GSTR 3B and GSTR 2A Mismatch: Madras HC sets aside GST Demand Order on 10% Pre-Deposit [Read Order]

The Madras High Court has set aside a GST demand order on the condition that the petitioner remits 10% of the disputed tax demand. The court emphasised the need to uphold principles of natural justice and provided an opportunity for the petitioner to contest the tax demand on merits, particularly addressing the mismatch between the petitioner's GSTR 3B returns and the auto populated GSTR 2A.

The writ petition sought to quash the impugned order dated April 10, 2024, issued by the Deputy Commercial Tax Officer. The petitioner contended that the order violated principles of natural justice and asserted that he was unaware of proceedings culminating in the order.

R. Hemalatha, counsel for the petitioner, argued that the tax proposal related to a mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A. She submitted that the petitioner had obtained the requisite certificate in terms of Circular No.183 and, if provided an opportunity, would be able to justify the claim of Input Tax Credit ( ITC ). On instructions, she stated that the petitioner agreed to remit 10% of the disputed tax demand as a condition for remand.

K.Vasanthamala, representing the respondent, pointed out that the impugned order was preceded by an intimation, a show cause notice and multiple personal hearing notices.

Justice Senthilkumar Ramamoorthy examined the submissions and the impugned order. The court noted that the respondent concluded that ITC had been wrongly availed of and confirmed the tax proposal because the petitioner did not reply to the show cause notice.

The court acknowledged the petitioner's assertion that they were unaware of the proceedings due to the lack of proper communication. The court also recognized the issue of mismatch between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A as central to the dispute.

The court set aside the impugned order on the condition that the petitioner remits 10% of the disputed tax demand within two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the same period.

Upon receipt of the reply and confirmation of the 10% remittance, the respondent is directed to provide a reasonable opportunity for the petitioner to contest the tax demand, including a personal hearing. The respondent is then required to issue a fresh order within three months from the date of receipt of the petitioner’s reply.

To Read the full text of the Order CLICK HERE

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