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 demand. Despite the petitioner's explanations and submissions, the authority issued a show cause notice demanding Rs.55,39,99,352/-. The court found that the petitioner's clarifications were not duly considered and directed the authority to pass a reasoned order on the show cause notice after taking into account the petitioner's responses and averments. The matter was listed for further hearing.

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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.

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