Karnataka HC Quashes Contractor’s Later Section 74 GST Order On 2018-19 Issue, Leaving Earlier Section 73 Order Intact

In brief

The question

Whether the subsequent Section 74 proceedings for FY 2018–19 could proceed when a Section 73 adjudication order for the same year had already been made and was under challenge.

The court held

W.P. No. 28817/2026 was allowed, and the Section 74 intimation, show-cause notice, adjudication order, and their summaries were quashed.

It also directed

W.P. No. 29033/2024 was disposed of in light of the Division Bench decision, without interference with the Section 73 adjudication order or a direction to defer recovery.

The petitioner was left at liberty to pursue any remedy against the Public Works Department, subject to all just exceptions in law.

01Facts

The petitioner faced proceedings under Sections 73 and 74 of the CGST/KGST Acts for FY 2018–19.

In W.P. No. 29033/2024, he challenged a Section 73 show-cause notice, the adjudication order dated 29 April 2024, and a recovery notice.

pp. 7–8

He also sought, alternatively, directions requiring the Public Works Department to reimburse differential GST under the decision in Sri Chandrashekharaiah v. State of Karnataka.

pp. 7–8

While that petition was pending under an interim order, the tax authority initiated and completed separate Section 74 proceedings for the same financial year, which the petitioner challenged in W.P. No. 28817/2026.

pp. 8–10

02Issues

i.Whether the subsequent Section 74 proceedings for FY 2018–19 could proceed when a Section 73 adjudication order for the same year had already been made and was under challenge.

pp. 10–13

ii.Whether the Section 73 adjudication order should be set aside, or the tax authority’s recovery deferred, based on Sri Chandrashekharaiah and the petitioner’s claim for reimbursement of differential GST by the Public Works Department.

pp. 8–12

03Law Applied

Sections 73 and 74 of the CGST/KGST Acts govern the respective tax-determination proceedings.

pp. 10–12

The Court, applying the Division Bench’s decision in W.A. No. 652/2026, stated that courts cannot issue blanket directions requiring tax authorities to act contrary to statutory provisions, and that directions concerning contractual tax burdens must account for the particular contract terms.

pp. 10–12

It further held, in the circumstances of this case, that parallel proceedings—particularly later proceedings under Section 74 after a Section 73 adjudication for the same financial year—could not be maintained.

p. 13

Provisions in the judgment · 4 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 Section 74 Section 73

KARNATAKA GOODS AND SERVICES TAX ACT, 2017 Section 74 Section 73

04Reasoning

The Division Bench decision foreclosed the petitioner’s reliance on Sri Chandrashekharaiah as a basis to disturb the Section 73 adjudication or direct the tax authority to defer recovery; any claim against the Public Works Department depended on the contractual terms and had to be pursued separately.

pp. 11–12

However, the Section 73 adjudication order dated 29 April 2024 already addressed FY 2018–19, and the later Section 74 proceedings concerned the same financial year.

p. 13

Because any tax due for that year would be recoverable under the existing Section 73 order, the Court found that the subsequent Section 74 proceedings could not continue.

p. 13

05Holding

W.P. No. 28817/2026 was allowed, and the Section 74 intimation, show-cause notice, adjudication order, and their summaries were quashed.

pp. 13–14

W.P. No. 29033/2024 was disposed of in light of the Division Bench decision, without interference with the Section 73 adjudication order or a direction to defer recovery.

p. 14

The petitioner was left at liberty to pursue any remedy against the Public Works Department, subject to all just exceptions in law.

pp. 14–15

LawLens.Karnataka High Court

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