Section 73(9) orders for 2020-21 quashed as impermissible; ex-parte orders for 2019-20, 2021-22, 2022-23 set aside and remitted

HC quashed three adjudication orders issued under Section 73(9) of the KGST Act for the same tax period 2020-21 as impermissible, and remitted that matter to the respondents for fresh consideration. The court also set aside ex-parte adjudication orders for tax periods 2019-20, 2021-22 and 2022-23 because the petitioner had not been given adequate opportunity; the matters were remitted for reconsideration afresh in accordance with law on conditions, and the petition was allowed by way of remand.

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ISSUES PRESENTED AND CONSIDERED

1. Whether multiple adjudication orders under Section 73(9) purporting to relate to the same tax period are legally permissible.

2. Whether adjudication under Section 73, culminating in ex parte orders, was invalidated by denial of adequate opportunity to the taxpayer and thereby violated principles of natural justice.

3. Scope of judicial relief where adjudication orders are vitiated by procedural infirmity: whether quashing and remittal for fresh consideration is appropriate and what conditions (if any) may be imposed.

4. Whether a court may condition remittal on interim deposits pending fresh adjudication and the legal effect of such deposits on final outcome.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legality of Multiple Adjudication Orders for the Same Tax Period

Legal framework: Adjudication under Section 73(9) of the KGST/CGST Act resolves tax liability for specified tax periods; procedures must be consistent with the statute and administrative regularity.

Precedent treatment: No precedents were cited or relied upon in the judgment; the Court applied statutory and procedural logic drawn from the Act and general administrative law.

Interpretation and reasoning: The Court observed that three separate adjudication orders dated 21.02.2025, 24.02.2025 and 26.02.2025 all purported to adjudicate liability for the tax period 2020-21. The Court held that issuance of multiple adjudication orders in respect of the same tax period is "clearly impermissible in law" because it contravenes the statutory scheme which contemplates final adjudication for a period and because multiplicity undermines procedural regularity and fairness.

Ratio vs. Obiter: Ratio - The conclusion that multiple adjudication orders for the same tax period are impermissible and must be quashed was applied as a decisive ground for setting aside the relevant orders for 2020-21.

Conclusion: The three adjudication orders for 2020-21 were quashed and remitted to the authority to proceed afresh to the stage of receiving the taxpayer's reply to the show cause notice.

Issue 2 - Violation of Principles of Natural Justice by Passing Ex Parte Adjudication Orders

Legal framework: Principles of natural justice require that an affected person be given adequate and reasonable opportunity to be heard before adverse adjudicatory orders are passed; administrative adjudication under tax statutes must conform to these requirements.

Precedent treatment: The Court relied on established natural justice principles; no specific case law was cited in the text.

Interpretation and reasoning: For the tax periods 2019-20, 2021-22 and 2022-23, adjudication proceeded ex parte because the petitioner failed to file replies to show cause notices. The petitioner, however, asserted that if granted another opportunity it would file responses and contest the proceedings. The Court adopted a justice-oriented approach, acknowledging the procedural lapse but recognizing the petitioner's expressed willingness to participate. The Court concluded that setting aside ex parte orders and remitting for reconsideration with an assurance of adequate opportunity was appropriate to cure the natural justice defect.

Ratio vs. Obiter: Ratio - Ex parte adjudications occasioned by non-filing of replies may be set aside where the court, exercising supervisory jurisdiction, finds it just to remit for fresh consideration subject to conditions ensuring procedural regularity; the authority must provide sufficient and reasonable opportunity to the taxpayer. This formed part of the operative relief.

Conclusion: The impugned ex parte adjudication orders for 2019-20, 2021-22 and 2022-23 were set aside and remitted for fresh consideration with directions to provide reasonable opportunity to the taxpayer to submit replies and documents.

Issue 3 - Appropriate Judicial Relief and Conditions on Remittal

Legal framework: Courts exercising writ jurisdiction may quash administrative orders tainted by illegality or procedural infirmity and may remit matters for fresh decision; courts may, in the exercise of equitable discretion, impose conditions (including interim deposits) to balance interests of revenue and litigant.

Precedent treatment: The judgment applies the court's remedial powers under supervisory writ jurisdiction; no direct precedent was cited or overruled.

Interpretation and reasoning: The Court differentiated between the 2020-21 orders (multiplicity defect) and the other periods (procedural non-participation/ex parte). For the latter, the Court considered fairness to the revenue and the taxpayer's stated willingness to engage. To balance competing interests, the Court remitted the matters but imposed a condition of depositing 10% of the tax amount for the tax periods 2019-20, 2021-22 and 2022-23 before the adjudicating authority, with the deposit to be subject to the final outcome. For the 2020-21 orders, the multiplicity itself warranted unconditional remittal to the stage of filing reply.

Ratio vs. Obiter: Ratio - Remittal is an appropriate remedy for both multiplicity and procedural defects; courts may impose reasonable conditions (such as partial deposits) when remitting ex parte adjudications to protect revenue interests while allowing fresh adjudication. Obiter - The judgment's characterization of the court's approach as "justice oriented" is explanatory rather than a separate legal principle.

Conclusion: The Court set aside and remitted the impugned orders. For 2020-21 the remittal was to the stage of filing reply without deposit; for 2019-20, 2021-22 and 2022-23 remittal was subject to a 10% interim deposit of tax, payable to the adjudicating authority and held open to adjustment pending final adjudication.

Issue 4 - Duty of the Adjudicating Authority on Remittal to Provide Opportunity and Consider Documents

Legal framework: On remand the adjudicating authority must act in accordance with law, give sufficient and reasonable opportunity to the affected party, and consider submissions and documents placed on record before passing a fresh order.

Precedent treatment: The Court reaffirmed the authority's obligation to conduct proceedings with procedural fairness; no distinct precedential analysis was provided.

Interpretation and reasoning: The Court expressly granted liberty to the petitioner to submit pleadings, responses and documents, and directed the authority to provide sufficient and reasonable opportunity and to hear the petitioner before proceeding further. The Court fixed a date for appearance and mandated adherence to statutory and natural justice requirements during reconsideration.

Ratio vs. Obiter: Ratio - On remittal, the authority is bound to consider the petitioner's submissions and afford a reasonable hearing; the court's directions to that effect form part of the operative order.

Conclusion: The adjudicating authority must accept and consider the petitioner's submissions on remand, provide reasonable hearing opportunities and adjudicate afresh in accordance with law, subject to the deposit conditions where imposed.

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