GSTAT Bengaluru quashed a reverse charge demand on office meals raised by an audit officer through a bare DRC‑01 summary, and held the appellate authority could not sustain it on a new Section 9(4) basis.
GSTAT Bengaluru has held that a summary in Form GST DRC‑01 cannot replace a show cause notice under Section 73(1) of the CGST Act, and that an adverse order passed without a personal hearing violates Section 75(4). [Fortinet Technologies India Private Limited v. Deputy Commissioner of Commercial Taxes (Audit)-5.3, Bengaluru, 2026-juristway.com-3175-GSTAT(Bengaluru)-GST]
The Bench of Prabhakaran P.M., Judicial Member, and Ravi Jesuraj S., Technical Member, allowed the appeal and set aside a demand of CGST and SGST of ₹1,09,815 each for 2017-18, with interest and penalty. Prabhakaran P.M. wrote the order.
After an audit, the officer issued only a DRC‑01 summary dated 21 Mar 2023 for reverse charge tax on “hiring charges, loan documentation charges etc.”, which in fact related to office meal entries. The order was signed on 26 Apr 2023, before the appellant’s reply of 28 Apr 2023, without any hearing. The first appellate authority upheld the demand because the caterer was unregistered until 12 Jul 2018 or meal charges were collected from employees.
Under Rule 142(1), the Bench noted, the summary is served “along with” the notice; it accompanies the notice and does not replace it. Relying on Armour Security (India) Ltd. and High Court rulings including M/s Construction Catalysers Pvt. Ltd. Vs State of Assam, it held that Section 160 cannot save a proceeding with no notice at all, and that the absence of a hearing “completely vitiates the proceedings.”
The first appellate authority could not confirm the demand on a new legal basis never put to the appellant. On merits, no authority had identified whether Section 9(3) or 9(4) applied. “Tax demand cannot be created based on assumptions or presumptions,” the Bench held.
It declined, however, to invalidate the documents for want of a DIN or RFN, since Karnataka’s circular requiring RFNs on physically generated communications came only on 23 May 2023. The pre-deposit is to be refunded with interest.
2026-juristway.com-3175-GSTAT(Bengaluru)-GST
