Karnataka HC Sets Aside Ex Parte GST Order and Bank Attachment for Violation of Natural Justice

The Karnataka High Court has refused an ex parte adjudication order given against an assessee and directed a complete reevaluation of the case. Also, the court has invalidated any following recovery actions, including the bank account attachment.

The bench of Justice S Sunil Dutt Yadav mentioned that the adjudication order was indeed passed ex parte. The court analysed the contests of the order, which alleged the incorrect availment of the GST ITC and questioned the genuineness of transactions, along with claims that invoices were issued without the actual supply of goods.

The applicant, M/s. G.S. and Company contested an adjudication order passed via the GST authorities. The applicant claimed that the order had been passed ex parte without a chance to present its case and that tax had earlier been recovered under such order.

As per the applicant, failure to answer the SCN was because of bona fide lapse and asked for a chance to submit a response and challenge the allegations on merits.

However, the Court said that such serious findings should be tested via proper adjudication after providing the taxpayer a fair chance to answer.

The Court outlined that the ex parte adjudication order should be set aside. The case must be remitted back to the adjudicating authority for fresh consideration. A chance to submit the response to the show-cause notice and present the case should be given to the applicant. All claims of both parties are kept open for reconsideration.

Also, the Court mentioned that although tax had been recovered, these recoveries shall be as per the outcome of fresh proceedings.

The Court ruled that the attachment of the bank accounts initiated for recovery objectives stands set aside. Any recovery made will remain provisional and subject to the final adjudication outcome.

Also Read: SC Quashes ₹8.9 Cr GST Demand, Cites Lack of Proper Service Violating Natural Justice

The petitioner has been instructed to appear before the adjudicating authority on 13 May 2026, without any further notice, and submit a reply to the GST show-cause notice.