, BENGALURU SOUTH COMMISSIONERATE, C WING, 7^TH FLOOR, KENDRIYA SADAN, KORAMANGALA, BENGALURU-560 034

THE COMMISSIONER CENTRAL TAX, SOUTH DIV-4, BENGALURU SOUTH COMMISSIONERATE, C WING, 7^TH FLOOR, KENDRIYA SADAN, KORAMANGALA, BENGALURU-560 034.

2 -

NC: 2026:KHC:19480 WP No. 9013 of 2026

HC-KAR

MINISTRY OF FINANCE, REP.BY ITS SECRETARY, DEPARTMENT OF REVENUE, NEW DELHI-11001.

… RESPONDENTS

(BY SRI. ARAVIND V. CHAVAN, ADVOCATE)

THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI, ORDER OR DIRECTION QUASHING THE IMPUGNED ORDER IN ORIGINAL SI.NO.17/2021 SD-4 DATED 15.02.2021 ANNEXURE-A PASSED BY THE RESPONDENT NO.1 FOR THE FINANCIAL YEAR 2014-15 (ASSESSMENT YEAR 2015-16) VIDE RECOVERY INTIMATION DATED 27.02.2026 FILE NO. NO.GEX COM /TECH/MISC/ 2219/2025-CGST-DIV-SD-4-COMMRTE 126/26, ALLEGING SERVICE TAX DEMAND AMOUNT OF RS.13,07,933/-, PENALTY UNDER S.78 RS.13,07,933 AND PENALTY UNDER S.77 RS.40,000/- TOTALLY AMOUNTING TO RS.26,55,866/- ALONG WITH INTEREST UNDER S.75 OF THE FINANCE ACT, 1994 TILL THE DATE OF ACTUAL PAYMENT AND ETC.

THIS PETITION, COMING ON FOR FRESH MATTERS LIST, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

ORAL ORDER

Sri.Aravind Chavan, learned counsel accepts notice

for the respondents.

The petitioner has called in question the validity

of the Order-in-Original at Annexure-A and submits that

3 - NC: 2026:KHC:19480 WP No. 9013 of 2026

HC-KAR

the authority while adjudicating the proceedings in terms

of the Finance Act, 1994, in order to raise demand regarding service tax has relied on the inputs received from the Central Board of Direct Taxes ('CBDT', for short).

It is submitted that in similar cases, the authorities in order to raise demand of service tax have relied on the inputs received from CBDT.

This Court in W.P.No.11154/2023 and connected

matters dated 03.07.2024 has set aside the order and remitted the matter back for reconsideration in terms of the observations made in the said order.

Learned Counsel for petitioner submits that the proceedings are ex parte and the petitioner did not have opportunity to make out reply.

It is further submitted that the question of raising

any demand relating to service tax is inapplicable as petitioner carries on business of retail trading of provisions

4 - NC: 2026:KHC:19480 WP No. 9013 of 2026

HC-KAR

and grocery items in a Provision Store. As it involves sale of goods, the question of invoking liability of service tax does not arise.

Perused the order passed in W.P.No.11154/2023

and connected matters dated 03.07.2024. Para 10 of the order reads as under:

"10. The officers while disposing off the

petitions to keep in mind the following:

1) Whether petitioners do not qualify under Section 65B(44) of the Finance Act, 1994 ?

2) Whether services are covered under negative list ?

3) Whether services are covered under the exemption list under the Notification No.25/2012-ST dated 28.06.2012 or under any other applicable Notifications ?

4) Whether the person is liable to remit service tax in terms of Rule 2 (1) (d) read with applicable notification?

5) Whether claims are barred by limitation in terms of the law laid down by the Apex Court ? "

5 -

NC: 2026:KHC:19480 WP No. 9013 of 2026

HC-KAR

In light of the contentions raised and observations made in W.P.No.11154/2023 and connected matters dated 03.07.2024, the Order-in-Original at Annexure-A is set

aside and the matter is remitted to the stage of reply to the show-cause notice.

Petitioner to appear before the respondent no.1

without further notice on 18.05.2026.

Accordingly, the petition is disposed of.

