Tax Proposal confirmed on GSTR 3B and GSTR 2A Mismatch: Madras HC directs Re-adjudication on 10% Pre-deposit [Read Order]

In a recent ruling, the Madras High Court set aside a GST order confirming a tax proposal due to a mismatch between GSTR-3B returns and auto-populated GSTR-2A. The court directed a re-adjudication of the tax demand, contingent on remitting 10% of the disputed tax demand.

The petitioner, Tvl. Uniform Collections, challenged the impugned order dated 10.07.2023. The petitioner asserted that the show cause notice and the impugned order were uploaded in the "View Additional Notices and Orders" tab on the GST portal and were not communicated through any other mode.

Samhita Srinivas, counsel for the petitioner, argued that the petitioner was unaware of proceedings culminating in the impugned order and, therefore, could not participate in such proceedings.

The petitioner agreed to remit 10% of the disputed tax demand as a condition for remand if given the opportunity to contest the tax demand on merits.

T.N.C. Kaushik, Additional Government Pleader representing the first and second respondents, submitted that the principles of natural justice were complied with. He pointed out that a notice in Form ASMT-10 was issued upon noticing discrepancies in the returns filed by the petitioner, followed by a show cause notice dated 17.01.2023 and a personal hearing notice.

The respondents  further asserted that the petitioner failed to respond to the show cause notice or participate in the personal hearing.

Justice Senthilkumar Ramamoorthy observed that the tax proposal, which pertained to a mismatch between the petitioner’s GSTR-3B returns and the auto-populated GSTR-2A, was confirmed due to the petitioner’s non-response to the show cause notice and non-participation in the personal hearing.

The bench emphasised that the interest of justice warranted providing the petitioner an opportunity to contest the tax demand on merits.

Consequently, the impugned order 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 from the date of receipt of a copy of this order.

Additionally, the petitioner was permitted to submit a reply to the show cause notice within the same period, and the first respondent was instructed to provide a reasonable opportunity to the petitioner, including a personal hearing, and issue a fresh order within three months.

To Read the full text of the Order CLICK HERE

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