Case Law Details
Xiaomi Technology India Pvt Ltd Vs Additional Commissioner, CGST Delhi West Commissionerate & Ors. (Delhi High Court)
In the case of Xiaomi Technology India Pvt Ltd Vs Additional Commissioner, CGST Delhi West Commissionerate & Ors., the Delhi High Court addressed a dispute concerning the mismatch between GSTR-3B and GSTR-1 filings for the financial year 2017-18. The respondents alleged discrepancies in the taxpayer’s declarations, including differences in the reported tax liabilities and availed Input Tax Credit (ITC). They claimed a mismatch of Rs. 4,37,27,280 in tax liabilities and a significant over-claim of IGST, amounting to Rs. 15,66,77,314. The department issued a Show Cause Notice (SCN) to recover these amounts, but Xiaomi contended that they had submitted replies to prior notices and sought to clarify these differences.
The court highlighted that Section 74 of the Central Goods and Services Tax Act (CGST Act), which deals with fraud, willful misstatement, or suppression of facts, could not be invoked merely on the basis of a mismatch between GSTR-3B and GSTR-1 without evidence of such malfeasance. The court raised doubts about the application of Section 74, indicating that it should only apply if fraudulent intent or willful misrepresentation was proven. The respondents were permitted to continue with the inquiry, but any final orders were put on hold pending further hearings. The case was scheduled for the next hearing on December 16, 2024.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 64250/2024 (Ex.)
Allowed, subject to all just exceptions. Application stands disposed of.
W.P.(C) 15297/2024 & CM APPL. 64249/2024 (Interim Stay)
1. Since the respondents are duly represented by Mr. Singla, let a reply be filed within a period of four weeks from today. The petitioner shall have a week therefrom to file a rejoinder affidavit.
2. Prima facie, we bear in consideration the submissions addressed by Mr. Lakshmikumaran, learned counsel for the writ petitioner, who draws our attention to the ongoing inquiry which was being undertaken by the respondents and the various responses which were submitted by the writ petitioner in the course thereof. Our attention was drawn to the initial notice of 14 July 2023 and the detailed reply which was submitted by the writ petitioner in response thereto.
3. From the order impugned before us, we note that the respondents lay the following allegations:
“11. In view of above, it has been found that the department had given many opportunities to the noticee to rebut the allegations, but the noticee had not submitted any documents neither to this office nor to the Audit-II Commissionerate, New Delhi, as replied vide letter C. No. GST/Delhi(West)/ Audit Draft SSCA on GST data quality/ 99/2022-23 dated 10.06.2024 issued by the Assistant Commissioner (Audit) CGST WEST Commissionerate, Bhikaji Cama Place, New Delhi and just wasting the time of the department.
12. Whereas, it appears that as per Table-A above the noticee had declared tax liability in GSTR-3B as Rs. 5,10,21,02,608/- (IGST- 32,53,11,56,59/-, CGST- Rs. 90,26,29,835/- and SGST- Rs. 90,26,29,835/-) whereas, tax liability declared in GSTR-1 is Rs. 5,05,83,75,329/- (IGST-Rs. 3,29,53,95,072/- CGST- Rs. 90,33,53,768/- and SGST-Rs. 90,33,53,768/-) therefore, it has been found that there is a huge difference of IGST- Rs. 4,22,79,413/-, CGST – Rs. 7,23,933/- and SGST-Rs. 7,23,933/- (total amount of Rs. 4,37,27,280/-). Therefore, it appears that there is a mis-match in GSTR-3B and GSTR-1 for amount of Rs. 4,37,27,280/- in the financial year 2017-18 and as per GSTR-9 (for FY 2017-18) the same has not been corrected by the noticee.
13. Whereas, the noticee had availed IGST of Rs. 4,80,64,08,184/- as reflected in (GSTR-3B) table -6(A) of the GSTR-9 for financial year 2017-18, however, IGST of Rs. 4,64,97,30,870/- reflected in (GSTR-2A) table 8(A) of the GSTR-9 for the financial year 2017-18. Therefore, there is a huge difference of IGST-Rs. 15,66,77,314/- which was excess availed by the noticee during financial year 2017-18. As discussed above many opportunities have been given to the noticee to submit the relevant records for verifying the said difference but a vague reply has been submitted by the noticee, which could not help in reaching any conclusion, in this regard.
14. Whereas, it also appears that as per Table-B above of para -5, the noticee had utilized the amount of ITC as Rs. 3,83,67,99,504/- (IGST- Rs. 3,81,33,16,312/-, CGST-Rs. 1,17,41,596/- and SGST- Rs.1,17,41,596/-), whereas, it has been found that the noticee had availed ITC as per GSTR-2A (FY 2017-18) as Rs.4,65,74,10,474/- (IGST-Rs. 4,64,67,30,268/-, CGST-Rs. 53,40,103/- and SGST- Rs. 53,40,103/-). Therefore, it has been found a huge difference of ITC as Rs. 82,06,10,970/- (IGST Rs. 83,34,13,956/-, CGST- (-) Rs. 64,01,493/- and SGST- (-) Rs. 64,01,493/-), which has been availed/ utilized in this regard has been received. DRC-01A dated 28.06.2024 has been issued to the taxpayer, but no reply in this regard has been received. Therefore, same is recoverable from the noticee under Section- 74(1) of the CGST Act, 2017.”
4. Prima facie, we doubt how the provisions of Section 74 of the Central Goods & Services Tax Act, 2017 would stand attracted on a mere allegation of a mismatch between GSTR-3B and GSTR-1. This we note since the said provision would itself be liable to be invoked only if it be alleged that a case of fraud, wilful misstatement or suppression of facts is made The matter requires consideration.
5. We, accordingly, provide that while it shall be open for the respondents to proceed further with the impugned Show Cause Notice, any final orders, if passed, shall not be given effect to till the next date of hearing.
6. Let the matter be called again on 16.12.2024.
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