Rs. 2.38 crores GST demand due to Non reconciliation between GSTR-01 & GSTR-09: Delhi HC Directs to accept Rectification Application filed by L& T Ltd
The GSTR-01 was available with the Adjudicating Authority itself, as is evident from the attachment to the DRC-07.
Larsen - Turbo - Ltd - Taxscan
Larsen - Turbo - Ltd - Taxscan
The Delhi High Court directed to accept the rectification application filed by Larsen & Toubro Limited (L&T) as the demand of Rs. 2.38 crores Goods and Service Tax (GST) was based on non-reconciliation between GSTR-01 & GSTR-09.
Larsen & Toubro Limited, the petitioner, challenged the show cause notice dated 04th December, 2023 (‘the SCN’) issued by the Department of Trade & Taxes, Government of N.C.T. of Delhi, pertaining to the Financial Year 2018-19, as also the consequent order dated 29th April, 2024 passed by the office of Sales Tax Officer Class II/ AVATO, Delhi (‘the impugned order’).
The petition also challenges the vires of Notification No. 56/2023Central Tax dated 28th December, 2023 and Notification No. 9/2023Central Tax dated 31st March, 2023 (‘impugned notifications’). The impugned notifications were under consideration before this Court in a batch of matters with the lead matter being W.P.(C) 16499/2023 titled ‘DJST Traders Pvt. Ltd. vs. Union of India and Ors.’
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In fact, Notification Nos. 09 and 56 of 2023 (Central Tax) were challenged before various other High Courts. The Allahabad Court has upheld the validity of Notification no.9. The Patna High Court has upheld the validity of Notification no.56. Whereas, the Guwahati High Court has quashed Notification No. 56 of 2023 (Central Tax).
The Telangana High Court, while not delving into the vires of the assailed notifications, made certain observations in respect of invalidity of Notification No. 56 of 2023 (Central Tax). In the meantime, the challenges were also pending before the Bombay High Court and the Punjab and Haryana High Court. In the Punjab and Haryana High Court vide order dated 12th March, 2025, all the writ petitions have been disposed of in terms of the interim orders passed therein.
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The Court has heard counsel for the parties for a substantial period today. A perusal of the above would show that various High Courts have taken a view and the matter is squarely now pending before the Supreme Court.
Apart from the challenge to the notifications itself, various counsels submit that even if the same are upheld, they would still pray for relief for the parties as the Petitioners have been unable to file replies due to several reasons and were unable to avail of personal hearings in most cases.
The submission of the Petitioner, on facts, is that in the SCN, there were two grounds which are raised against the Petitioner. Firstly, there is no reconciliation between GSTR-01 and GSTR-09. Secondly, Input Tax Credit has been claimed from dealers, return defaulters and tax non-payers. The demand qua the first aspect is Rs. 55,38,016/- and qua the second aspect is Rs. 61,83,610/-.
A division bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the summary of the demand finally raised in the impugned order is to the tune of Rs. 2.38 crores. The petitioner had also filed a rectification application wherein vide order dated 30th July, 2024 without granting any hearing, the rectification application was dismissed.
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Under such circumstances, because the Petitioner’s application for rectification was decided without granting a proper hearing, the matter deserves to be remanded to the concerned Authority to be considered afresh.
The court held that the rectification application be heard afresh by the concerned Authority, since clearly one of the grounds on which the demand has been raised in the impugned order for non-reconciliation of the GSTR-01 and GSTR-09 is that the GSTR-01 was not filed along with the reply to the SCN.
However, a perusal of the record would show that the GSTR-01 was clearly available with the Adjudicating Authority itself, as is evident from the attachment to the DRC-07. Thus, the rectification application filed by the Petitioner is restored to its original number. The order dated 30th July, 2024, rejecting the rectification application filed by the Petitioner is set aside.
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