Karnataka High Court Quashes GST Order Passed by Same Officer Who Conducted Audit

The Karnataka High Court has allowed the writ petition by Gayatri Gururaj Purohit against the State of Karnataka. It set aside the goods and services tax adjudication for the tax period 2017-18. The Court quashed the detailed adjudication order dated 31 August 2023 passed under Section 73 of the Central Goods and Services Tax Act, 2017 by the Commercial Tax Officer (Audit)-5, Belagavi. It also quashed the summary of the order in Form GST DRC-07 uploaded on the portal on 7 September 2023 bearing RFN No. ZD290923008480D. The matter was remanded for fresh consideration from the pre-show-cause stage.

Records placed before the Court showed Form GST ADT-01 was issued on 4 January 2021 for conduct of audit under Section 65 of the Act. The audit report in the case was issued on 11 November 2021. The same officer thereafter issued the pre-show-cause intimation in Form GST DRC-01A on 5 March 2022. The summary of the show-cause notice in Form GST DRC-01 followed on 20 September 2022.

She contended before the Court that the adjudication had proceeded ex parte without proper notice to her. The prayers sought certiorari against the detailed order and the DRC-07 summary. A stay was also sought on the consequential recovery action initiated under Section 79 of the Act. That action comprised a notice in Form GST DRC-13 issued to her banker on 10 January 2024 and Criminal Miscellaneous No. 457 of 2024 instituted before the Judicial Magistrate First Class, Athani on 23 May 2024 for recovery of the alleged dues.

Fresh hearing by different officer

Reliance before the Court rested entirely on the coordinate Bench ruling in Imran K. Madiwale, sole proprietor of M/s. I. K. Groups of Companies against the State of Karnataka in W.P. No. 103328 of 2026 decided on 23 April 2026 at the Dharwad Bench, which had held that the officer who initiated and completed the audit could not issue the notice and adjudicate the same matter. Counsel appearing for the State did not dispute that legal position before the Court. Accepting that the present dispute was identical and governed by that ruling, the Court held that the adjudication by the auditing officer could not be sustained. It directed that the petitioner would be heard afresh from the stage of filing a reply under Section 73(5) to that intimation. It further directed the Joint Commissioner of Commercial Taxes (Administration) to entrust the proceedings to a proper officer under GST other than respondent No. 2 who had handled the audit of GST, while permitting the petitioner to urge all available contentions including objections to the audit report.