Karnataka High Court
M/S Rns Motors Private Limited vs State Of Karnataka on 8 December, 2025
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2025:KHC:51773
WP No. 36549 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF DECEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO. 36549 OF 2025 (T-RES)
BETWEEN:
1. M/S RNS MOTORS PRIVATE LIMITED
(A PRIVATE LIMITED COMPANY INCORPORATED
UNDER THE COMPANIES ACT 1956)
REPRESENTED BY ITS MANAGING DIRECTOR,
MR SUNIL RAMA SHETTY,
NO. 2275, GURGUNTE PALYA,
TUMKUR ROAD,
YESHWANTAPUR,
BANGALORE - 560022.
...PETITIONER
(BY SRI. RAGHAVENDRA B. HANJER, ADVOCATE)
AND:
1. STATE OF KARNATAKA
Digitally signed
REPRESENTED BY ITS SECRETARY,
by DEPARTMENT OF FINANCE,
SHARADAVANI
B VIDHANA SOUDHA,
Location: High
Court of AMBEDKAR VEEDHI,
Karnataka BANGALORE 560 001.
2. THE JOINT COMMISSIONER OF
COMMERCIAL TAXES (ADMN)
DGSTO-6, 3RD FLOOR,
KIADB BUILDING,
14TH CROSS, 4TH PHASE,
PEENYA 2ND STAGE,
BANGALORE - 560058.
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WP No. 36549 of 2025
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3. THE DEPUTY COMMISSIONER OF
COMMERCIAL TAXES (AUDIT)-6.1
DGSTO-6,
KIADB BUILDING,
3RD FLOOR, 14TH CROSS,
4TH PHASE,
PEENYA, 2ND STAGE,
BANGALORE - 560058.
...RESPONDENTS
(BY SRI. K. HEMA KUMAR, AGA)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED
AUDIT OBSERVATION UNDER SECTION 65(6) OF THE KGST / CGST
ACT AND SECTION 20 OF THE IGST ACT, 2017 READ WITH RULE
101(4) OF THE KGST RULES, 2017 BEARING NO. DCCT (AUDIT)-
6.1/2022-23 DATED 21.06.2022 (ANNEXURE- A) ISSUED BY THE 3RD
RESPONDENT, THE IMPUGNED AUDIT ORDER UNDER SECTION
65(6) OF THE KGST / CGST ACT AND SECTION 20 OF THE IGST
ACT, 2017 READ WITH RULE 101(4) OF THE KGST RULES, 2017
BEARING NO. DCCT (AUDIT)-6.1/2022-23 DATED 24.06.2022
(ANNEXURE- B1) ALONG WITH AUDIT REPORT UNDER SECTION
65(6) BEARING REF NO. 17007 DATED 24.06.2022 ISSUED IN FORM
GST ADT-02 (ANNEXURE-B2) BY THE 3RD RESPONDENT, THE
IMPUGNED NOTICE BEARING FILE JCCT (ADM), DGSTO-
6/BNG/SMR- /2024-25 DATED 16.01.2025 ISSUED IN FORM GST
RVN-01 (ANNEXURE- C) ISSUED BY THE 2ND RESPONDENT AND
THE CONSEQUENT ORDER BEARING NO. JCCT (ADMN)/DGSTO-
6/GST/SMR/2025-26 DATED 03-09-2025 (ANNEXURE- D1) ALONG
WITH SUMMARY OF THE DEMAND BEARING NO.
