Recent High Court Ruling on GST Return Mismatch Cases

The Goods and Service Tax (GST) Act was inaugurated at midnight on July 1, 2017. This legislation’s primary objective is to provide a framework for imposing and collecting taxes on the intra-state supply of goods or services, or both, by the central government and related matters.

Under the GST Act of 2017, 13 distinct types of returns must be submitted, including GSTR-1, GSTR-3B, GSTR-5A, GSTR-6, GSTR-7, GSTR-4, GSTR-5, GSTR-9, GSTR-10, GSTR-11, GSTR-8, CMP-08, and ITC-04. However, not all returns are applicable to every taxpayer.

A “mismatch” refers to a situation where two elements or values fail to harmonize or correspond with each other. GST return mismatches problem can occur in various ways. Each of the returns submitted by taxpayers is interconnected, both among themselves and with the data provided by the GSTINs mentioned in them.

Consequently, when comparing the data received from one taxpayer with that from the counterparty, they should align. Any discrepancies between these data sets are referred to as “mismatches.”

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Calcutta HC: GSTR 2A and 3B Mismatch Case B/W Suncraft Energy Pvt Ltd and Assistant Commissioner

The High Court of Calcutta has ruled that buyers who adhere to the conditions specified in Section 16(2) of the Central Goods and Services Tax (CGST) Act and State Goods and Services Tax (SGST) Act of 2017 are entitled to claim Input Tax Credit (ITC) and are not responsible for discrepancies in the Goods and Services Tax Return (GSTR) 2A and GSTR 3B due to the seller’s default.

Consequently, the appeal is granted, and the orders made in the writ petition and the order issued by the Assistant Commissioner of State Tax are overturned. The court directs that action should first be taken against the seller before any action can be commenced against the appellant.

Delhi HC: Buyer GST ITC Denial Case B/W Bharti Telemedia Ltd and Union of India

The Delhi High Court is scheduled to hear a series of petitions jointly addressing the denial of Goods and Service Tax (GST) Input Tax Credit (ITC) to buyers on the grounds of default by the seller. The petitioners have challenged the validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017.

The bench observed that the restriction imposed by Section 16(2)(c) regarding ITC is analogous to the condition set forth in Section 9(2)(g) of the Delhi Value Added Tax Act, 2004, which was modified in the case of Quest Merchandising India Private Limited vs. Government of NCT of Delhi for genuine purchases and affirmed by the Supreme Court. The court has scheduled the case for a joint hearing on April 19, along with other pending petitions. This case is under the jurisdiction of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju.

Kerala HC: GSTR-1 and GSTR-3B Mismatch Case B/W Jose Paul and State Tax Officer

The Kerala High Court invalidated an assessment order under the Central Goods and Service Tax (CGST) that was issued without allowing a hearing. This assessment order was based on a discrepancy identified in GSTR-1 and GSTR-3B.

A single-judge bench, presided over by Justice Dinesh Kumar Singh, granted the writ petition and nullified the contested order and accompanying notice. The petitioner was instructed to appear before the first respondent on September 29, 2023, at 11:00 a.m. with all relevant records to finalize a fresh assessment order by the law.

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Delhi HC: GST Refund Reconciliation Statement Case B/W M/s Shivbhola Filaments Pvt. Ltd. and Assistant Commissioner

In a recent case, the Delhi High Court instructed the Goods and Service Authority to reevaluate a matter in which a GST refund had been declined due to a mismatch, without considering the reconciliation statement.

A division bench, consisting of Justice Vibhu Bakhru and Justice Amit Mahajan, set aside the contested order and reinstated the petitioner’s refund applications before the Adjudicating Authority. The Authority was tasked with determining the amount of refund due to the petitioner after affording them an opportunity for a hearing.

Jharkhand HC: Tax Penalty in Form GST DRC-07 Case B/W Vikash Kumar Singh and Commissioner of State Tax

The Jharkhand High Court has recently invalidated the Show Cause Notice (SCN) and Demand Order against the taxpayer as obsolete, which sought a penalty of 100% of the Goods and Services Tax (GST) dues as per Form GST DRC-07.

In a division bench presided over by Justice Aparesh Kumar Singh and Justice Deepak Roshan, it was observed that imposing a 100% penalty on tax dues, as indicated in the Order contained in Form GST DRC-07 (Annexure-4), is inconsistent with the provisions of Section 73(9) of the 2017 Act. This section allows the Proper Officer to impose a penalty of up to 10% of the tax dues when issuing an adjudication order. Moreover, it was noted that the proceedings also violated the principles of natural justice and the prescribed procedure under Section 73 of the Goods and Services Tax Act.

