GST RCM liability Mismatch Occurs due to Inadvertent Error while Filing GSTR 3B: Madras HC sets aside Order, Remands for Reconsideration [Read Order]

The Madras High Court has set aside a Goods and Services Tax ( GST ) demand order, specifically addressing a discrepancy in Reverse Charge Mechanism ( RCM ) liability. The court took into account the petitioner's argument regarding inadvertent errors in filing GSTR 3B returns, prompting a remand of the matter for further consideration.

The petitioner, Arupadai Infrastructure submitted that they were not provided with a reasonable opportunity to contest the tax demand on merits, as they were unaware of the proceedings leading to the impugned order until after its issuance. The petition was filed subsequent to the rejection of a rectification petition.

Counsel for the petitioner pointed out that the impugned order addressed two issues. Firstly, regarding the discrepancy between the petitioner's GSTR 3B returns and the GSTR 1 statement, the petitioner had already remitted the tax dues related to it. Secondly, concerning the RCM liability mismatch, it was attributed to an inadvertent error in filing the GSTR 3B returns during the relevant assessment period. The petitioner sought another opportunity to contest this issue.

Mr. V. Prashanth Kiran, Government Advocate, accepted notice for the respondent and mentioned that the impugned order was preceded by an intimation, a show cause notice, and personal hearing notices.

The petitioner provided proof of payment of tax dues related to the GSTR 3B and GSTR 1 discrepancy. Regarding the RCM liability mismatch, the petitioner submitted relevant GSTR 3B returns to support the claim of inadvertent error. Since the tax dues appeared to have been recovered, revenue interest was secured at this stage.

As a result, a single bench of Justice Senthilkumar Ramamoorthy set aside the impugned order dated 17.11.2023 concerning the RCM liability mismatch, and the matter was remanded for reconsideration by the first respondent. The petitioner was directed to submit a reply to the show cause notice within fifteen days from the receipt of the court's order.

The Madras High Court instructed the first respondent- Deputy State Tax Officer to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months from the receipt of the petitioner's reply. It was clarified that the amounts appropriated in relation to the RCM liability mismatch would abide by the outcome of the remand.

To Read the full text of the Order CLICK HERE

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