DCCT(ADMN)/DGSTO-6/GST/SMR-/2025-26 DATED 03-09-2025
ISSUED IN FORM GST APL-04 (ANNEXURE- D2) BY THE 2ND
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WP No. 36549 of 2025
HC-KAR
RESPONDENT AS WITHOUT JURISDICTION AND PASSED BEYOND
THE NO. STATUTORY PERIOD OF LIMITATION AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, the petitioner seeks the following reliefs:
"WHEREFORE, the Petitioner most respectfully prays that the Hon'ble High Court be pleased to:
a) Issue a writ, order or direction in the nature of Certiorari by quashing the impugned Audit Observation under Section 65(6) of the KGST / CGST Act & Section 20 of the IGST Act, 2017 read with Rule 101(4) of the KGST Rules, 2017 bearing No. DCCT (Audit)-6.1/2022-23 dated 21.06.2022 (Annexure-'A') issued by the 3rd Respondent, the impugned Audit Order under Section 65(6) of the KGST / CGST Act & Section 20 of the IGST Act, 2017 read with Rule 101(4) of the KGST Rules, 2017 bearing No. DCCT (Audit)-6.1/2022-
23 dated 24.06.2022 (Annexure-'B1') along with Audit Report under Section 65(6) bearing Ref No. 17007 dated 24.06.2022 Issued in FORM GST ADT-02 (Annexure-'B2') by the 3rd Respondent, the impugned Notice bearing File No. JCCT(ADM),DGSTO-6/BNG/SMR- /2024-25 dated 16.01.2025 issued in FORM GST RVN-01 (Annexure- 'C') -4- NC: 2025:KHC:51773 WP No. 36549 of 2025 HC-KAR issued by the 2nd Respondent and the consequent Order bearing No. JCCT (ADMN)/DGSTO-6/GST/SMR/2025-26 dated 03-09-2025 (Annexure- 'D1') along with Summary of the Demand bearing No. DCCT(ADMN)/DGSTO- 6/GST/SMR- /2025-26 dated 03-09-2025 issued in FORM GST APL-04 (Annexure- 'D2') by the 2nd Respondent as without jurisdiction and passed beyond the statutory period of limitation;
b) Issue a writ or order or direction in the nature of any wit try setting aside the GST demand of Rs.7,37,05,082/ along with interest of Rs.9,79,54,244/- and penalty of Rs.73,78,508/- confirmed in the impugned Order bearing No. JCCT (ADMN)/DGSTO-6/GST/SMR/2025-26 dated 03- 09-2025 (Annexure- 'D1') along with Summary of the Demand bearing No. DCCT(ADMN)/DGSTO-6/GST/SMR- 2025-26 dated 03-09-2025 issued in FORM GST APL-04 (Annexure- 'D2') by the 2 Respondent;
c) Pass such other order(s) as may be deemed fit and proper in the facts and circumstances of the case in the interest of justice."
2. Heard the learned counsel for the petitioner, learned AGA for the respondents and perused the material on record.
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3. The issue in controversy involved in the present petition as to whether without initiating proceedings under Section 73 or 74 of the KGST Act, the respondent - revenue would be entitled to initiate suo moto revisional proceedings came up for consideration before this Court in the case of M/s.
Navayuga Engineering Company Limited v. Joint Commissioenr of Commercial Taxes in W.P.No.26955/2025 dated 18.11.2025, wherein it is held as under:
"In this petition, petitioner seeks the following reliefs:
"(a) To issue order(s), directions, writ(s) in the nature of Certiorari or any other writ quashing the Impugned Order in Revision bearing No. JCCT(ADMN)/DGSTO-6/GST/SMR-
03/2025-26 dated 14.05.2025 passed by the Respondent is enclosed at Annexure-A as being without jurisdiction;
(b) To issue order(s), directions, writ(s) in the nature of mandamus or any other writ holding that the provisions of Section 15(2) of the CGST Act to determine the value of supply is inapplicable to the facts and of the present case;
(c) To issue order(s), directions, writ(s) in the nature of mandamus holding that invocation of revisional powers by the Respondent to pass the Impugned Order under Section 108(1) f the CGST Act against an Audit Report is incorrect and without Authority of law;
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(d) To issue order(s), directions, writ(s) in the nature of certiorari or any other writ holding that the interest Section 50 of the CGST/SGST Act, 2017 and penalty under Section 73(9) of CGST/SGST Act, 2017 is not leviable;
(e) To issue order(s), directions, writ(s) or any other relief as this Hon'ble Court deems it fit and proper in the facts and circumstance of the case in the interest of justice;"
2. Heard learned Senior Counsel for the petitioner and learned counsel for the respondent and perused the material on record.
