GSTR-1 and 3B Mismatch: Kerala HC Nullifies CGST Assessment Order Due to Lack of Hearing Opportunity

The Kerala High Court set aside the assessment order under the Central Goods and Service Tax (CGST) passed without furnishing the chance of a hearing. The assessment order was on the grounds of the mismatch discovered in GSTR -1 and GSTR -3B.

The petitioner, Jose Paul, filed a writ petition to challenge the show cause notice and order issued by the 1st respondent. Jose Paul is a registered dealer under the SGST and CGST Acts.

In his compliance with tax regulations, the petitioner submitted sales statements in GSTR-1, monthly returns in GSTR-3B, and annual returns in GSTR-9, along with a Reconciliation statement in GSTR-9C that included audited financial statements for the 2017-18 fiscal year. An inconsistency between the GSTR-1 and GSTR-3B reports was identified, leading to the issuance of a notice to the petitioner. A personal hearing was scheduled for March 7, 2022.

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However, on the appointed date, the 1st respondent was on leave, and no further hearing date was provided. Surprisingly, the impugned order (Ext.P5) was issued without affording the petitioner an opportunity to be heard, as per the initial notice.

During the last hearing of the writ petition, the Government Pleader, Ms. Rasmitha Ramachandran, confirmed that the petitioner had not been given a chance to be heard as mandated by Section 73 of the GST Act.

Taking into consideration the aforementioned facts and the undisputed circumstances, Justice Dinesh Kumar Singh, the single judge presiding over the case, granted the writ petition. The impugned order and the notice were set aside. The petitioner was instructed to appear before the 1st respondent on September 29, 2023, at 11:00 a.m., bringing all relevant records, for the purpose of finalizing a fresh assessment order in compliance with the law.