Guwahati Company Gets Fresh Chance To Contest Service-Tax Demand As Karnataka HC Quashes Order, Bank Recovery Notice Over Possible Old-Address Service

The petitioner challenged an order-in-original dated 16 November 2021 under Section 65B of the Finance Act, 1994, a show-cause notice dated 23 December 2020 under Section 73 of the Central Goods and Services Tax Act, 2017, and a garnishee notice dated 24 June 2026 under Section 79(1) of that Act.

It submitted that it had relocated its office from Bengaluru to Guwahati in 2019 and may not have received the show-cause notice or hearing notices at its former address. It also asserted that it exported services for consideration received in foreign currency and was not liable to register as a taxable person.

After the garnishee notice was served on its bank, the petitioner sought copies of the show-cause notice and order-in-original, but received only the latter.

The Court heard the petition for disposal and considered whether the petitioner should receive another opportunity to respond.

Section 65B of the Finance Act, 1994, Section 73 of the Central Goods and Services Tax Act, 2017, and Section 79(1) of that Act were the statutory provisions associated with the challenged order, show-cause notice, and garnishee notice, respectively.

The Court applied the principle that a party should receive a reasonable opportunity to respond before adverse proceedings are concluded, particularly where non-participation may have resulted from a change of address.

It also referred to the Karnataka High Court’s decision in M/s. Karnataka Chinmaya Seva Trust v. Joint Commissioner of Central Tax, W.P. No. 11154/2023 and connected matters, dated 3 July 2024, in which proceedings were restored for consideration in similar circumstances.

The Court considered that the show-cause notice was based on information furnished by the CBDT, but the petitioner could potentially establish that its services were exempt from service tax and that the underlying facts warranted a different outcome.

It also considered the petitioner’s assertion that its change of address explained its failure to participate; the Court treated that change as undisputed and concluded that the petitioner should have another opportunity to present its case.

It therefore set aside the order-in-original and garnishee notice, while leaving the show-cause notice and substantive issues open for adjudication.

The petitioner was directed to file its response to the show-cause notice by 6 November 2026, without further notice; the first respondent must provide the petitioner with a copy of the show-cause notice on its first appearance and give it a reasonable opportunity to respond.

All questions were left open for consideration.