2023 (6) TMI 231 - HC - GST

Typo in GSTR-3B Return Doesn't Justify Excessive Tax Demand; Authority Must Reconsider Petitioner's Clarifications

The HC held that a typographical error in the petitioner's GSTR-3B return, resulting in an inflated tax liability, could not justify an excessive tax ... Quashing of show cause notice - reconsideration on merits - rectification of inadvertent/typographical error in GST returns - correction mechanism under departmental circular - stay of coercive action pending adjudication - deletion of unnecessary partyQuashing of show cause notice - rectification of inadvertent/typographical error in GST returns - correction mechanism under departmental circular - reconsideration on merits - stay of coercive action pending adjudication - Show cause notice dated 12.05.2023 quashed and matter directed to be reconsidered after taking into account the petitioner's explanations; coercive steps stayed till the next date of hearing. - HELD THAT: - The Court found that the petitioner had explained an apparent typographical error in the FORM GSTR-3B filed for September, 2017 and had taken steps to reverse the excess Input Tax Credit and to correct the liability in subsequent returns. The Court observed that where an inadvertent or typographical error has occurred in returns, the taxpayer should not be mulcted for tax in excess of what is due and payable and that the petitioner's explanations did not appear to have been considered. In consequence, the Court quashed the show cause notice dated 12.05.2023 but directed the authority to consider all clarifications and pass an appropriate order pursuant to the show cause notice within three weeks. The Court further clarified that no coercive steps shall be taken to enforce the demand as projected in the show cause notice or any order passed pursuant thereto until the next date of hearing. The direction entails fresh consideration on merits by the assessing authority, taking into account the petitioner's responses and the departmental correction mechanism established by Circular No.26 dated 29.12.2017, notwithstanding the respondents' contention about the circular's retrospective application. [Paras 12, 13, 14, 15, 16]Show cause notice dated 12.05.2023 quashed; authority directed to consider petitioner's clarifications and pass a reasoned order within three weeks; coercive action stayed pending further proceedings.Deletion of unnecessary party - Respondent nos. 2 to 4 deleted from the array of parties as not necessary to the petition. - HELD THAT: - The Court concluded that respondent nos. 2 to 4 were not necessary parties for adjudication of the controversy raised in the petition and accordingly removed them from the array of parties. [Paras 18]Respondent nos. 2 to 4 deleted from the array of parties.Final Conclusion: The show cause notice dated 12.05.2023 is quashed; the assessing authority is directed to reconsider the matter in light of the petitioner's explanations and pass an appropriate order within three weeks; coercive steps are stayed until the next hearing; respondent nos. 2 to 4 are deleted from the array of parties. Issues Involved: The petitioner challenged a show cause notice and an intimation related to a tax liability error in returns filed under the Central Goods and Services Tax Act, 2017.Impugned Show Cause Notice and Intimation: The petitioner filed a petition challenging a show cause notice and an intimation related to an error in its tax liability under the CGST Act. The error stemmed from a mistake in the returns filed for September 2017, where the petitioner erroneously typed its liability as Rs. 32,33,36,855 instead of Rs. 3,23,36,855. The petitioner used Input Tax Credit (ITC) to discharge the liability, claiming it as an apparent error. The petitioner rectified the mistake by reversing the ITC used and correcting the liability in subsequent returns. Despite following the procedure outlined in Circular No.26 dated 29.12.2017, the benefit was not extended to the petitioner as the circular was issued subsequently.Respondents' Actions and Petitioner's Clarifications: The respondents issued a demand for Rs. 55,39,99,352 on 19.12.2022, comprising tax demand and interest. The petitioner clarified the reasons for the mismatch, scheduled a personal hearing, and submitted additional explanations. However, a show cause notice was issued on 12.05.2023, raising the same demand. The petitioner filed the present petition due to the lack of consideration for the explanations provided.Court's Decision and Directions: The Court acknowledged that taxpayers should not be burdened with tax liability exceeding what is due for inadvertent errors. The show cause notice dated 12.05.2023 was quashed, with an assurance from the respondents to consider all clarifications and pass an appropriate order. The concerned authority was directed to pass an order within three weeks, considering the petitioner's responses and the petition's contentions. No coercive steps were to be taken against the petitioner until the next hearing scheduled for 24.07.2023. Respondent nos. 2 to 4 were deemed unnecessary parties and were removed from the case.