Tax Order Overturned: Input Tax Credit Restored and Procedural Fairness Mandated for Taxpayer Challenging GSTR Mismatch

HC allowed the writ petition challenging the tax order dated 20.12.2023. The court set aside the impugned order regarding GSTR 3B returns and GSTR 2A mismatch, directing respondent to reconsider the matter within three months. HC mandated unblocking of input tax credit and providing reasonable opportunity for personal hearing to the petitioner.

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Issues Involved:
Challenge to order dated 20.12.2023 in W.P.No.4966 of 2024, compliance with principles of natural justice, mismatch between GSTR 3B returns and GSTR 2A, availability of requisite certificates, setting aside the impugned order, remand for reconsideration, unblocking input tax credit.

Compliance with Principles of Natural Justice:
The petitioner challenged the order dated 20.12.2023 in W.P.No.4966 of 2024, citing that the show cause notice was issued on the same date as the audit report, raising concerns about the mismatch between GSTR 3B returns and auto-populated GSTR 2A. The petitioner argued that the issue had already been addressed under Section 74 proceedings and requested a reconsideration, mentioning the ability to prove the eligibility of Input Tax Credit (ITC) with the necessary certificates. The Additional Government Pleader contended that natural justice principles were followed, starting from the audit-based show cause notice on 29.09.2023, with subsequent opportunities for personal hearings and due consideration of the petitioner's response.

Mismatch Between GSTR 3B Returns and GSTR 2A:
A comparison of the impugned order dated 20.12.2023 with another challenged order dated 30.12.2023 in W.P.No.4974 of 2024 revealed a common issue regarding the mismatch between the petitioner's GSTR 3B returns and auto-populated GSTR 2A. This similarity prompted the need for reconsideration of the impugned order. The petitioner's counsel emphasized the availability of certificates as per Circular No.183, supporting the claim that only eligible ITC was availed. Consequently, the court set aside the impugned order and remanded the matter to the respondent for a fresh decision within three months, following a reasonable opportunity for the petitioner, including a personal hearing.

Unblocking Input Tax Credit:
In light of setting aside the impugned order, the court directed the respondent to take necessary steps to unblock the input tax credit of the petitioner in the electronic credit ledger. The writ petitions were disposed of based on these terms, with connected miscellaneous petitions closed and no costs imposed on any party involved in the proceedings.

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