Mismatch between GSTR 3B returns & auto populated 2A: HC directs re-adjudication

Gauresh Industries Vs Deputy State Tax Officer (Madras High Court)

In the case of Gauresh Industries versus the Deputy State Tax Officer, the Madras High Court addressed a tax dispute centered around a discrepancy between the GSTR-3B returns filed by Gauresh Industries and the auto-populated GSTR-2A returns. The court’s decision, issued on October 17, 2023, involved setting aside a previous tax demand order due to a lack of opportunity for the petitioner to contest the demand on its merits.

Initial Notice and Proceedings:

• The issue began with the scrutiny of Gauresh Industries’ tax returns, leading to the issuance of a notice in Form GST ASMT-10 on March 8, 2022.
• This was followed by an intimation on April 30, 2022, and a show cause notice on July 11, 2022.
• Gauresh Industries claimed to be unaware of these proceedings and thus did not respond.

Petitioner’s Argument:

• The petitioner’s counsel argued that the matter involved a mismatch between the GSTR-3B returns and the auto-populated GSTR-2A returns.
• The petitioner had all relevant documents to explain the reasons for this mismatch and sought an opportunity to present these documents.
• The petitioner expressed willingness to remit 10% of the disputed tax demand as a condition for remand, demonstrating a commitment to resolving the issue.

Respondent’s Position: The Government Advocate, Mrs. K. Vasanthamala, contended that sufficient opportunities had already been provided to the petitioner through the issuance of the notice, intimation, and show cause notice.

Court’s Analysis and Decision:

• Upon reviewing the impugned order, the court noted that the tax proposal was based on the difference between the petitioner’s GSTR-3B and GSTR-2A returns.
• The tax demand was confirmed because the petitioner failed to respond to the show cause notice, a situation the petitioner claimed was due to a lack of awareness.
• The court found it just and appropriate to provide the petitioner with another opportunity to present their case, considering they possessed the necessary documents to justify their Input Tax Credit (ITC) claims.

Court’s Directive:

• The court set aside the impugned order dated October 17, 2023, contingent upon the petitioner remitting 10% of the disputed tax demand within two weeks of receiving a copy of the order.
• The petitioner was allowed to submit a reply to the show cause notice within this period.
• Upon receipt of the reply and confirmation of the 10% payment, the respondent was directed to provide a reasonable opportunity for the petitioner, including a personal hearing.
• The respondent was instructed to issue a fresh order within three months from the receipt of the petitioner’s reply.

Conclusion:

• The case was disposed of on the terms outlined above, without imposing any costs.
• Consequently, the related petitions, W.M.P. Nos. 11885 and 11888 of 2024, were also closed.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An order dated 17.10.2023 is challenged on the ground that the petitioner did not have a reasonable opportunity to contest the tax demand on merits. Upon scrutiny of the petitioner’s return, a notice in Form GST ASMT – 10 was issued on 08.03.2022. This was followed by an intimation dated 30.04.2022 and a show cause notice dated 11.07.2022. The petitioner asserts that he was unaware of these proceedings.

2. Learned counsel for the petitioner submits that the matter pertains to the discrepancy between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A. He further submits that the petitioner has all relevant documents to explain the reasons for the mismatch. Therefore, he seeks an opportunity. On instructions, he submits that the petitioner is willing to remit 10% of the disputed tax demand as a condition for remand.

3. Mrs.K.Vasanthamala, learned Government Advocate, accepts notice for the respondent. With reference to the impugned order, she points out that sufficient opportunities were provided to the petitioner by way of a notice in Form GST ASMT 10, an intimation and a show cause notice.

4. On perusal of the impugned order, it is clear that the tax proposal pertains to a difference between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A. The tax proposal was confirmed because the petitioner did not reply to the show cause notice. The petitioner asserts that all necessary documents are available to establish that the availment of Input Tax Credit was in order. In these circumstances, it is just and appropriate that the petitioner be provided an opportunity after putting the petitioner on terms.

5. For reasons set out above, impugned order dated 17.10.2023 is set aside subject to the petitioner remitting 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. Within the aforesaid period, the petitioner is permitted to submit a reply to the show cause notice. Upon receipt of such reply and upon being satisfied that 10% of the disputed tax demand was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of the petitioner’s reply.

6. W.P.No.10783 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.11885 and 11888 of 2024 are closed.