Court annuls tax imposed by Assistant Commissioner on M/s. Sri Kali Krishna Industries due to mismatch reports

The court annulled the tax imposed by the Assistant Commissioner (ST) on M/s. Sri Kali Krishna Industries for an alleged under-declared tax liability of Rs. 38,648. The court found that the appellant had paid the net tax liability for October 2017 after adjusting eligible ITC, contrary to the assessing authority's determination of under-declaration based on mismatch reports. The court concluded that the evidence presented by the appellant supported their claim, and the tax levied on the basis of mismatch reports was annulled. The appeal was allowed in favor of the appellant.

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Issues:
- Dispute over tax orders passed by the Assistant Commissioner (ST)
- Alleged under-declared tax liability of Rs. 38,648
- Appeal filed by M/s. Sri Kali Krishna Industries

Analysis:
The appeal was filed against tax orders passed by the Assistant Commissioner (ST) concerning an alleged under-declared tax liability of Rs. 38,648 by M/s. Sri Kali Krishna Industries. The assessing authority noted a discrepancy between the turnover declared in GSTR-1 and GSTR-3B for the period from July 2017 to June 2018. The appellant claimed that due to GSTN network software issues, their GSTR-3B return for October 2017 was automatically shown as 'NIL'. They transitioned to the composition scheme post-October 2017 and paid the actual tax liability for that month. The appellant argued that they had discharged the net tax liability before any show cause notice was issued.

During the appeal hearings, the Authorized Representative reiterated the contentions set forth in the grounds of appeal. The appellant maintained that they had paid the net tax liability for October 2017 after adjusting eligible ITC. However, the assessing authority unilaterally determined an under-declared tax based on the mismatch between GSTR-1 and GSTR-3B turnovers without considering the appellant's submissions. The appellant requested the annulment of the assessment order based on their compliance with tax payments for October 2017.

Issues for Adjudication:
- Verification of whether the appellant's claim of discharging the actual net tax liability for October 2017, thereby disputing the under-declared tax due to mismatch reports, is substantiated with logical explanation and reliable evidence.

Analysis:
Upon review of the grounds of appeal and the assessment order, it was found that the appellant acknowledged a gross tax liability of Rs. 38,647 for October 2017, which was in line with the assessing authority's determination. The appellant asserted that after adjusting eligible ITC, they paid the remaining tax liability of Rs. 13,568 on 28-12-2017. The assessing authority failed to verify this information and unilaterally concluded an under-declared tax, disregarding the appellant's compliance with the net tax payable for October 2017.

Conclusion:
The evidence presented by the appellant regarding the balance tax liability indicated that the assessing authority's determination of under-declaration lacked certainty and authenticity. The appellant's assertion of having paid the net tax liability for October 2017 after adjusting eligible ITC was supported by rational arguments and corroborative evidence. Mismatch reports, while indicative, cannot be solely relied upon to establish tax suppression. Therefore, the tax levied based on mismatch reports was annulled, and the appellant's contentions were deemed sustainable. Consequently, the appeal was allowed, and the tax imposed by the assessing authority was annulled.

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