ITC availed Reversed due GSTR 3B returns and GSTR 2A Discrepancy : Madras HC orders 10% Pre-deposit for Reconsideration [Read Order]

The Madras High Court ordered reconsideration of the  issue of Input Tax Credit ( ITC ) under Goods and Services Tax ( GST ) reversed due to the discrepancy in GSTR 3B returns and GSTR 2A. The order was set aside on condition of 10% pre-deposit.

The Petitioner, Rishab Industries is involved in wholesale and retail trading of plastic scraps and allied items. The petitioner claims that their GST compliance consultant failed to keep them informed about proceedings leading to the contested order.

The petitioner's counsel submitted the petitioner's annual return and highlighted that the discrepancy between the petitioner's GSTR 3B and the auto-populated GSTR 2A amounts to only Rs. 19,341/-.

Asserting that given the chance, the petitioner could effectively explain this discrepancy and challenge the tax demand, he further conveyed the petitioner's willingness to remit 10% of the disputed tax demand as a condition for remand.

Mrs. K. Vasanthamala, representing the government, pointed out that the impugned order was preceded by an intimation dated 19.05.2022, a show cause notice dated 08.06.2023 and a personal hearing notice dated 28.06.2023.

A single bench of Justice Senthilkumar Ramamoorthy noted that the ITC availed by the petitioner was reversed due to the disparity between their GSTR 3B returns and the auto-populated GSTR 2A. However, considering the minimal discrepancy and the petitioner's willingness to contest, the court deemed it just and necessary to grant the petitioner an opportunity to contest the tax demand on its merits.

Consequently, the impugned order dated 15.09.2023 was set aside, and the matter was remanded for reconsideration. The petitioner was directed to remit 10% of the disputed tax demand within two weeks, along with submitting a reply to the show cause notice within the same period. Upon receipt of the petitioner's reply and satisfaction of the remittance condition, the 1st respondent - The Assistant Commissioner (ST) was instructed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.

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