Input tax credit reconciliation must be allowed with protective terms; ex parte ITC denials remitted for fresh adjudication.

Petitioner challenged ex parte assessment orders denying or quantifying input tax credit due to alleged belated claim and mismatch between GSTR-3B and supplier-uploaded GSTR-2A; the article recommends allowing a fresh opportunity to respond and to substantiate ITC through reconciliation and supporting records, while imposing protective terms to prevent revenue prejudice. Operative effect: the impugned ex parte orders are set aside and the matters remitted for fresh adjudication on merits, subject to the petitioner appearing on the specified date and depositing 10% of the disputed demand within three weeks before further proceedings, with all substantive contentions reserved.

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Issues: Whether the ex parte orders of assessment/adjudication under Section 73 of the KGST/CGST Acts for the financial year 2019-2020 rejecting or quantifying input tax credit (ITC) on grounds of belated claim and discrepancies between GSTR-3B and GSTR-2A should be set aside and the matters remitted for the petitioner to file reply, subject to protective terms to prevent revenue loss.

Analysis: The impugned orders were passed ex parte and involve disputed ITC arising from alleged mismatch between ITC shown in GSTR-3B and supplier-uploaded GSTR-2A and from a claim characterised as belated under Section 16(4) of the Karnataka Goods and Services Tax Act, 2017. The petitioner offered to undertake reconciliation by producing supporting material and to make an interim payment to safeguard revenue. Given the reconciliation issue and the petitioner's undertaking to cooperate and to deposit a portion of the disputed demand, it is appropriate to permit a fresh opportunity to reply to the show-cause notices and to decide the ITC claim on merits while ensuring no immediate revenue loss.

Conclusion: The ex parte Orders are set aside and the matters remitted to enable the petitioner to file replies and substantiate reconciliation of ITC; the petitioner is placed on terms to appear on the specified date and to satisfy 10% of the disputed demand within three weeks prior to proceeding further, with all contentions kept open.

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