Karnataka HC: GSTR-3B Changes Case B/W M/s Orient Traders and Deputy Commissioner of Commercial Taxes

The Karnataka High Court has granted permission to the assessee to make necessary amendments to their GSTR 3B returns for the months of July 2017 and March 2018, as it would not prejudice the revenue.

Justice S R Krishna Kumar, a single member of the court, has ruled that the petitioner is entitled to the limited relief of amending their Form GSTR 3B returns for July 2017 and March 2018. This allowance is granted, especially since it will not cause any harm to the revenue authorities.

Karnataka HC: Revise GSTR-3B for 3 Years Case B/W Wipro Limited India Vs the Assistant Commissioner

In a significant development for Wipro, the Karnataka High Court has acknowledged that genuine errors in GSTR-3B can be rectified, allowing the company to revise its returns for the past three years as per a recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC). This rectification pertains to unintentional and bona fide errors in the invoices.

The High Court has directed, “Under these circumstances, I believe it would be fair and just to dispose of this petition by instructing the revenue authorities (respondents 1 to 3) to follow the procedure outlined in the Circular and apply it to the petitioner’s case, which spans from 2017-18 to 2019-20. Although the Circular explicitly covers the years 2017-18 and 2018-19, since the petitioner has committed similar errors not only for those years but also for 2019-20, a fair approach would be to extend the benefit of the Circular to the year 2019-20 as well.”

Madras HC: Non-Communication of Mismatch Case B/W Mahendra Feeds and Foods vs Deputy Commissioner of GST

In another noteworthy decision, the Madras High Court has upheld the legality of a show cause notice issued due to discrepancies in the returns filed by a supplier and a dealer, categorizing it as a mere technical breach.

Justice R. Suresh Kumar noted, “After receiving the show cause notice if the petitioner wanted to rectify the discrepancy between themselves and the supplying dealer, they should have obtained and submitted the supporting documents confirming that the output tax had been paid by the supplying dealer. They failed to do so. Therefore, the argument that Section 42(3) necessitates communication at the earliest point in time and thus the show cause notice cannot be considered an intimation of the discrepancy between the supplier and the petitioner is not tenable. Therefore, this Court finds that the impugned order cannot be successfully challenged.” The department was represented by Mr. K. Mohana Murali, Senior Panel Counsel.

Madras HC: Relief to Exporter Despite Mismatch Return Case B/W Abi Technologies vs The Assistant Commissioner of Customs

In another significant ruling, the Madras High Court has granted a refund claim to an exporter, emphasizing that strict adherence to GST regulations to deny legitimate export incentives would contradict the legislative intent of such incentives.

The Court, in its decision, stated, “If there was indeed an export and valid tax debited by the petitioner for exports to foreign buyers, a refund shall be granted. The petitioner is also instructed to provide the necessary details to the respondent within 30 days of receiving a copy of this order. Upon receipt of this information, the respondent should review and verify it with the customs department and proceed to approve the refund claim, if the petitioner is otherwise entitled to it. It is important to note that procedural errors should not hinder the legitimate grant of refunds under the IGST Act, 2017, in conjunction with the CGST Act, 2017, and related rules.” Mr. C. Natarajan appeared on behalf of the petitioners.

Bombay HC: Electronic Credit Ledger after One Year Restriction Case B/W Advent India PE Pvt Ltd and Union of India

The Bombay High Court has instructed the GST Authority to release the Input Tax Credit (ITC) of Rs. 1.17 Crores that was blocked in the electronic credit ledger for a year.

Ms Yadav, representing the petitioner, had argued that the ITC would be unblocked after the verification process was completed. A division bench, presided over by Chief Justice Deepankar Dutta and Justice M.S. Karnik, noted that as per the statutory mandate in sub-rule (3) of rule 86A, the petitioner should have had the ITC unblocked immediately after one year of the initial restriction imposed under sub-rule (1). If the authorities believed that the petitioner was uncooperative, they should have taken appropriate legal action. The delay in lifting the restriction merely because a reply was awaited was declared illegal.

Madras HC: GST on belated Cash Remittance Case B/W F1 Auto Components P ltd vs The State Tax officer

In a significant ruling, the Madras High Court has upheld the imposition of interest under Goods and Service Tax (GST) for late cash remittances, deeming it compensatory and mandatory.

