Differences of ITC availed in Form GSTR-3B against Form GSTR-2A: Orissa HC Quashes GST Order on violation of Natural Justice Principle

M/s. D.R. Patnaik, the petitioner challenged the Order-in- Original dated 20.02.2025 and Summary Order dated 24.02.2025 passed by the Additional Commissioner, GST & Central Excise Commissionerate, Rourkela-Opposite Party No.1 under Section 73 of the Central Goods and Services Tax Act, 2017/the Odisha Goods and Services Tax Act, 2017 (“GST Act”), whereby the demand to the tune of Rs.10,16,95,448/- for the financial year 2020-21 has been raised besides penalty of Rs.1,01,69,545/-.

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The averments and contents of the writ petition reveal that though returns in GSTR-3B and GSTR-2A are furnished, on the allegation that during financial year 2020-21 excess input tax credit of Rs.10,16,95,448/- has been availed by the petitioner. The Petitioner claims to have provided a reconciliation statement along with the supporting documents in connection with reply to show-cause notice explaining the differences of input tax credit availed in Form GSTR-3B against ITC available in Form GSTR-2A vis-à-vis the value of transactions in Form GSTR-8A. Despite such reply contained detailed explanation with necessary documents for verification as to correctness of availment of input tax credit being made available to the adjudicating authority, a demand as afore-noted has been raised, challenging which the present writ petition has been filed.

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Mr. Rudra Prasad Kar, Senior Advocate assisted by Mr. Asit Kumar Dash, Advocate taking the Court to Form GST DRC-06, i.e., reply to the show-cause notice dated 21.11.2024, which contained apart from detailed reply/explanation, copies of necessary documents to verify with reference to allegations of excess input tax credit, advanced argument that the adjudicating authority has conspicuously omitted to consider the same, but sustained the allegation of excess input tax credit availed during April, 2022 to March, 2021 in order to set up huge demand.

He submitted that said reply along with objection as to jurisdictional fact being not considered by the adjudicating authority, the Order-in-Original along with Summary Order is not tenable in the eye of law. He drew attention of the Court to paragraph-4 of the Order-in-Original dated 20.02.2025 to buttress his contention that the adjudicating authority was under misconceived perception that no response was filed in connection with the show-cause notice dated 21.11.2024. He vehemently affirmed that in fact the detailed explanation was furnished to the authority concerned via web-portal on 20.12.2024 in Form GST DRC-06.

A division bench of Justice Biraja Prasanna Satapathy and Justice Murahari Sri Raman is of ex facie view that there was glaring non-adherence of principles of natural justice as the Order-in-Original dated 20.02.2025 under Annexure-7 reveals error apparent on the face of the record, which fact could be discerned from narration of the adjudicating authority vide Paragraph-4 of the said Order-in-Original.

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This Court is persuaded to believe that the proper authority has failed to consider the reply to show-cause notice in Form GST DRC-06 along with other documents uploaded. The bench set aside the Order-in- Original dated 20.02.2025 vide Annexure-7 as also Summary Order dated 24.02.2025 passed under Section 73 of the GST Act by the Additional Commissioner, GST & Central Excise, Commissionerate, Rourkela-Opposite Party No.1 on the ground of violation of principles of natural justice and remitted the matter to the said authority concerned for fresh adjudication.

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