HC Directs GST Authority to Extend Opportunity for Assessee to Elucidate GSTR-3B and GSTR-2B Discrepancies

In a recent case, the High Court intervened in a dispute between a dealer of woven fabrics and ready-made garments and the tax department regarding inconsistencies between their GSTR-3B and GSTR-2B returns. The petitioner, accused of failing to respond adequately to show cause notices, contested the tax demand, claiming a lack of opportunity to provide necessary documentation. Here’s a breakdown of the case and the court’s ruling.

Facts of the Case:

The petitioner, engaged in the trade of woven fabrics and ready-made garments, received a show cause notice from the tax department, alleging disparities between their GSTR-3B and GSTR-2B returns. Despite awaiting crucial details from suppliers, the petitioner did not respond to the notice.

However, the department passed the order and made entire tax liability with regard to disparity between GSTR-3B and GSTR-2B returns. It filed writ petition and contended that the petitioner did not have a reasonable opportunity to contest the tax demand.

Held:

The High Court acknowledged the petitioner’s negligence in failing to submit documents upon receiving the intimation and show cause notice. However, it emphasized that if the petitioner’s explanation was valid, denying them an opportunity to address the alleged discrepancies would be unjust.

Consequently, the court deemed the impugned order invalid, with the condition that the petitioner remit 10% of the disputed tax demand. Furthermore, the tax department was directed to afford the petitioner a reasonable opportunity to clarify their position before issuing a fresh assessment order.