Madras HC Quashes Order Over GST Return Mismatch; Orders Rehearing After 10% Tax Deposit

D.S. Engineering has filed a writ petition challenging a GST order issued by the Deputy State Tax Officer-2, asserting that it violates the principles of natural justice.

The company, which operates in the machinery and engineering components trading sector, has furnished its GST returns and paid taxes for the 2019-20 period. Discrepancies were discovered between their GSTR-3B and GSTR-2A filings.

Multiple notices have been issued by the tax officer along with Form DRC-01A and DRC-01, along with a reminder, but received no response from DS. Engineering, therefore the officer issued an order validating the proposed tax assessment.

Read Also: Recent High Court Ruling on GST Return Mismatch Cases

The counsel of the applicant mentioned that DS. Engineering wished to elaborate on the mismatch when provided a chance and mentioned a recent Madras High Court ruling in a case similar to that, where the court remanded the case for reconsideration on the applicant depositing 10% of the disputed tax. DS. Engineering counsel mentioned their client’s readiness to follow with this prerequisite.

It was marked by the Madras HC that the absence of a proper hearing set aside the impugned order. Within 4 weeks, the court asked DS Engineering to deposit 10% of the disputed tax. The original assessment order on compliance shall be regarded as a Show Cause Notice, and the company shall be permitted 4 weeks to submit its objections with the related documents.

The court directed the tax officer to regard such objections and pass a fresh order post furnishing a reasonable hearing. Within the specified time, the failure to deposit the needed amount or file objections shall result in the original assessment order being reinstated.