The Karnataka High Court, in a relief to taxpayers, has set aside an adjudication order passed against M/s Srinidhi Construction and remanded the case back for fresh consideration.
The case originated from a GST audit where authorities alleged discrepancies in the input tax credit claims and short declaration of output tax in the GSTR-3B Form. Because of the failure of the taxpayer to respond to the SCN and file important documents such as work orders, bank statements, and financial records, the department moved with the adjudication and issued a demand order.
The applicant in the hearing claimed that the proceedings were inaccurate, as the same authority performed the audit and passed the adjudication order. It was mentioned that, because of bona fide reasons, no response can be submitted earlier, and a chance must be furnished to present the case on merits.
Also Read: Karnataka HC Quashes GST Demand, Orders Fresh Adjudication with 10% Pre-Deposit Condition
The High Court noted that the adjudicating authority issued the order without considering the taxpayer’s response and supporting documents. Therefore, the Court concluded that principles of natural justice necessitated providing a new opportunity.
The Court:
- Quashed the impugned Order-in-Original and related demand
- Remitted the case back to the adjudicating authority for reconsideration
- Permitted the taxpayer to submit a reply and submit relevant documents
- Directed the applicant to appear before the authority on 20 May 2026
- Levied a cost of ₹10,000 payable to the Karnataka Advocates Clerks Benevolent Trust
The ruling supports that for matters of non-compliance, the taxpayers must be furnished with a fair chance to present their case before adverse orders are finalised.
Key takeaway
The same judgment outlines the significance of the principle of natural justice in GST proceedings and proposes relief where orders are passed without a proper chance of hearing.
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| Case Title | M/s. Srinidhi Construction Vs. Joint Commissioner of Commercial Taxes |
| Case No. | Writ Petition No. 10121 of 2026 (T-Res) |
| Counsel for the Petitioner | Sri. Shravan Madhav K. P. |
| Counsel for Respondent | Smt. Jyothi M. Maradi |
| Karnataka High Court | Read Order |
