GST Demand Quashed on Limitation Issue

Case Details: Bangalore Matics (P.) Ltd. vs. Union of India - [2026] 182 taxmann.com 429 (Karnataka)

Judiciary and Counsel Details

S.R. Krishna Kumar, J.
Harish Vashisth, Adv. for the Petitioner.
Jeevan J. Neeralgi, Adv. & K. Hema Kumar, AGA for the Respondent.

Facts of the Case

The petitioner was issued a show cause notice under Section 73 of the CGST Act, alleging that excess ITC was claimed in Form GSTR-3B compared to Form GSTR-2A. It did not respond to the notice, and an ex-parte adjudication order was passed confirming the demand along with interest and penalty. The petitioner challenged the order, arguing that the proceedings were barred by limitation and that the notice went unnoticed, thereby preventing the filing of a reply. The matter was accordingly placed before the High Court.

High Court Held

The High Court observed that the issue of limitation depended on the validity of the extension of limitation, which was pending adjudication before the Supreme Court. As the decision would directly affect the legality of the proceedings, the Court held that deciding the matter at that stage would be inappropriate. It was further noted that it would avoid multiplicity of proceedings and conflicting outcomes by awaiting the Supreme Court’s decision. Accordingly, the High Court set aside the demand order passed under Section 73 of the CGST Act and remanded the matter for fresh consideration.