Karnataka High Court Permits Filing of Delayed GST Appeal, Sets Aside Limitation Bar in Peculiar Facts

Case Overview: Aditya Security Force Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)

The Karnataka High Court, in the matter of Aditya Security Force Vs Assistant Commissioner of Commercial Taxes, addressed a writ petition filed against two ex parte adjudication orders passed under Section 73(9) of the Goods and Services Tax Act, 2017. The orders, both dated 21.05.2025, pertained to tax periods 2021-22 and 2022-23. The Court ultimately disposed of the writ petition by granting the assessee a three-week window to pursue the statutory appellate remedy under Section 107(4) of the Act, while directing the appellate authority not to raise any objection on the ground of limitation.

Background and Factual Matrix

Who is the Assessee?

The assessee in this case is a small-scale provider of security services operating under the name Aditya Security Force. Being a modest enterprise with limited exposure to digital compliance infrastructure, the assessee admittedly lacked familiarity with the GST portal and had not received adequate professional advice regarding its tax obligations under the GST framework.

The Show Cause Notices and Adjudication Orders

The proceedings originated with the issuance of Show Cause Notices in Form GST DRC-01, both dated 08.04.2024, bearing reference numbers CTO/ENF/HPT/U/S73/15/2024-25/7775 and CTO/ENF/HPT/U/S73/16/2024-25/7776, covering the tax periods April 2021 to March 2022 and April 2022 to March 2023, respectively.

Despite the issuance of these notices, the assessee was unable to respond or participate in the adjudication proceedings, primarily due to its inability to access and navigate the GST portal. As a consequence, the adjudicating authority — the Assistant Commissioner of Commercial Taxes — passed ex parte orders of adjudication under Section 73(9) of the Goods and Services Tax Act, 2017, on 21.05.2025, bearing reference numbers ACCT(Audit)-2/HPT/GST-ADJN/Order-/2025-26/T for both tax periods.

Discrepancy Between Notice and Order — A Key Grievance

One of the central grievances raised before the High Court was that the amounts of tax, interest, and penalty as quantified in the adjudication orders differed from those specified in the original show cause notices. The assessee argued that this divergence was directly contrary to the mandate under Section 73(7) of the Goods and Services Tax Act, 2017, which governs the extent to which demand can be confirmed beyond what is stated in the notice.

1. Reverse Charge Mechanism — Who Bears the GST Liability?

A substantive and factually complex issue raised by the assessee pertained to the applicability of the Reverse Charge Mechanism (RCM) to its security services business. The assessee relied upon:

  • Notification dated 28.06.2017 (as amended by Notification dated 31.12.2017)
  • The assessee also referred to a further notification dated 31.12.2018

Under these notifications, it was contended that the liability to discharge GST on security services was cast upon the recipient of the services and not upon the service provider. However, the adjudicating authority had proceeded to levy GST directly upon the assessee — the supplier of services — without appreciating this RCM framework.