TaxTMI 
TaxTMI 
TaxTMI 
The GST Laws were introduced on 01/07/2017 and after a significant gap of more that eight and a half years, GSTAT has passed the very first order on differences in GSTR on 12/02/2026. This order seems to be the first order on second appeal on a core issue on GST but still a reasoned one considering all required aspects. It gives me tremendous scope to expect more such quality orders from all benches across India.
In part one, let us discuss the story. One of large company engaged in setting up of renewable energy projects across India had filed the GSTR 1 accurately for the financial year 2018-19. Due to high volume of business, impermissible corrections in GSTR 1, covid related issues etc, the GSTR 3 as well as GSTR 9 were filed by extracting actual figures from the books of Accounts. This resulted in difference between returns GSTR 1 and GSTR 3B based on which SCN was issued. Though details of all credit notes along with complete reconciliation was filed, the Learned Proper Officer (LPO) proceeded to confirm a total demand of 65 lakhs on 26/04/2021 by passing order under Section 74 with the sole objective in mind to impose maximum penalty.
Appeal was filed under section 107 and the first appellate authority gave partial relief by holding that Section 74 is not applicable as the taxpayer has disclosed all required information fully which proves that there was no intention to evade GST. Accordingly, penalty was brought down significantly but demand on GST and interest prevailed.
It is really an unfortunate situation for the taxpayer as he was willing to cooperate by furnishing accurate reconciliation statements for the timing differences but the LPO was not willing to accept the claims either due to his subject understanding or may be due to pressure on more collection. The First appellate Authority passed orders on 29/08/2022 with partial relief forcing the taxpayer to approach GSTAT.
Part 2: The matter relates to Sterling and Wilson Private Limited. Order was passed by the president, GSTAT. The issues were handled in most appropriate manner and the paras 27, 32 as well as 35 deserve special mention. As the order runs in to 25 pages, in order to facilitate all connected with GSTR Difference issue, I furnish the relevant extracts which are key take aways in the own language of GSTAT.
01) n our considered view every honest taxpayer should be protected and if it is held, he has no intention of evading tax by submitting wrong data or misinformation or fraudulent misinformation having intend to evade tax then he should be given a proper hearing before saddling him with penalties and interest. In the ultimate analyses if a person has paid the tax and if it is accepted the taxes has been paid because of timeline, his argument is not heard, then he should be given another opportunity to argue his point of view. It may also be noted here that the period in which proceedings in original and appeal were heard was a difficult time as it is during the Covid-19 Pandemic.
02) Moreover, we are of the opinion that CGST / SGST Act is relatively new Act and professionals may not be thorough in the filing returns at the relevant period, together with fact that, at that particular time most of returns were being filed manually and the technique of auto-population and full online filling was not operational to fullest extent as it is now. There were chances of human error. In order to obviate any such human error, the matter should be re-considered by the learned Proper Officer. If we remand the matter, the best or the worst, depending upon the point of view, either from Revenue or from the side of the assessee, that can happen is that the case would be re-heard and decided at the very threshold and effective judgment would be passed. It is also not disputed at this stage that Appellant was not heard in-person at the time of passing of the order-in-original.
03) The learned Proper Officer while disposing the proceeding Under Section 73 of the CGST Act shall examine the genuineness of the Credit / Debit notes and other documents produced by the Appellant and render the final order.
04) There shall be no orders as to costs.
Conclusion: Let us hope that there are no more cases at adjudication level on raising demand based on GSTR differences, as there are several reasons for such differences. In case the LPO wishes no such differences in GSTR, it is happening so in all cases where the returns are NIL returns. Hence, I appeal to all LPO to pass reasoned orders on the connected issues taking lessons from the views expressed by the GSTAT.