3. In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned Senior Counsel for the petitioner invited my attention to the Revised Audit Observation dated 17.11.2023, to which petitioner submitted a reply dated 24.11.2023, which culminated in an Audit Report dated 15.12.2023 in Form GST No.CTO/Audit-6.1/DGSTO-6/23-24 dated 15.12.2023 in Form GST ADT-02. It is submitted that after having issued the aforesaid Audit Report dated 15.12.2023 in favour of the petitioner, the respondent was not entitled to initiate Revision Proceedings under Section 108 of the KGST Act by issuing notice dated 19.10.2024 especially when no proceedings under Section 73 or Section 74 of the KGST Act, was initiated by the respondent prior to initiating the revision proceedings or subsequently and as such, the impugned revision proceedings including the impugned order passed by the Revisional Authority deserves to be quashed.
4. Per contra, learned AGA for the respondents on instructions submits that there is no merit in the petition -7- NC: 2025:KHC:51773 WP No. 36549 of 2025 HC-KAR and that the same is liable to be dismissed. He however would not dispute the fact that proceedings under Section 73 or Section 74 of the KGST Act had not been initiated by the respondent as on date and liberty may be reserved in favour of the respondent to initiate such proceedings as permissible in law.
5. The aforesaid facts and circumstances clearly indicate that as on the date of initiating revisional proceedings by issuance of the revision notice dated 19.10.2024, respondent had not initiated proceedings under Section 73 or Section 74 of the KGST Act. In this context, it is relevant to extract Section 65(7) of the KGST Act, which reads as under:
"Section 65(7) of the Kerala Goods and Services Tax (KGST) Act, 2017, states that if an audit conducted by the tax authorities detects any instances of unpaid or short-paid tax, erroneously refunded tax, or input tax credit wrongly availed or utilized, the proper officer can initiate action under Section 73 or Section 74 of the Act."
6. A plain reading of the aforesaid provision will clearly indicate that upon coming to know about issuance of the Audit Report, it is incumbent upon the respondent to initiate proceedings / action under Section 73 or Section 74 of the KGST Act and without doing so, it is impermissible in law for the respondent to initiate revisional proceedings, which is contrary not only to the aforesaid provision but also the other material on record especially having regard to the fact that no proceedings have been initiated under Section 73 or Section 74 of the KGST Act even till today.
7. Under these circumstances, I am of the considered opinion that the impugned proceedings including -8- NC: 2025:KHC:51773 WP No. 36549 of 2025 HC-KAR the impugned order are illegal, arbitrary and without authority of law and the same deserves to be quashed.
8. In the result, I pass the following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned order in Revision at Annexure -
A dated 14.05.2025 passed by the respondent is hereby quashed.
(iii) Liberty is however reserved in favour of the respondent to initiate proceedings against the petitioner in accordance with law subject to all just exceptions and limitations as permissible in law."
4. As can be seen from the aforesaid judgment, in the absence of proceedings under Section 73 or 74 of the KGST Act, pursuant to audit proceedings, it is impermissible in law for the respondents to initiate revisional proceedings, which are contrary to the said provision and in the light of the aforesaid judgment in M/s. Navayuga Engineering Company Limited case supra, the impugned proceedings deserve to be quashed.
5. In view of the above, I pass the following:
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(i) The petition is hereby allowed.
(ii) The impugned notice dated 16.01.2025 issued by respondent No.2 at Annexure - C, and the consequent order dated 03.09.2025 at Annexure-
D1 along with the summary of the demand dated 03.09.2025 issued by respondent No.2 at Annexure-D2, are hereby set aside.
(iii) Liberty is however reserved in favour of the respondents to initiate proceedings against the petitioner in accordance with law subject to all just exceptions and limitation as permissible in law.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE SJK List No.: 2 Sl No.: 14