Madras HC Remands Case for Reconsideration: Disparity in GST Returns Ignored Despite Timely Payment

The Madras High Court ordered a reconsideration of the case about the timely payment of Goods and Services Tax (GST) dues, especially addressing differences between Goods and Services Tax Returns (GSTR) 1 and GSTR 3B. This order complied with the observation of the court that even after recognizing the prompt payment of GST dues, the officers ignored this fact.

Under scrutiny, the petitioner, following an inspection, obtained an intimation dated 14.02.2023, followed by an SCN on 17.03.2023. Responses were duly furnished, directing to the issuance of the impugned order.

The counsel of the applicant at the legal proceedings outlines two issues. The first one is related to the disparity in the turnover that has been declared in GSTR 3B compared to the GSTR 1 statement, the applicant has cleared the tax obligations in advance of the intimation. The second one is for the reversal of the ITC claimed for buying from Sri Vela Hardware and Paints, discrepancies arose regarding the nature of purchases.

Answering that the additional government pleader claimed that even after the release of partial obligation, the levied penalty was justified. However, on analysis, it was seen that the conclusion of the respondent opposed the documented proof.

A single bench of Justice Senthilkumar Ramamoorthy noted that on verifying the challenged order it is proved that the respondent regarded the timely payment of the applicant of the due amounts for the variance between the GSTR 1 and 3B dated January 9, 2023. Even after the consideration the respondent incorrectly mentioned on Page 23 of the transcript that levied entity loses to settle tax liabilities within 15 days of obtaining the notice on 17th March 2023. The same claim opposes the documented proof.

For the ITC reversal under GST of the purchases from Sri Vela Hardware and Paints, it stayed unclear on what foundations the conclusion was reached for the applicant’s paint procurement, particularly under the petitioner’s reply on September 23, 2023, including the accompanying documents.

The Additional Government Pleader shows the outstanding obligations of Rs 20,232 related to the same problem instead of the initial one. Provided that the answer of the applicant along with the accompanying documentation were not considered, the challenged order does not have the merits related to such cases.

The bench based on the aforesaid grounds set aside the challenged order and remanded the case for reconsideration. As per that, the writ petition was disposed of.