Unaware of GST Proceedings in GSTR 3B and GSTR 2A Mismatch: Madras HC sets aside Order, remands for Reconsideration [Read Order]

The Madras High Court set aside an order concerning a GST ( Goods and Services Tax ) dispute due to a mismatch between GSTR 3B returns and the auto-populated GSTR 2A. The court emphasised the breach of principles of natural justice and granted 10% pre-deposit conditional remand, offering the petitioner an opportunity to contest the tax demand on merits.

The writ petition, filed by M/s. Mohan Enterprises, sought to quash the impugned order dated 22.03.2024, for the assessment year 2018-19. The petitioner contended that their business was discontinued and that the show cause notice and impugned order were uploaded on the GST portal but not communicated through any other mode.

R. Hemalatha, counsel for the petitioner, asserted that the tax proposal was based on a mismatch between the petitioner’s GSTR 3B returns and the auto-populated GSTR 2A. She submitted that the petitioner was unaware of the proceedings and thus could not reply to the show cause notice or attend the personal hearing. She further submitted that if given an opportunity, the petitioner would reconcile the mismatch and agreed to remit 10% of the disputed tax demand as a condition for remand.

The respondent, represented by Sai Srujan Tayi, maintained that principles of natural justice were complied with. He pointed out that the respondent had issued a notice in Form ASMT 10 dated May 17, 2023, and a show cause notice dated September 6, 2023, before issuing the impugned order. It was highlighted that the petitioner failed to respond to the show cause notice and did not attend the personal hearing.

Justice Senthilkumar Ramamoorthy examined the submissions and the impugned order. The court noted that the tax proposal was confirmed because the petitioner did not reply to the show cause notice or attend the personal hearing. The court acknowledged the petitioner’s assertion that they were unaware of the proceedings due to the discontinuation of the business.

The court set aside the impugned order on the condition that the petitioner remits 10% of the disputed tax demand in cash within two weeks from the date of receipt of a copy of this order. The petitioner is also permitted to submit a reply to the show cause notice within the same period.

Upon receipt of the reply and confirmation of the 10% payment, the respondent is directed to provide a reasonable opportunity for the petitioner to contest the tax demand, including a personal hearing. The respondent is then required to issue a fresh order within three months from the date of receipt of the petitioner’s reply.

To Read the full text of the Order CLICK HERE

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