The Karnataka High Court examined whether an assessment order passed without considering the assessee’s reply—due to alleged non-receipt of the show-cause notice (SCN)—could be sustained. The assessee pleaded bona fide and unavoidable circumstances arising from a change in registered email ID, resulting in failure to respond to the SCN.
Facts
- GST authorities issued a show-cause notice electronically.
- The assessee did not file a reply, leading to an adverse order.
- Assessee contended that:
- SCN was not received due to change in email ID.
- Non-reply was neither deliberate nor negligent.
- Opportunity of hearing was effectively denied.
Issue
Whether the assessment order passed without the assessee’s reply—due to bona fide non-receipt of SCN—violated principles of natural justice and required interference by the High Court.
Held
- The Court held that a justice-oriented approach must prevail in tax matters.
- When bona fide reasons and unavoidable circumstances are demonstrated, the assessee should not be denied an opportunity to respond.
- The impugned order was set aside.
- The matter was remanded to the adjudicating authority from the stage of reply to show-cause notice.
- To balance equities and discourage casual conduct, the Court imposed costs of ₹10,000 on the assessee.
Key Observations
- Procedural lapses should not override substantive justice.
- Electronic service must be effective and meaningful, not merely technical.
- Courts may impose costs while granting relief to prevent misuse of leniency.
Outcome
✅ Assessment order quashed
🔁 Matter remanded for fresh consideration
💰 Cost of ₹10,000 imposed on assessee
Analysis
This decision reinforces a balanced judicial approach in GST adjudication—protecting natural justice while discouraging procedural laxity.
- Electronic Service ≠ Effective Service
The Court implicitly acknowledged that mere electronic issuance of an SCN is not enough. If service is not effective due to genuine technical reasons (such as change of registered email), the resultant proceedings become vulnerable. This is significant in the GST regime, where communication is largely portal/email-driven. - Bona fide Conduct as a Decisive Factor
Relief was granted not automatically, but because the assessee demonstrated bona fide and unavoidable circumstances. This indicates that courts will scrutinize conduct—relief is unlikely where non-compliance appears deliberate or negligent. - Natural Justice Over Procedural Rigidity
The ruling reiterates that denial of opportunity to reply to SCN vitiates the entire proceeding. An SCN is the foundation of adjudication; if that foundation is compromised, subsequent orders cannot stand. - Costs as a Deterrent Mechanism
By imposing ₹10,000 as costs, the Court struck a middle path:- Prevents misuse of writ jurisdiction for avoidable lapses
- Signals that procedural leniency does not mean immunity from responsibility
This trend is increasingly visible in GST writs.
- Limited Remand – From SCN Stage Only
The matter was remanded only from the stage of reply to SCN, not de novo. This protects revenue interests and avoids reopening settled procedural steps unnecessarily. - Practical Takeaway for Taxpayers & Professionals
- Ensure timely updating of email/mobile details on the GST portal
- Maintain documentary proof of technical or unavoidable difficulties
- Courts may grant relief, but often with costs and conditions
Overall Significance:
The ruling underscores that substantive justice prevails over technicalities, but procedural diligence remains non-negotiable in the GST ecosystem.
Citation:
12 Jan 2026 | [2026] 182 taxmann.com 179 (Karnataka) [12-12-2025] | GST | Case Laws