After Authorities Recovered 100% Of Tax Under One GST Order, Karnataka HC Restores Contractor’s Two-Year Proceedings For Fresh Replies

The petitioner challenged adjudication orders under Section 73(9) of the CGST Act and corresponding KGST provisions for financial years 2020–21 and 2021–22, together with related recovery notices under Section 79(C).

He asserted that he had not responded to the show-cause notices because his accountant managed his registered email account and failed to provide the necessary information; he learned of the adjudication orders only after receiving summons in pending criminal proceedings.

He also claimed to have offered tax of ₹75,000 for 2020–21 and approximately ₹3,50,000 for 2021–22, and stated that authorities had recovered all tax for the first year and 11.76% of the demand for the second.

He sought an opportunity to submit work orders and other documents to reconcile the tax liability.

The Court considered the adjudication orders made under Section 73(9), the show-cause notices issued under Section 73(1), and the recovery notices under Section 79(C) of the CGST Act, along with the corresponding KGST provisions.

It exercised its jurisdiction under Articles 226 and 227 of the Constitution to grant case-specific relief, concluding that, in the particular circumstances, the petitioner should receive another opportunity to provide documents and reconciliation before the demand was enforced without considering those materials.

No precedent was relied upon in the order.

The Court noted the petitioner’s explanation that his accountant had failed to respond to notices, his claim that tax had already been offered for both years, the substantial recoveries made, and his willingness to produce documents for reconciliation.

Although the State submitted that notices had been sent by email and uploaded to the portal, the Court considered the circumstances as a whole and found that another opportunity was warranted to avoid enforcement of a demand without considering all relevant circumstances.

The Court did not determine the petitioner’s separate contention that adjudication had been completed before expiry of three months from issuance of the show-cause notices.

The Court quashed the two Section 73(9) adjudication orders, their summary orders, and the related Section 79(C) recovery notices.

It permitted the petitioner to file a response with supporting documents and reconciliation before the respondents by 2 December 2026, without further notice; the amounts already recovered were made subject to the outcome of the restored proceedings.

The petitioner was also permitted to place the order before the court dealing with the pending criminal miscellaneous proceedings, without prejudice to the authorities’ right to commence proceedings based on the outcome of the restored tax proceedings.