The Madras High Court nullifies the Goods and Service Tax (GST) assessment order as of 60% of the tax demand were appropriated from both the bank account and Electronic Credit Ledger (ECL), arised from a discrepancy between GSTR 3B and 2A attributed to misreported data and the petitioner need the opportunity contest the demand.
The petitioner Nakoda Unique Gold Private Limited, in the writ petition, the GST assessment order dated was contested on the grounds of inadequate opportunity for the petitioner to challenge the tax demand.
A Show cause notice ( SCN ) was issued regarding discrepancies between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. The petitioner didn’t respond, as the notice was uploaded on the GST portal’s “view additional notices and order” tab. Subsequently, the impugned order was issued.
The petitioner’s counsel highlighted that the total tax liability, as per the impugned order, was partly appropriated from the petitioner’s bank account and partly from the electronic credit ledger. With the amount appropriated exceeding the tax liability and representing over 60% of the total demand, the petitioner seeks an opportunity to contest the tax demand on its merits.
Responding to the petition, Mr. V. Prashanth Kiran, Government Advocate, confirmed the appropriation of a specific sum but lacks instructions regarding the recovery from the electronic credit ledger.
The bench noted that the petitioner claimed the discrepancy arose because the amount was specified under the row relating to “all other ITC” instead of the row relating to “import of goods”. Supporting documents detailing the appropriation from the bank account and electronic credit ledger were provided. Considering these facts, the bench deemed it fair to grant the petitioner an opportunity to contest the tax demand on its merits.
A Single bench of Justice Senthilkumar Ramamoorthy emphasized that all amounts appropriated towards the tax demand shall abide by the outcome of the remanded proceedings. Consequently, the writ petition is disposed of on the aforementioned terms, with no costs incurred.
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