The court has determined that the imposition of interest for belated cash remittances is both compensatory and obligatory, and this levy has been upheld. Regarding the second aspect of the levy, which pertains to remittances through electronic credit registers, the court noted that a previous decision in the case of Maansarovar Motors Private Limited v. The Assistant Commissioner, Poonamallee Division, Chennai, covered this matter, and therefore this aspect of the levy was annulled.

Madras HC: Resubmit Correct Annexures to Form GSTR-3B Case B/W M/s. Sun Dye Chem and the Assistant Commissioner

The Madras High Court has allowed an assessee to resubmit corrected annexures to Form GSTR-3B, highlighting that in the absence of a proper mechanism, taxpayers should not be denied the credits to which they are entitled.

Therefore, the court has granted the petitioner permission to resubmit annexures to Form GSTR-3B with the correct distribution of credit between IGST, SGST, and CGST within four weeks from the date of this order. The respondents are instructed to accept and enable the auto-population of the correct details on the GST portal.

Delhi HC: IGST Refund Case B/W Syschem India Limited and Union of India

The Delhi High Court has sent the notice before the government in response to a petition requesting direction for the processing of IGST refunds for the export of goods.

A division bench, comprised of Justice Rajiv Shakdher and Justice Talwant Singh, has directed the government to issue notices through all available means, including email, regarding the processing of IGST refunds for goods exports. The plea also seeks a directive for the payment of due interest from the date of the shipping bill. The matter has been scheduled for the next hearing on August 4, 2021.

Delhi HC: GST Authority Open Online Portal for Revised Filing of TRAN-1

The High Court of Delhi has directed the GST Authority to establish an online portal for the electronic or manual submission of revised declaration TRAN-1 by the petitioner.

The division bench, consisting of Justice Sanjeev Narula and Justice Manmohan, has instructed the Income Tax Authority to establish an online portal for the petitioner’s electronic or manual submission of the revised TRAN-1 declaration. The court expressed frustration with the Tax Department’s lack of comprehension and fairness in this case. The court noted that the respondents’ failure to address the petitioner’s issue, combined with their rigid stance, contributed to doubts about the GST technical infrastructure. The court emphasized that if the respondents were to engage with taxpayers with a genuine intent to resolve issues, it would build confidence in the system and prevent such matters from reaching the courts.

Kerala HC: ITC Cannot Be Denied on GSTR 2A and 3B Case B/W Mina Bazar Railway Station Road Vs State Tax Officer

In a recent judgment, the Kerala High Court has ruled that Input Tax Credit (ITC) cannot be denied solely based on the discrepancy between GSTR 2A and GSTR 3B. The High Court has referred the case for a reexamination of the evidence. Mina Bazar Railway Station, the petitioner, has filed a writ petition challenging both the assessment order and the recovery notice. Upon reviewing the assessment order in question, it is evident that the petitioner’s claim for input tax credit relies solely on the difference between GSTR 2A and GSTR 3B.

Also, it has been directed that, following a comprehensive assessment of the evidence provided by the petitioner/assessee, the Assessing Authority must issue new orders by the relevant regulations. The petitioner has been specifically advised to attend a meeting with the Assessing Officer on October 3, 2023, at 11:00 a.m., and bring all necessary supporting evidence to substantiate their claim for input tax credit.

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Kerala HC: GSTR 2A and GSTR 3B Discrepancies Case B/W M/s Henna Medicals Bus Stand Road and State Tax Officer

In line with the Calcutta High Court’s ruling in Suncraft Energy Private Limited v. The Assistant Commissioner, State Tax, Ballygunge Charge, the Kerala High Court has ruled that in the GST regime, assessees cannot be denied Input Tax Credit due to discrepancies between GSTR 2A and GSTR 3B.

The Assessing Authority has been directed to issue new orders based on the relevant regulations and the petitioner’s evidence. The petitioner is also required to meet with the Assessing Officer on October 3, 2023, at 11:00 a.m., and provide all necessary evidence for their input tax credit claim.

Rajasthan HC: Availing of Unutilized ITC via Next GSTR-3B Return Case B/W Pacific Industries Ltd and Union Of India

In response to a petition filed due to the unavailability of Form GST ITC-02A on the GST Portal, a division bench of the High Court has issued a directive to the department, permitting the assessee-petitioner to claim an Input Tax Credit of Rs. 2,58,03,590 through the forthcoming GSTR-3B return.

In summary, the writ petition has been granted as follows: “The respondents are instructed to regularize the input tax credit in favour of the petitioner as per their entitlement. The petitioner is authorized to utilize the Input Tax Credit of Rs. 2,58,03,590 through the next GSTR-3B return,” as concluded by the Court.

