Madras HC Orders 10% Pre-Deposit Reconsideration Due to GST Liability Mismatch (GSTR 3B vs GSTR 2A)

A reconsideration of the matter has been ordered by Madras HC on a 10% pre-deposit condition concerned with the mismatch between GSTR 3B and GSTR 2A, following a failure to respond to the Show Cause Notice ( SCN ).

The applicant, Crystal Granites contested the order because the show cause notice and the impugned order were only uploaded on the “View Additional Notices and Orders” tab of the GST portal and were not communicated via any other norms.

The counsel of the applicant Mr. B. Raveendran furnished that the applicant was not holding with a reasonable chance to argue the tax demand as they were not aware of the SCN.

It was argued by the counsel that the ingredients of Section 74 of the applicable GST legislation were not pleased and that the proceedings were barred by limitation. However, the applicant agreed to remit 10% of the disputed tax demand as a condition for the matter to be reconsidered.

The Government Advocate, Mr V. Prasanth Kiran, has accepted the notice for the respondent and stated that the impugned order was preceded via an SCN and a personal hearing proposed in November 2023. He furnished that the order was provided u/s 74 of the GST acts and, therefore not barred by limitation.

Justice Senthilkumar Ramamoorthy’s bench discovered that the tax proposal came from mismatches between the applicant’s GSTR-3B returns and the auto-populated GSTR-2A, due to the failure of the applicant to respond to the show cause notice or attend the personal hearing, of the tax demand was confirmed.

On January 5, 2024, the Madras High Court set aside the impugned order. The applicant is needed to remit 10% of the disputed tax demand within 2 weeks from obtaining the copy of the order of the court and is allowed to furnish a response to the SCN within the same duration.

The respondent GST department was asked to propose to the applicant a reasonable chance to show their case along with a personal hearing and to provide a new assessment order within 3 months from the response of the applicant on confirmation of 10% payment. Consequently, the writ petition was disposed of.