Madras High Court Quashes GST Discrepancy Order

Introduction

The case of Subh Sri Agencies vs Deputy State Tax Officer before the Madras High Court revolves around a discrepancy identified in GST returns and the subsequent legal proceedings initiated by the petitioner. This article aims to dissect the key aspects of the case, including the arguments presented by both parties and the pivotal judgment delivered by the High Court.

Facts of the Case

The petitioner, Subh Sri Agencies, received a show cause notice on 26.12.2022, regarding a disparity between their GSTR 1 and GSTR 3B returns. Responding to the notice on 17.03.2023, the petitioner clarified that the discrepancy arose due to an error in reflecting amounts towards CGST and SGST instead of IGST. Despite this explanation, an impugned order was issued on 09.06.2023, prompting the petitioner to seek legal recourse.

Issue

The central issue at hand was whether the petitioner’s explanation for the disparity in their tax returns was valid and whether the impugned order issued by the tax authority was justified.

Petitioner’s Argument

The petitioner contended that the disparity in their GST returns stemmed from a genuine error in reflecting amounts for CGST and SGST instead of IGST. They argued that if the correct amounts were added and compared, it would elucidate the apparent discrepancy.

Respondent’s Argument

Contrary to the petitioner’s stance, the respondent emphasized that the impugned order was issued within the stipulated timeframe and that the petitioner’s approach to the court was belated. The respondent asserted that no interference in the order was warranted.

Court Judgment

In its verdict, the Madras High Court quashed the impugned order, subject to the petitioner remitting 10% of the disputed tax demand. The Court directed the respondent to afford a reasonable opportunity to the petitioner, including a personal hearing, before issuing a fresh order.