Case Summary: M/s Madhu Plastics Pvt. Ltd. v. State of Karnataka & Ors., High Court of Karnataka, WP No. 5685 of 2025 (T-RES), decided on 11.03.2025 — Category: Input Tax Credit (ITC); Relevant Section: Section 73 of the CGST / KGST Act
Facts (Paras 3 – 5)
M/s Madhu Plastics Pvt. Ltd. received neither the intimation under Section 73(5) dated 28.11.2023 nor the show-cause notice under Section 73(1) dated 08.12.2023 issued by the Assistant Commissioner, LGSTO-27, Bengaluru. Unaware of the proceedings, the company discovered the adjudication order dated 12.03.2024 (Annexure F) on the GST portal, by which input tax credit (ITC) of ₹ 2,20,75,208 was disallowed with interest and penalty. A rectification request under Section 161 was also rejected vide endorsement dated 29.01.2025. The company thus filed the present writ petition under Articles 226 and 227 of the Constitution challenging both orders for violation of natural justice and seeking de-attachment of its ITC ledger.
Questions before the Court
Whether the ex-parte adjudication order passed under Section 73 of the KGST/CGST Act and the subsequent rejection of rectification violated principles of natural justice, warranting quashing and remand for fresh consideration.
Observations (Paras 5 – 6)
Justice S.R. Krishna Kumar observed that the petitioner indeed did not file any reply to the notices. Nevertheless, adopting a justice-oriented approach, the Court found that since the entire adjudication had been concluded ex-parte and the taxpayer had not been heard, one more opportunity ought to be granted. Without entering into the merits, the Court emphasized that GST adjudication must conform to fair-hearing requirements embedded in Section 75(4) of the CGST Act and basic natural-justice principles.
Judgement (Para 7)
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The writ petition was allowed.
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The adjudication order dated 12.03.2024 and the endorsement dated 29.01.2025 were set aside.
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The matter was remitted to the Assistant Commissioner (R-3) for reconsideration after giving the petitioner a fair chance to respond to the SCN dated 08.12.2023.
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The petitioner was directed to appear on 24.03.2025 without waiting for further notice.
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The Court further directed the revocation of the attachment of the ITC ledger pending proceedings.
Summary of Cases Referred
| Sr. No. | Case Name | Citation / Court | Principle Laid Down |
|---|---|---|---|
| 1 | No specific precedents cited in text | — | The Court relied on settled principle of natural justice and Section 75(4) of CGST Act 2017 requiring opportunity of hearing before adjudication. |
Between Fine Lines
This judgment underscores that even if a taxpayer defaults in replying to notices, the department must ensure effective service and fair opportunity before finalizing tax liability. Ex-parte GST orders under Section 73, passed without proof of notice or hearing, are vulnerable to judicial review. Businesses should regularly check the GST portal for pending communications, but tax officers too must ensure procedural fairness to avoid remand and delay.
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