Sri. Madhusudhan Reddy L v. The State of Karnataka

e -e1e-eeeee e e ((((((((((((HC-KAR, NC:(2026:KHC:49146( WP(No.(28412(of(2026( ( ,,,,,,,,,, , CNR:(KAHC010626642026(e ( e ( INATHEAHIGHACOURTAOFAKARNATAKAAATABENGALURUA e THe DATEDATHISATHEA9 ADAYAOFASEPTEMBER,A2026A e BEFOREA e THEAHON'BLEAMR.AJUSTICEABAMASHYAMAPRASADA e WRITAPETITIONANO.A28412AOFA2026A(T-RES)A e BETWEEN:AA Ae - SRI.-MADHUSUDHAN-REDDY-L-e S/O.-LAKSHMI-NARAYAN-REDDY,- e AGED-ABOUT-56-YEARS,- PROPRIETOR-OF-M/S.-KUNDAN-TRANSPORT,--e R/AT-NO.-29/2A2B,-SHREE-LAKSHMI-NILAYA,-- e PURVA-BELMONT-GATE,-KANAKAPURA-ROAD,- e JARAGANAHALLI,-J.P.NAGAR,-- BENGALURU---560-078.-e …PETITIONER-e (BY-SRI.-SUBRAHMANYA-DATTATRAY,-ADVOCATE)- e AND:Ae A e Digitally 1.- THE-STATE-OF-KARNATAKA-signed by REP.-BY-THE-PRINCIPAL-SECRETARY,-- VANAMALA FINANCE-DEPARTMENT,-VIDHAN-SOUDHA,-eN BENGALURU---560-001.-Location: HIGH - COURT OF 2.- JOINT-COMMISSIONER-KARNATAKA OF-COMMERCIAL-TAXES,-(LEGAL-AFFAIRS),- COMMERCIAL-TAX-BUILDING,-- KALIDASA-MARG,-GANDHI-NAGAR,-- VANIJYA-THERIGE-KARYALAYA,-- BENGALURU---560-009.- - e e -e2e-eeeee e e ((((((((((((HC-KAR, NC:(2026:KHC:49146( WP(No.(28412(of(2026( ( ,,,,,,,,,, , CNR:(KAHC010626642026( ( (

3.-DEPUTY-COMMISSIONER-OF-COMMERCIAL-TAXES,--(AUDIT)-3.4,-DGSTO-3,-2ND-FLOOR,--ROOM-NO.225,-TTMC,-BMTC-COMPLEX,-SHANTHINAGAR,-BENGALURU---560-027.-…RESPONDENTS-(BY-SMT.-JYOTI-M.-MARADI,-HCGP)--THIS-WP-IS-FILED-UNDER-ARTICLES-226-AND-227-OF-THE-CONSTITUTION-OF-INDIA-PRAYING-TO-I.-ISSUE-WRIT-OF-CERTIORARI-OR-ANY-OTHER-WRIT-OR-ORDER-SETTING-ASIDE-THE-ADJUDICATION-ORDER-DATED-

23.12.2025-PASSED-BY-THE-RESPONDENT-NO.3-UNDER-SECTION-73(9)- OF-THE-CGST-AND-KGST-ACT,- 2017- (ANNEXURE-J)- FOR-THE-TAX-PERIOD-2021-22-WHEREIN-HELD-THAT-THE-PETITIONER-IS-LIABLE-TO-MAKE-PAYMENT-OF-RS.-78,-66,-748/--TOWARDS-TAX,- INTEREST-AND-PENALTY,- BEING-ARBITRARY,- ERRONEOUS-AND-NOT-SUSTAINABLE-IN-LAW-AND-ETC.,- - THIS-PETITION,- COMING-ON-FOR-PRELIMINARY-HEARING,-THIS-DAY,-ORDER-WAS-MADE-THEREIN-AS-UNDER:- CORAM:- HON'BLE-MR.-JUSTICE-B-M-SHYAM-PRASAD- - e

ORAL ORDER

The petitioner has called in question the third respondent's Adjudication Order dated 23.12.2025 [Annexure-J] for the Financial Year 2021-2022 while calling in question the Garnishee Notice dated

02.07.2026 [Annexure-L]. The impugned adjudication order is an ex-parte order.

Mr. Subrahmanya Dattatray, learned counsel for the petitioner, and Ms. Jyothi M. Maradi, the learned High Court Government Pleader who is called upon to accept notice for the respondents, are heard for the disposal of the petition with the learned counsel for the petitioner emphasizing the following.

A. The petitioner had wrongly claimed ITC for the Financial Years 2021-2022 and 2022-2023 and the petitioner was issued with simultaneous notice for these years because of such wrongful ITC claim. The

petitioner could only respond to the show cause notices for the years 2021 and 2023 and bring to the notice of the proper Officer that the petitioner, on realizing that there was an error, had voluntarily reversed the claim in Form GST DRC - 03. B. The petitioner's explanation is accepted, and the proceedings have been dropped for these 2 years. C. The petitioner for bona fide reasons, and because he was responding to two notices, has not responded to the present show cause notice dated 08.09.2025 and therefore, the adjudication is against petitioner, confirming the demand. D. However, as could be seen from Annexure-B, the petitioner even for this Financial Year 2021-2022 has reversed the ITC of the value of Rs.1,04,69,149/- in August-2022.

If these circumstances and Annexure-B are verified, there would be no occasion for confirmation of the demand. These circumstances persuade this Court to opine that the reasons offered by the petitioner appear bona fide and are not contrived to make out a cause. This Court is of the further view that the third respondent who has passed the impugned adjudication order will have to, with due opportunity to the petitioner, examine whether the petitioner has indeed voluntarily reversed the entire ITC wrongly claimed, and therefore, the following: ORDER [A] The writ petition is allowed-in-part. [B] The impugned Adjudication Order dated

23.12.2025 [Annexure-J] and Garnishee Notice dated

02.07.2026 [Annexure-L] are quashed. [C] The petitioner is reserved with liberty to file a certified copy of this order and a

detailed explanation to the Show Cause Notice dated

08.09.2025 enclosing Annexure-B for consideration of whether there must be confirmation of the proposition in this notice dated

08.09.2025. [D] The petitioner shall file the reply and the details as aforesaid without waiting for a notice by 16.10.2026.

Sd/- (B M SHYAM PRASAD) JUDGE

JY List No.: 2 Sl No.: 10