M/S Acruti Design Services v. Office of the Deputy Commissioner of Commercial Taxes

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 7854 OF 2026 (T-RES) BETWEEN:

¶1M/S ACRUTI DESIGN SERVICES 164, CHOKKASANDRA MAIN ROAD, PEENYA, BENGALURU URBAN, KARNATAKA-560 057. REPRESENTED BY ITS MANAGING PARTNER MR. P.JAGDEESH AGED ABOUT 45 YEARS S/O. K R PARANJOTHI … PETITIONER (BY SRI. BHAIRAV G V., ADVOCATE) AND:

¶1OFFICE OF THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 6.3 - GSTO-6, 3RD FLOOR, KIADB BUILDING PEENYA 2ND STAGE, BENGALURU-560 058.

¶2OFFICE OF THE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES (AUDIT) 6.7-GSTO-6, 3RD FLOOR, KIADB BUILDING PEENYA 2ND STAGE, BENGALURU-56005

by VIJAYA P Location: HIGH COURT OF KARNATAKA NC:(2026:KHC:16852( WP(No.(7854(of(2026( ( , ,,HC-KAR( ( (

3., STATE,OF,KARNATAKA,, REPRESENTED,BY,SECRETARY,, FINANCE,DEPARTMENT,, VIDHANA,SOUDHA,,, BANGALORE,-,560,001., ,

4., UNION,OF,INDIA, MINISTRY,OF,FINANCE,,, REPRESENTED,BY,ITS,SECRETARY,, NORTH,BLOCK,,NEW,DELHI-110,001, …,RESPONDENTS, (BY,SMT.,JYOTI,M.,,HCGP,FOR,R1,TO,R3;, ,,,,,,SRI,MADANAN,PILLAI,,CGC,FOR,R4), , , THIS,W.P.,IS,FILED,UNDER,ARTICLES,226,AND,227,OF, THE,CONSTITUTION,OF,INDIA,,PRAYING,TO,A.,SET,ASIDE,THE, FORM, DRC-01A, NOTICE, DATED, 16.10.2023,, BEARING, NO., ACCT, (A), 6.7/DGSTO-8/ADJ-74/NO.02/2023-2024-ISSUED, BY, RESPONDENT, NO.2,, FOR, THE, FY, 2023-2024, (ANNEXURE-F), AND,ETC., , THIS,PETITION,COMING,ON,FOR,PRELIMINARY,HEARING, THIS,DAY,,ORDER,WAS,MADE,THEREIN,AS,UNDER:, CORAM:, HON'BLE,MR.,JUSTICE,S,SUNIL,DUTT,YADAV, , ORAL(ORDER( , Petitioner, has, called, in, question, the, validity, of, the, order, at, Annexure-A, passed, under, Section, 74, of, the,

Central Goods and Services Tax Act, 2017 (for short 'the Act').

¶2It is the case of the petitioner that the petitioner was not aware of the proceedings as the notice was not served. It is further submitted that the premise under which the proceedings were initiated is regarding wrongful availment of Input Tax Credit. It is submitted that in the absence of reply to the show cause notice, the authorities have proceeded to adjudicate and pass order at Annexure-A raising the demand. It is accordingly submitted that the order may be set aside and petitioner may be given an opportunity to reply to the show cause notice by placing relevant material to demonstrate that the supplier does exist.

¶3In light of such stand of the petitioner and noticing that the order passed at Annexure-A is an ex-parte order without the benefit of any reply by the petitioner, it would be appropriate considering the

consequences that would follow from upholding the order at Annexure-A, to set aside the order at Annexure-A while reserving liberty to make out reply to the show cause notice.

¶4Accordingly, the order at Annexure-A is set aside and the matter is remitted to the stage of reply to the show cause notice, copy of which is enclosed at Annexure-G. In light of setting aside of the order at Annexure-A, notices issued by the respondents to third parties under Section 79(1)(c) of the CGST Act, are required to be rescinded forthwith.

¶5It is also noticed that pursuant to the order at Annexure-A, there has been recovery by adjustment in the Electronic Credit Ledger with respect to certain amount of tax dues. Needless to state, the adjustment in the Electronic Credit Ledger would be subject to adjudication to be made as directed.

¶6Insofar as the notice at Annexure-B is concerned, learned counsel for the petitioner submits that it amounts to parallel proceedings as the subject matter overlaps with the show cause notice at Annexure-G. It is submitted that the said proceeding also requires to be set aside.

¶7The proceedings as regards Annexure-B is still at the stage of reply. It would be appropriate, considering that the proceedings as regards the order at Annexure-A is set aside and the matter is remitted to the stage of reply to the show cause notice enclosed at Annexure-G, that the proceedings at Annexure-B would also be clubbed along with the proceedings of the show cause notice at Annexure-G.

¶8Petitioner is at liberty to make out reply to both the said show cause notices at Annexures-G and B. All contentions of the petitioner as raised herein insofar as the notice at Annexure-B is kept open.

¶9The matter is remitted before respondent No.1 who is to conduct proceedings with respect to show cause notices at Annexure-G as well as Annexure-B. Petitioner to appear before respondent No.1 without further notice on

24.04.2026.

¶10The petitioner to pay costs of Rs.10,000/- to the Karnataka Advocate Clerks Benevolent Trust, High Court Building, Bangalore.

¶11In light of the above, writ petition is disposed of. All contentions are kept open.

Sd/- (S SUNIL DUTT YADAV) JUDGE

VP