Fair hearing in GST mismatch disputes requires consideration of the taxpayer's explanation before adverse adjudication is sustained.

An adjudication based on an alleged mismatch between Form GSTR-3B and Form GSTR-2A could not be sustained where the taxpayer's explanation about credit note accounting and the corresponding input tax credit reversal was not dealt with on merits. The High Court held that the incomplete consideration of the defence was inconsistent with a fair hearing, so the orders were set aside and the matter remanded for fresh de novo adjudication after granting the taxpayer an opportunity of hearing.

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Issues: Whether the demand and appellate orders based on the alleged discrepancy between Form GSTR-3B and Form GSTR-2A could be sustained when the taxpayer's explanation was not considered and the matter required fresh adjudication.

Analysis: The petitioner had explained that the alleged mismatch arose from the manner in which credit notes were accounted for and that there was no real difference in tax liability if the input tax credit reversal and corresponding output tax treatment were properly understood. The order-in-original did not deal with this explanation in substance. In such circumstances, the adjudication was found to be incomplete on merits and inconsistent with the requirement of a fair hearing. The Court therefore found it appropriate to set aside the orders and send the matter back for fresh consideration after granting an opportunity of hearing.

Conclusion: The impugned orders could not be sustained and the matter was remanded for fresh de novo adjudication after hearing the petitioner.

Final Conclusion: The taxpayer obtained relief by way of quashing of the orders and remand, while the substantive tax controversy was left open for reconsideration by the adjudicating authority.

Ratio Decidendi: An adjudication order cannot be sustained where the material explanation of the affected party is not dealt with, and the matter must be remitted for fresh decision after affording a proper opportunity of hearing.

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