No more demand based on GSTR 2A Vs GSTR 3B from today onwards.

The GSTAT benches across India have started functioning and orders have started to be available in the public domain. These developments are phenomenal as the orders are passed after analysing the facts as well as the legal grounds. One such order as passed by the Bengaluru bench of the GSTAT on 03/09/2026 is worth to note. This is not just a simple order meant to end the dispute between the affected taxpayer and the GST Authorities but really an eye opener for all disputes connected with demand raised on the sole ground of differences between 2A and 3B. It is not the case that there could not be any demand based on these two returns but the case is that the demand sustains only after through reconciliation. The CBIC has issued two circulars bearing numbers 183 and 193 and these two circulars are binding on the tax officials to decide the demand amount.

It shall be highly interesting to analyse the operative portion of the order dated 03/09/2026 as reported in M/s. Peekay Industries Versus Commissioner of Commercial Taxes, Karnataka, Commercial Tax Officer (LGSTO), Bengaluru, Joint Commissioner of Commercial Taxes (Appeals-5), Bengaluru. - 2026 (9) TMI 454 - GSTAT BENGALURU

Demand was raised based on differences for the year 2019-20. The taxpayer promptly replied by duly reconciling that ITC pertaining to 2018-19 was used in 2019-20 which was legally permissible. Without considering this argument OIO was passed on 30/07/2024 confirming demand of excess ITC in 3B along with applicable interest as well as penalty. The taxpayer preferred the first appeal and the OIA was passed on 15/11/2025 by rejecting the appeal. Aggrieved by the above two orders, the taxpayer preferred the second appeal which was finally disposed.

It is to be noted that this is not a simple remand order. The directions for doing the needful have been dictated by the GSTAT in elaborate manner leaving no choice to the proper officer to decide anything beyond this. For the benefits of all concerned, the operative portion is furnished below.

J. Operative Order For the reasons discussed above, the appeal is disposed of by way of remand to the Adjudicating Authority on the following terms:

(i) The order dated 30.07.2024 (FORM GST DRC-07) passed by the Commercial Tax Officer (LGSTO)-036, DGSTO-5, Bengaluru; and

(ii) The Order-in-Appeal No. GST.AP. 877/24-25 dated 15.11.2025 passed by the Joint Commissioner of Commercial Taxes (Appeals-5), Koramangala, Bengaluru, are set aside.

Comments: It is for all tax officers who pass order raising demand based on differences between 2A and 3B to note that unless the OIO is passed in line with this GSTAT order, the same is liable to be quashed later.

(iii) The matter is remanded to the Adjudicating Authority for fresh adjudication, strictly confined to the show cause notice in FORM GST DRC-01 dated 29.05.2024. This is not a de novo remand at large. It is not an opportunity to reopen or expand the case. Specifically, the Adjudicating Authority shall not travel beyond the heads (IGST, CGST or SGST) and grounds set out in that notice or confirm, or propose to confirm, any tax, interest or penalty exceeding the amount specified in that notice, under any head or on any ground whatsoever.

Comments: Matter ends here. There is absolutely no scope for further disputes.

(iv) The fresh order may confirm the demand in the show cause notice - in whole or in part - or drop it, in whole or in part, based strictly on the material and findings relevant to that notice. It cannot enhance the demand. Within the above scope, the Adjudicating Authority shall specifically do the following:

(v) Reconcile the two conflicting workings: Reconcile the primary tax-period-wise working (Para 9.1 of this Order) with the "Excess of 2018-19 claimed in 2019-20" / "Net Excess Claim" working (Para 9.3). In doing so, the Adjudicating Authority shall: (a) Disclose the source and derivation of the GSTR-2A base figures used in the Para 9.3 working; and (b) Specifically verify and disclose whether the CGST/SGST figures used in that working were, in fact, furnished by the Appellant - given that the Appellant's letter dated 30.03.2024 on record reconciles only the IGST head.

(vi) Carry out invoice-wise, and where necessary supplier-wise, verification of the disputed Input Tax Credit.

(vii) Examine the tax invoices, purchase register, books of account, and electronic credit ledger relied upon by the Appellant. M/s. Peekay Industries Versus Commissioner of Commercial Taxes, Karnataka, Commercial Tax Officer (LGSTO), Bengaluru, Joint Commissioner of Commercial Taxes (Appeals-5), Bengaluru. - 2026 (9) TMI 454 - GSTAT BENGALURU

(viii) Determine - applying Section 16(2)(a) to (d) and Rule 36(4) as they stood during the relevant tax periods, and not Section 16(2)(aa), which does not apply to Financial Year 2019-20 - whether any condition then in force was actually breached.

(ix) Apply CBIC Circular No. 183/15/2022-GST as extended by Circular No. 193/05/2023-GST only to the period April 2019 to 8th October 2019, and separately examine the period 9th October 2019 to March 2020 on its own footing.

(x) Before drawing any adverse inference from a GSTR-2A shortfall, record whether the compliance status of the concerned supplier(s) has been enquired into, and record findings on bona fides.

(xi) Examine whether any part of the mismatch is the result of an inter-head misallocation between IGST and CGST/SGST.

(xii) The Appellant shall be given a reasonable and effective opportunity to produce reconciliation statements, tax invoices, purchase register, books of account, and any other supporting material - including the certificates contemplated under Circular No. 183/15/2022-GST and Circular No. 193/05/2023-GST, to the extent applicable -The Appellant shall also be granted a personal hearing before any fresh order is passed.

(xiii) The Adjudicating Authority shall pass a fresh, reasoned order that Satisfies the requirements of Section 75(6) of the CGST Act, 2017, within twelve weeks from the date this Order is communicated.

(xvi) Any consequential demand of interest under Section 50, or penalty under Section 73(9), of the CGST Act, 2017, shall follow - and abide by - the fresh determination of tax liability made under this Order. Such interest or penalty shall not stand independently on the basis of the orders now set aside.

(xvii) This Tribunal has not expressed any opinion on whether the disputed Input Tax Credit is ultimately admissible. All questions of fact and law are left open for the Adjudicating Authority to decide, within the scope of the show cause notice as directed above - uninfluenced by any observation in the orders now set aside, or, except as expressly recorded above, by any observation in this Order.

Comments: The proper officer is bound to follow all the above directions and pass a reasoned order now. Unlike the High Court orders in writ matters where proper officer may take a stand that issue not decided, in this case issue attained finality and hence this order is binding on all GST Officials. This is a guideline to deal with such differences between 2A and 3B.

(xviii) No order as to costs. The appeal is disposed of accordingly.

Order pronounced in the open court on this 3rd day of September, 2026.