Mismatch between Turnover Reported in GSTR 9 and GSTR 3B: Madras HC sets aside Demand Order for Lack of Hearing [Read Order]

The Madras High Court set aside the order demanding Goods and Services Tax ( GST ) issued due to a discrepancy between their monthly ( GSTR-3B ) and annual ( GSTR-9 ) return filings. The court ruled that the petitioner was not granted a fair hearing and directed the department to reconsider the demand after providing a proper opportunity to be heard.

The Assistant Commissioner had issued an order on 01.11.2023, asserting a tax demand against the petitioner for the mismatch in their GST return filings.

N. Murali, counsel for the petitioner, referred to the cancellation of GST registration and pointed out that the petitioner would be in a position to explain the mismatch between the monthly returns and the annual return if provided an opportunity. On instructions, he submitted that the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand.

The respondent, represented by C. Harsha Raj, submitted that principles of natural justice were complied with by issuing an intimation dated 30.06.2023, a show cause notice dated 23.08.2023 and by offering personal hearings on 23.09.2023, and 27.10.2023,

Justice Senthilkumar Ramamoorthy found that it is evident that the tax proposal, which related to the mismatch between turnover reported in GSTR 9 and GSTR 3B, was confirmed solely because the petitioner did not reply to the show cause notice and appear at the personal hearings. Since the petitioner's GST registration was cancelled and he asserts a lack of knowledge of proceedings, the interest of justice warrants reconsideration. albeit by putting the petitioner on terms.

The court set aside the order, subject to the condition that the petitioner remit 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of the order. The petitioner is also permitted to file a reply to the show cause notice within the same period.

Upon receiving the reply and confirmation of the deposit, the Assistant Commissioner has been directed to provide a reasonable opportunity to be heard to the petitioner, including a personal hearing. Following this, the department must issue a fresh order within three months of receiving the petitioner's reply.

To Read the full text of the Order CLICK HERE

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