GST show-cause notice non-reply leading to ex parte tax demand u/s73(9)/r.142(5) set aside; fresh hearing ordered

Ex parte adjudication under s. 73(9) of the CGST/KGST Acts read with r. 142(5) was challenged on the ground that the noticee failed to file a reply to the show-cause notice due to bona fide and unavoidable circumstances. The HC held that, in the interests of justice, a further opportunity should be granted where the assessee asserts sufficient cause for non-participation, warranting reconsideration from the reply stage. The impugned demand order confirming tax, interest, and penalty was set aside, and the matter was remitted to the authority for fresh adjudication after receiving the reply.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the ex parte adjudication order confirming tax, interest, and penalty under Section 73(9) read with Rule 142(5) should be set aside and the matter remitted where the taxable person asserted that non-filing of reply to the show-cause notice was due to bona fide reasons, unavoidable circumstances, and sufficient cause.

(ii) What conditions and safeguards should accompany remand to ensure a reasonable opportunity to reply and participate, and to address non-appearance before the adjudicating authority.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Setting aside ex parte order and remand for fresh consideration due to asserted sufficient cause for non-reply

Legal framework: The Court noted that the show-cause notice was issued under Section 73(1) of the applicable GST enactments and that the impugned ex parte order was passed under Section 73(9) read with Rule 142(5).

Interpretation and reasoning: The Court treated the petitioner's specific assertion-that the show-cause notice was not within the petitioner's knowledge and that the omission to reply and contest was due to bona fide reasons, unavoidable circumstances, and sufficient cause-as the determinative factor. While the respondents opposed the petition, the Court considered it "just and appropriate" to adopt a "justice oriented approach" and provide one more opportunity. On this basis, the Court concluded that the matter should be reopened from the stage of filing reply to the show-cause notice, rather than allowing the ex parte demand to stand.

Conclusions: The ex parte adjudication order confirming the demand (including tax, interest, and penalty) was set aside, and the proceedings were remitted for reconsideration afresh in accordance with law from the stage of the petitioner submitting reply to the show-cause notice.

Issue (ii): Conditions of remand-appearance, opportunity to file material, and automatic recall on default

Interpretation and reasoning: To operationalize the remand and ensure participation, the Court fixed a specific date for appearance before the adjudicating authority without further notice. It expressly reserved liberty to the petitioner to submit replies and documents, and directed that the authority provide sufficient and reasonable opportunity, hear the petitioner, and then proceed in accordance with law. To prevent abuse of the indulgence granted, the Court attached a consequence for non-compliance by directing that if the petitioner failed to appear on the fixed date, the remand order would stand automatically recalled without further orders.

Conclusions: Remand was made conditional upon the petitioner's appearance on the specified date; the petitioner was permitted to file replies/documents; the authority was directed to grant reasonable opportunity and decide in accordance with law; and non-appearance would trigger automatic recall of the Court's order.

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