Kalaburagi Bench Sets Aside Ex Parte GST Assessments Subject to 10% Deposit

The Kalaburagi Bench of the Karnataka High Court set aside two ex parte assessment order in GST passed against Sri Siddappa by the Assistant Commissioner of Commercial Taxes on December 22, 2023, and remitted the case to the reply stage of the show cause notice dated September 29, 2023, on payment of 10% of the tax demanded.

Both orders go. The dispute restarts at the reply stage, and the petitioner gets an opportunity to file his reply with documents before any fresh decision is taken in accordance with law.

According to the order, the Assistant Commissioner had decided the matter without the benefit of the reply. challenged in the writ petition. The court did not retain those assessments on file. It restored the proceedings to the point where the petitioner was to answer the September 29, 2023 notice.

Payment comes first. The remand will operate only if the petitioner deposits 10% of the demanded tax. On that deposit, the assessing authority will take up the matter again from the notice stage.

Orders Return to Notice Stage

Revival is limited to the pre-assessment phase. The notice dated September 29, 2023 is the live starting point. The two final orders dated December 22, 2023 stand removed.

In Goods and Services Tax litigation the sequence is familiar. The department issues a notice setting out the proposed demand, the grounds and the period. The taxpayer files a reply with explanation and records. Where no reply is filed, the officer proceeds on material available on record. That is recorded as an ex parte assessment.

Such orders reach High Courts every week. Taxpayers cite delayed receipt of notice, portal access failure, lack of records or absence of personal hearing. The department cites service through the portal, expiry of time and limitation for completing assessments. Here the court took a middle course. It neither confirmed the demand nor closed the case for the taxpayer. It ordered a decision after hearing.

Appearance is fixed. The petitioner must appear before the respondent on September 7, 2026, without awaiting further notice, and may submit replies and supporting documents on that date. The respondent must give a reasonable opportunity of hearing before proceeding further in accordance with law.

Lawyers treat that date as service itself. No fresh summons is needed. In remand matters of this type, counsel carry a certified copy of the High Court order when they report before the officer and obtain an acknowledgement for the file.

When an Assessment Order in GST Fails

An assessment order in GST is the final determination of tax, interest and penalty for the period. It comes after notice and reply. It records what was proposed, what the taxpayer said, what documents were seen, and why the explanation was accepted or rejected.

Difficulty starts when the second step is absent. With no reply and no hearing on record, the final order often confirms the proposal in a few pages. Taxpayers then move the High Court under Article 226 alleging breach of principles of natural justice and seek a contest on facts before recovery proceeds.

Discretion in such writs is wide. The court can dismiss the petition and relegate the taxpayer to statutory appeal with pre-deposit. It can keep the demand in abeyance and call for records. Or it can do what was done here, set aside the ex parte orders and restore the file to the notice stage with conditions to protect revenue.

Facts guided the choice. Conduct of the taxpayer, delay in approaching the court, availability of alternative remedy and nature of the demand all count. Conditional remand is used where a hearing on merits is needed but the taxpayer must show seriousness by depositing part of the demand. The 10% figure matches a familiar threshold in tax litigation, where partial deposit tests bona fides while the main dispute stays open.

For practitioners the value lies in structure, not in any new test. No general rule was laid down that all ex parte orders must reopen. One petition was decided on its facts with a practical solution. The department holds security through the deposit. The taxpayer gets the hearing missed earlier.

The 10% Payment Condition Explained

Close reading of the payment term is needed. The remand is conditional. Without payment, the relief may not operate and the department could treat the original orders as revived or press for recovery under law.

Calculation has to follow the words of the order. The demand figure in the two orders dated December 22, 2023 must be identified and 10% worked out on the tax component, since interest and penalty are shown separately in GST demands. Payment must go through the proper challan, proof must be preserved, and that proof must be produced on the fixed date for the assessment file.

Balance is not waived. Full tax, interest and penalty, if any, will be decided afresh after hearing. The deposit will normally be adjusted against final liability. A reduced demand on fresh assessment will raise adjustment or refund under the applicable rules. A confirmed demand will leave only the balance payable.

Counsel also distinguish this deposit from stay or appeal pre-deposit. It is a term of the writ order itself. Delay or short payment invites fresh dispute on compliance. Where two assessment orders exist, as here, the calculation should cover both and the payment references should link to the relevant periods and notices.

What the Fresh Hearing Requires

Receipt of reply, scrutiny of documents, hearing of the petitioner or his representative, and a fresh reasoned order dealing with objections form the heart of the remand. The Assistant Commissioner must complete each part.

Preparation will decide the outcome. Each allegation in the notice dated September 29, 2023 needs a point-wise answer. General denials carry little weight in tax assessments. Turnover must be reconciled with returns and books, and any mismatch in input tax credit, output liability, e-way bills or place of supply must be explained with transactions.

Records should be filed in order. Invoices, e-invoices where applicable, GSTR-1, GSTR-3B, GSTR-9, balance sheets, bank statements, purchase and sales ledgers, transport records and supplier correspondence are commonly relied on. Where a document was unavailable earlier, the reply should state when it became available and why it is filed now. Material filed under the High Court order must be considered.

After remand many assessees ask how to check GST assessment order position on the portal. The working method is to track the notices and orders tab with the reference number of the original notice and to keep the High Court order, payment challan and acknowledgement of physical reply together, since portal display can lag behind court remands. Any fresh hearing intimation uploaded must be downloaded at once and replied to within time, even though the High Court has fixed the first date.

Use of the hearing date is critical. The petitioner or counsel should attend on September 7, 2026, obtain acknowledgement of attendance, file the reply with annexures, and seek a date for personal hearing if none is given. Adjournment for further records, if needed, should be sought in writing with reasons. Copies of any additional material or report the officer proposes to rely on should be sought for rebuttal. That record will support any later appeal if the fresh order goes against the taxpayer.

On the department side, the fresh proceedings must remain within jurisdiction and limitation as applicable, service must be recorded, and the final order must address the reply. The mandate to proceed in accordance with law covers each aspect.

Sri Siddappa must now pay 10% of the tax demanded, appear on September 7, 2026 without waiting for a fresh summons, file a complete reply with supporting documents, and secure a reasoned fresh order after hearing.