M/s King Enterprise v. Assistant Commissioner of Commercial Taxes (Audit)

What happened

A ferrous-scrap trader faced an ex parte adjudication and DRC-07 dated 29 April 2026 concerning April 2023–March 2024, with tax and penalty stated at ₹91,00,384. It attributed non-participation to a change of consultant and unnoticed portal communications. The taxpayer offered to reconcile GSTR-3B and GSTR-2A and explain supplier-return and registration circumstances.

Questions before the court

• Whether the trader should receive another adjudication opportunity on the particular service record and proposed reconciliation.

What each side argued

The State said notices and hearing communications had also gone by email and post. When questioned, its counsel could not identify those dispatch documents. The taxpayer relied on the coordinate bench decision in Zeal Group and offered supporting transaction records.

Why the court ruled this way

The court criticised the taxpayer’s lack of care but found that the matter had proceeded entirely ex parte on the demonstrated record. It applied the approach in Zeal Group, balancing a fresh opportunity with a deposit condition. The court did not determine whether the claimed credit was eligible or whether supplier cancellation defeated it.

Controlling point

On the demonstrated facts, an ex parte GST demand could be reopened for a supported reconciliation and effective hearing, subject to a case-specific deposit condition.

Order and next steps

The adjudication and summary orders were quashed. Restoration was conditional on depositing 10% of the tax in demand by 5 October 2026, subject to the final outcome. The taxpayer must also submit its response, certified order, transaction documents and reconciliation by that date. A reasoned decision is due within two months thereafter.

Practical implications

The deposit direction concerns 10% of tax, not an assumed percentage of the combined tax-and-penalty figure. A restored hearing requires an invoice-level reconciliation and evidence of actual transactions. Taxpayers should maintain access to their portal when consultants change.

Limits of this ruling

• This is a conditional remand, not an allowance of ITC.
• It does not establish a universal rule that portal service is invalid.
• The operative deadline is 5 October 2026; the earlier 30 September date appears only in the quoted precedent.