GST demand of Rs. 64 crore quashed due to excessive assessment on filing errors, matter remanded with Rs. 5 crore deposit condition

HC quashed GST demand order dated 21.12.2023 involving disputed liability of Rs. 64,34,49,053 for short payment on unreconciled sales turnover and ITC reversal issues. Court found demand excessive based on filing errors in GSTR 3B returns. Matter remanded for reconsideration with condition that petitioner deposit Rs. 5 crore within three weeks. Assessing officer directed to provide reasonable opportunity including personal hearing and issue fresh order within three months of receiving deposit amount.

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Issues involved: Challenge to order in original u/s assessment period 2017-18.

First Issue: Short payment of GST on unreconciled sales turnover

The petitioner disclosed the same turnover thrice in GSTR 3B return due to initial year of GST implementation. The assessing officer held against the petitioner for lethargy in maintaining accounts despite rectification in GSTR 9 annual return.

Second Issue: Non-reversal of Input Tax Credit (ITC) on account of rejection

Petitioner faced defective goods situation and had options to reverse ITC either by requesting credit note from supplier or returning goods under invoice. Circular No. 72/46/2018-GST allowed returning goods as fresh supply.

Third Issue: Reversal of ITC by petitioner

Petitioner reversed ITC of almost Rs. 28 crore, but assessing officer disregarded this fact leading to unsustainable tax demand of about Rs. 115 crore out of total demand of Rs. 117 crore.

Fourth Issue: Objection to impugned order

Respondent's counsel argued that impugned order considered petitioner's reply and provided personal hearing, hence no interference is warranted under Article 226 of the Constitution of India.

Conclusion

The High Court quashed the impugned order dated 21.12.2023 and remanded the matter for reconsideration with a condition for the petitioner to remit Rs. 5 crore towards disputed tax demand within three weeks. Assessing officer directed to provide a reasonable opportunity to petitioner and issue a fresh order within three months from the date of receipt of the amount.

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