Calcutta HC: Mismatch in GSTR 2A and GSTR 3B ITC Case B/W Suncraft Energy Private Limited and the Assistant Commissioner

The Calcutta High Court has concluded that issuing a demand notice to the recipient of services due to discrepancies in GSTR 2A and GSTR 3B Input Tax Credit (ITC) is invalid when no investigation has been carried out regarding the supplier.

The Court, consisting of Chief Justice T S Sivagnanam and Justice Hiranmay Bhattacharyya, has based its decision on previous judgments, including Bharti Airtel and Arise India Ltd, and has ruled that a demand notice sent to the service recipient due to mismatches between GSTR 2A and GSTR 3B ITC is not sustainable without investigating the supplier whose invoices do not appear in GSTR 2A. Allegations of non-payment of tax by the supplier and denial of ITC under section 16(2)(c) of the Act could not be incurred without investigating the supplier in question.

Kerala HC: Non-Recording of Transaction In GSTR-2A Form Case B/W Diya Agencies and the State Tax Officer

In a significant legal decision, a Single Bench of the Kerala High Court has ruled that purchasers cannot be denied Input Tax Credit (ITC) solely on the basis of the transaction not being recorded in the GSTR-2A Form.

Justice Dinesh Kumar Singh of the Court stated, “If, upon review of the evidence provided by the petitioner, the assessing officer determines that the claim is legitimate and genuine, the petitioner should be granted input tax credit. The absence of the tax in Form GSTR-2A should not suffice as a reason to reject the assessee’s claim.” Advocates Aji V. Dev, H. Abdul Lathief, Alan Priyadarshi Dev, and S. Sajeevan represented the petitioner, while Government Pleader Jasmine M.M appeared for the respondents.

Jharkhand HC: GSTR-2A Non-Uploading of Invoices B/W Tycoons Industries Pvt. Limited and M/s. Estern Coalfileds Ltd.

The Jharkhand High Court has issued an injunction against Eastern Coalfields, the respondent, from deducting amounts from invoices on the grounds that the GST amount does not reflect in GSTR-2A due to non-uploading of invoices.

Rajesh Lala, counsel for the respondent no.1, requested three weeks’ time to file a counter affidavit. A Division Bench of the High Court, consisting of Justices, analyzed the facts and legal provisions and ordered that Estern Coalfields should maintain the status quo, preventing them from deducting further amounts from future invoices. The matter has been scheduled for further consideration on 14.06.2023.

Rajasthan HC: Availing of ITC in GSTR-3B Case B/W Pacific Industries Ltd and Union Of India

The Rajasthan High Court has granted the Assessee the right to claim Input Tax Credit in the GSTR-3B Return due to the unavailability of FORM GST ITC-02A on the GSTN Portal during its insertion.

In a ruling led by Honorable Justice Sandeep Mehta and Honorable Justice Vinod Kumar Bharwani, the Division Bench declared that the actions of the GST Department were significantly illegal, arbitrary, and unjust. Additionally, the Bench authorized the Petitioner to utilize the input tax credit through the GSTR-3B return and instructed the respondent to regularize the input credit according to the entitled amount. The Court’s order specified, “The respondents are hereby required to regularize the ITC in favor of the assessees in accordance with their entitlement. The petitioner is hereby permitted to claim the Input Tax Credit of Rs. 2,58,03,590/- in the upcoming GSTR-3B return.”

Chhattisgarh HC: ITC Mismatch in Form GSTR-3B with GSTR-2A Form Case B/W M/s. Bharat Aluminium Company Limited and Union of India

In a significant development benefiting Bharat Aluminium Company Ltd. (BALCO), the Chhattisgarh High Court has stayed an order that denied Input Tax Credit (ITC) due to discrepancies between Form GSTR-3B and Form GSTR-2A.

Justice Gautam Bhaduri, sitting as a single judge, scheduled the matter for the week commencing August 02, 2021, and granted a stay on recovery. The Revenue was also restrained from taking coercive measures against the assessee, provided they deposited 5% of the demand within 15 days.

GST Payment & Return Mismatch Notices Sending to Companies by Department

The GST Department has initiated inquiries into companies, requesting explanations for discrepancies between return GSTR-3B and GSTR-1.

The Goods and Services Tax (GST), a new indirect tax law, was implemented on July 1 last year. However, revenue figures remained poor until January. According to a report in the Financial Express, data analysis indicated that only 16 percent of the summary sales returns under GST matched the final returns until December 2017. Additionally, the analysis revealed an excess tax payment of Rs 91,072 crore by 49.36 percent of businesses registered under GST between July and December.