GSTR-1 vs GSTR-3B turnover mismatch linked to third-party GSTR-7 TDS reporting; reassessment order set aside for fresh hearing

In a writ challenging an assessment premised on mismatch between GSTR-1 and GSTR-3B, the HC held that the discrepancy appeared linked to tax deducted at source reported by a third party in GSTR-7 and therefore required an explanation from the assessee. Applying principles of natural justice, the HC found the assessee was entitled to a fair opportunity to clarify the turnover variance noted in ASMT-10 before any adverse determination. The HC declined to relegate the assessee to the appellate remedy at this stage because the matter required proper primary consideration on merits. The impugned order was set aside and the matter remitted for a fresh merits order within three months.

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Issues involved:
The issues involved in the judgment are related to an aggrieved petitioner challenging an Assessment Order due to alleged discrepancies in the communication of notices under the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017.

Impugned Assessment Order:
The petitioner contested an Assessment Order dated 08.05.2023, which followed notices in Form GST ASMT-10 dated 21.03.2022, Form GST DRC-01A dated 19.08.2022, and Form GST DRC-01 dated 27.10.2022. The petitioner failed to respond to the latter two notices, leading to the issuance of the impugned Assessment Order.

Communication of Notices:
The petitioner claimed that recent notices were hosted in a different section of the Dashboard, causing them to miss Form GST DRC-01A and Form GST DRC-01 notices. The respondent argued that proper communication was made in accordance with Section 169 of the TNGST Act, 2017, and suggested the petitioner seek remedy through the Appellate Authority.

Discrepancy in Turnover Details:
The court noted a discrepancy between the details in Form GSTR-1 and Form GSTR-3B, specifically related to deductions declared in Form GSTR-7. The petitioner was required to explain this discrepancy, and the court acknowledged the need for a fair chance to address the issue.

Court Decision:
The court set aside the impugned order, remitting the case back to the respondent for a fresh order within three months. The respondent was directed to address the issue of hosting information in the Dashboard properly. The court decided not to direct the petitioner to approach the Appellate Authority, allowing for a proper consideration of the matter.

Conclusion:
The court's decision favored the petitioner, granting them an opportunity to address the discrepancies in the Assessment Order. The judgment emphasized the importance of proper communication of notices and the need for a fair chance to rectify any discrepancies in turnover details.

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