MC Bauchemie India Pvt Ltd & Anr. Vs Union Of India & Ors. (Gujarat High Court)
The Gujarat High Court, in a significant ruling delivered on 10 July 2025, quashed GST proceedings initiated solely on the basis of a mismatch between turnover declared in E-way bills and GSTR-9 returns. The Court emphasized that without allegations of fraud, willful misstatement, or suppression, the tax authorities could not assume jurisdiction under Section 73 of the GST Act, 2017.
Background of the Case
MC Bauchemie India Pvt. Ltd., a manufacturer of construction chemicals, filed its GST returns for FY 2018–19. The Assistant Commissioner issued a notice under Form DRC-01A on 26 December 2023, proposing a tax liability of ₹78.74 lakh on three grounds:
1. Mismatch between turnover as per E-way bills and GSTR-9;
2. Excess Input Tax Credit (ITC) due to non-reconciliation;
3. Ineligible ITC under Section 17(5) of the GST Act.
The very next day, a show-cause notice in Form DRC-01 was issued under Section 73. Despite the company’s reply, the authority passed an Order-in-Original (10 March 2024) demanding ₹27.68 lakh with interest and penalty, without granting a personal hearing.
Appeals and rectification applications filed by the company were dismissed on technical grounds, prompting the present writ petition under Article 227 of the Constitution of India.
