Case Title: M/s Prabu Trading Company v. Assistant Commissioner of Commercial Taxes
Court: High Court of Karnataka, Bengaluru
Petition No.: W.P. No. 13437 of 2025 (T-RES)
Date of Judgment: 19 June 2025
Relevant Section: Section 73 of the CGST Act, 2017; Rule 142 of the CGST Rules, 2017
Category of Dispute: Adjudication and Natural Justice – Assessment Order
Facts (Paras 1–2):
The petitioner, M/s Prabu Trading Company, a registered wholesale dealer in fireworks (GSTIN 29AACFP1821C1ZO), challenged an order dated 20 December 2023 issued under Section 73 of the CGST Act. The order was passed ex-parte without granting an opportunity for hearing, allegedly in violation of Rule 142 of the CGST Rules, 2017, which mandates proper communication of notice through Form GST DRC-01. The petitioner contended that the order was void for want of service and relied on the Archita Tours and Travels v. State of U.P. (2024) 24 Centax 186 (All.) to emphasize that non-service or ineffective service of notice violates the doctrine of audi alteram partem (right to be heard).
Question Before the Court:
Whether an assessment order passed ex-parte, solely on the basis of electronic intimation on the GST portal without effective communication or hearing, is sustainable under Section 73 read with Rule 142 of the CGST Rules.
Observations (Paras 3–4):
The Court noted that while the Department argued that the petitioner had an alternate remedy through appeal, the record revealed no proof of effective service of notice beyond an automated email alert. The Court acknowledged that electronic service is valid in general under the GST regime, but in the present case—considering the business nature and substantive rights involved—the absence of fair opportunity rendered the adjudication unjust. The Court reiterated that procedural fairness is a fundamental element of tax adjudication, and failure to ensure service violates Rule 142 and natural justice.
Judgment (Paras 5–6):
The High Court quashed the impugned ex-parte order dated 20.12.2023 (Reference No. ZD291223060191P; Order No. CTO/LGSTO-040/DRC-07/R1vsR3B/58/2023-24). The matter was remanded to the adjudicating authority for fresh consideration from the stage of issuance of notice under Section 73. The petitioner was directed to appear on 15 July 2025 at 2:30 PM without awaiting a fresh notice, and to deposit ₹10,000 as costs with the Registrar General of the High Court within two weeks.
Table of Cases Referred:
| Case Name | Court / Citation | Principle Laid Down |
|---|---|---|
| Archita Tours and Travels v. State of U.P. | Allahabad High Court, (2024) 24 Centax 186 (All.) | Order passed without proper service of notice violates natural justice and is void. |
Between Fine Lines:
This ruling reinforces that ex-parte assessment orders issued solely on portal communication—without ensuring actual notice and opportunity—are unsustainable. Tax officers must strictly comply with Rule 142 communication protocols and the audi alteram partem principle to avoid orders being quashed and remanded, delaying revenue recovery.
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