GST demand on GSTR mismatch quashed where authority ignored explanation and failed to give reasoned findings.

A GST demand under Section 74 could not be sustained merely on a mismatch between GSTR-1 and GSTR-3B where tax on SEZ clearance to DTA had been paid through challan and the adjudicating order gave no reasoned consideration to the reply. The Court found that the order rested on a bare assertion that no evidence was furnished, without dealing with the explanation or the statutory incidence of tax in the SEZ-to-DTA transaction chain. The impugned demand was therefore quashed for want of proper reasoning and failure to consider the assessee's response.

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Issues: Whether a demand raised under Section 74 of the goods and services tax law could be sustained merely on the basis of mismatch between GSTR-1 and GSTR-3B, when the tax relating to clearance of goods from an SEZ to DTA had been paid through Treasury Challan and the adjudicating order contained no reasoned consideration of the reply.

Analysis: The petition challenged an order raising demand for alleged short payment arising from the difference between GSTR-1 and GSTR-3B. The record showed that the goods were cleared from an SEZ to the DTA, and the tax payment was made through TR-6 challan. The order under challenge did not disclose any real reasoning for invoking Section 74 and merely contained a bare assertion that no reply or evidence had been furnished. The materials also indicated that, in the statutory scheme governing SEZ clearances, the incidence of IGST and other applicable customs duties falls on the DTA recipient on import into the DTA, and the reply filed by the petitioner was not properly dealt with before confirming the demand.

Conclusion: The demand was not sustainable, and the impugned order was liable to be quashed.

Final Conclusion: The writ petition succeeded and the adjudicatory demand order was set aside for want of proper reasoning and due consideration of the petitioner's explanation.

Ratio Decidendi: A tax demand cannot be upheld on a bare mismatch in returns when the adjudicating authority fails to give a reasoned decision and ignores the assessee's explanation, particularly where the statutory incidence of tax lies elsewhere in the transaction chain.

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