IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17^TH DAY OF MARCH, 2026 BEFORE THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 30773 OF 2025 (T-RES)

BETWEEN:

MOHAMMED GHANI, AGED ABOUT 70 YEARS, E42, MANGO GARDEN, KANAKAPURA ROAD, KONANKUNTE CROSS, DODDKALLASANDRA, BANGALORE - 560062 …PETITIONER (BY SRI. VENKATANARAYANA G.M., ADVOCATE)

AND:

1. THE COMMISSIONER OF CENTRAL TAX, WEST COMMISSIONERATE, 1^ST FLOOR, BMTC BUS STAND, KANAKPURA ROAD, BANASHANKARI, Digitally signed by VIJAYA P BENGALURU - 560070.

Location: HIGH COURT OF KARNATAKA 2. THE ADDITIONAL COMMISSIONER OF CENTRAL TAX, WEST COMMISSIONERATE, 1^ST FLOOR, BMTC BUS STAND, KANAKPURA ROAD, BANASHANKARI, BENGALURU - 560070.

3. THE SUPERINTENDENT OF COMMISSIONER OF CENTRAL TAX, WEST COMMISSSIONERATE, 1^ST FLOOR, BMTC BUS STAND, KANAKAPURA ROAD, BANASHANKARI, BENGALURU - 560 070.

4. THE COMMISSIONER OF CENTRAL TAX (APPEALS), S1 AND S2, VINAYAMARG, 1^ST FLOOR, BMTC BUS STAND, KANAKAPURA ROAD, SIDDARTHANAGAR, MYSORE - 570011.

…RESPONDENTS (BY SRI. ARAVIND V. CHAVAN, ADVOCATE FOR R1 TO R4) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED RECTIFIED ORDER VIDE 29(R)/2022-23 DATED 11.01.2023 (ANNEXURE-A) PASSED BY RESPONDENT NO.2 DEMANDING SERVICE TAX OF RS.2,98,405/- ALONG WITH INTEREST AND PENALTY FOR THE FINANCIAL YEAR 2014-17 AND ETC., THIS PETITION, COMING ON FOR FRESH MATTERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

ORAL ORDER

The petitioner has called in question the validity of the order of rectification dated 11.01.2023 passed by respondent No.2 raising a demand of Service Tax of Rs.2,98,405/- along with interest and penalty for the financial year 2014-17. The petitioner has also challenged the legality of the recovery notices issued at Annexure-G.

2. It is the case of the petitioner that show-cause notice was issued by the Joint Commissioner of Central Tax alleging short payment of Service Tax based on the difference between gross value on basis of Income Tax Returns vis-à-vis declaration under the Service Tax Returns. On 23.09.2022, it is stated that Order-in-Original came to be passed.

3. Learned counsel for the petitioner submits that an appeal was filed against the Order-in-Original on 22.12.2022 and the appeal came to be disposed of by order dated 29.05.2023. It is submitted that in the interregnum, the revenue sought for suo-moto rectification and the Order-in-Original came to be rectified by virtue of the order at Annexure-A dated 11.01.2023.

4. It is the case of the petitioner that where the power of suo-moto rectification is invoked, there could not be an enhancement of liability of the petitioner without an opportunity of hearing, in light of Section 74(4) of the Finance Act, 1994 (for short 'the Act'). It is submitted that the petitioner was not aware of the order of rectification that was passed without notice to the petitioner.

5. It is however submitted that the Order-in-

Original itself which was the subject matter of the appeal proceedings came to be modified by the order of the appellate authority, wherein the appellate authority has considered the aspect of shortfall of payment of tax. It is submitted that in light of the Order-in-Appeal having been passed, the order of rectification passed subsequently may have to be ignored.

6. Learned counsel for the revenue submits that the order of rectification may require to be revisited, as the aspect of rectification order passed was not brought to the notice of the appellate authority.

7. In light of the facts as made out and noticing that the Order-in-Original came to be modified in accordance with law by virtue of the Order-in-Appeal by order dated 29.05.2023, the order of rectification that is passed without opportunity to the petitioner, would be an order passed in violation of the legal mandate under Section 74(4) of the Act.

8. Accordingly, the order of rectification at Annexure-A is set aside. M