Turnover Discrepancy in GSTR 3B and Form 26AS: Madras HC Rejects Tax Demand Order on Condition

Duplication Found in Turnover Reconciliation and GSTR 3B and Form 26AS: Madras HC sets aside GST Demand Order on Pre-deposit Condition

The Petitioner, Vadim Infrastructure Private Limited, is in engineering and construction services, contested the assessment order on 31.12.2023 and is assailed on the grounds of violation of principles of natural justice.

The major observations from the audit notice and observations on 22.08.2023, underlining turnover reconciliation, and variations between the GSTR 3B return form and Form 26AS as major concerns have been outlined by the applicant.

It was seen that the applicant’s answer dated 25.09.2023 specified that the turnover comprised the functionality of the businesses in India under various GST registrations and identical clarifications were furnished for the comparison between GSTR 3B return and Form 26AS.

Counsel stated that the duplication in such observations and emphasized that the need for tax is arrived at via the problems concerned with the turnover reconciliation and differences between the GSTR 3B return and Form 26AS. Consequently, counsel recommended a chance to challenge the tax demand.

On behalf of the respondents Mr. C. Harsha Raj, the Additional Government Pleader, considered the notice. He underscored that the applicant had been provided abundant chances to contest the tax demand.

Directing to audit observations and information, he remarked on the applicant’s failure to reply to the show cause notice and furnish important documents concerning turnover from Tamil Nadu. Mr. Harsha Raj highlighted that the applicant had legal remedies available and had not adequately explained interference under Article 226 of the Constitution of India.

The respondents in the impugned order learned about the failure of the applicant to furnish the documents for the turnover from Tamil Nadu. The court considering the same discovered the proof that the tax demand was verified based on the total turnover from the profit and loss account of the applicant.

The duplication between the turnover and differences in GSTR 3B return and Form 26AS is been determined by the court. The court considered the same fair to provide the applicant with another chance, albeit with conditions, to contest the tax demands.

The counsel of the applicant asks to remit 10% of the disputed tax demand towards all the problems instead of the turnover reconciliation along with the differences between the GSTR 3B return and Form 26AS, for which they propose remitting 5% of the disputed tax demand.

The impugned order is been set aside by the single bench of Justice Senthilkumar Ramamoorthy on the following conditions:

Recommended: Benefits & Challenges of Revised GSTR 3B for Re-filing

A 10% of the disputed tax demand was been allowed to be taken to the respondent, but it excludes the turnover reconciliation along with the differences between the GSTR 3B return and Form 26AS, from the attached bank account of the applicant.

For the turnover reconciliation along with the differences in GSTR 3B returns along with Form 26AS, a 5% of the tax demand might be levied from the identical account, on realization of the aforesaid amounts, which will be retained as per the resultant of the remanded proceedings the attachment of the bank account will stand raised.

The court demanded the applicant for filing a reply with all required documents within 3 weeks. Complying the same the 2nd respondent should provide the applicant a fair chance, and a personal hearing, and thereafter furnish a new order within 2 months of obtaining the response of the applicant. Accordingly, the writ petition was dismissed.