SD/(S SUNIL DUTT YADAV) JUDGE

NP

Issues for consideration

3 issues framed by the court

AI extract

1.
Whether the Order-in-Original raising service tax demand founded on inputs received from the Central Board of Direct Taxes (CBDT) is valid.medium confidence¶32
2.
Whether the ex parte adjudication denied the petitioner an opportunity to make out a reply to the show-cause notice.medium confidence¶36
3.
Whether any service tax liability can arise where the petitioner carries on business of retail trading of provisions and grocery items, involving sale of goods.medium confidence¶38

Cases cited

Colour shows how this judgement treated each authority

AI extract

W.P.No.11154/2023 and connected matters dated 03.07.2024Applied¶42

Statutes considered

8 provisions across 4 enactments

AI extract

Constitution of IndiaArticles 226 and 227¶21
Finance Act, 1994Section 78¶21 Section 77¶21 Section 75¶21 the Finance Act, 1994¶32 Section 65B(44)¶46
Rule 2 (1) (d)

Procedural history

How this case reached the court

AI extract

Order under challenge
Order-in-Original SI.No.17/2021 SD-4 dated 15.02.2021 (Annexure-A) passed by respondent no.1 for FY 2014-15 (Assessment Year 2015-16), enforced by recovery intimation dated 27.02.2026, alleging service tax demand, penalties under S.78 and S.77 and interest under S.75 of the Finance Act, 1994.¶21
Assistant Commissioner Central Tax, South Div-4, Bengaluru South Commissionerate (respondent no.1) · 15.02.2021
Prior proceeding
This Court in W.P.No.11154/2023 and connected matters dated 03.07.2024 had set aside the order and remitted the matter back for reconsideration in terms of the observations made therein; para 10 of that order laid down five adjudication points (Section 65B(44), negative list, exemption Notifications, Rule 2(1)(d) liability, limitation).¶35
Prior proceeding
Recovery intimation dated 27.02.2026 issued pursuant to the Order-in-Original, communicating total demand of Rs.26,55,866/- plus interest.¶21

Parties & counsel

AI extract

petitioner
SRI BAL KISHAN AGARWAL PROP. OF M/S. HARI OM STORES¶8
ARUNA BHAT
respondent
THE ASSISTANT COMMISSIONER CENTRAL TAX, SOUTH DIV-4, BENGALURU SOUTH COMMISSIONERATE¶13
ARAVIND V. CHAVAN
respondent
THE COMMISSIONER CENTRAL TAX, SOUTH DIV-4, BENGALURU SOUTH COMMISSIONERATE¶14
respondent
MINISTRY OF FINANCE, REP.BY ITS SECRETARY, DEPARTMENT OF REVENUE, NEW DELHI¶18

Coram

AI extract

S SUNIL DUTT YADAVauthor¶23

Case details

As recorded by the court registry

Court: Karnataka HC
Decided on: 8 Apr 2026 · April
Registered: 17 Mar 2026
Case no.: WP/9013/2026
CNR: KAHC010202722026
Topic: Writ and Judicial Review
Bench: S Sunil Dutt Yadav
Disposal: DISPOSED
Case type: Writ Petition (T-RES)

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Cite this judgement

Sri Bal Kishan Agarwal v. the Assistant Commissioner Central Tax, WP/9013/2026 (KA), decided on 8 April 2026.

The High Court of Karnataka publishes no neutral citation for this judgement — cite it by case number and date of decision.

Cases cited1

W.P.No.11154/2023 and connected matters dated 03.07.2024Applied¶42

Open Authorities

Statutes8

Constitution of IndiaArticles 226 and 227
Finance Act, 1994Section 78 · Section 77 · Section 75 · the Finance Act, 1994 · Section 65B(44)
Rule 2 (1) (d)Rule 2(1)(d)
Notification No.25/2012-STNotification No.25/2012-ST dated 28.06.2012

View all statutes

Procedural history3

Order-in-Original SI.No.17/2021 SD-4 dated 15.02.2021 (Annexure-A) passed by respondent no.1 for FY 2014-15 (Assessment Year 2015-16), enforced by recovery intimation dated 27.02.2026, alleging service tax demand, penalties under S.78 and S.77 and interest under S.75 of the Finance Act, 1994.Assistant Commissioner Central Tax, South Div-4, Bengaluru South Commissionerate (respondent no.1) · 15.02.2021
This Court in W.P.No.11154/2023 and connected matters dated 03.07.2024 had set aside the order and remitted the matter back for reconsideration in terms of the observations made therein; para 10 of that order laid down five adjudication points (Section 65B(44), negative list, exemption Notifications, Rule 2(1)(d) liability, limitation).
Recovery intimation dated 27.02.2026 issued pursuant to the Order-in-Original, communicating total demand of Rs.26,55,866/- plus interest.

View full history

Bench / Coram

S SUNIL DUTT YADAV

Parties & counsel

Rule 2(1)(d)¶49

Notification No.25/2012-STNotification No.25/2012-ST dated 28.06.2012¶48