TaxTMI 
TaxTMI 
2026 (10) TMI 207
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of returns furnished by the appellant for the relevant period, a discrepancy was noticed by the proper officer between the tax liability declared in GSTR-3B and GSTR-1. Subsequently, a notice was issued to the appellant by the Proper Officer under the provisions of Section 73 of the GST Act. However, the appellant did not furnish any written reply to the said notice. Consequently, the Proper Officer proceeded to adjudicate the matter ex-parte and passed the order dated 22.08.2024, determining tax of Rs.1,92,902/-, penalty of Rs.40,000/- and interest of Rs.1,73,426/-, amounting to Rs. Rs.4,06,328/ -. 1.4 Aggrieved by the aforesaid adjudication order, the appellant preferred an appeal before the First Appellate Authority. 1.5 During the appellate proceedings, notices for hearing were issued to the appellant fixing the dates of hearing. Despite repeated opportunities, neither the appellant nor any authorized representative appeared for the hearing. No application seeking adjournment was also submitted. Accordingly, the appeal was taken up for ex-parte disposal on the basis of the material available on record and the grounds of appeal filed by the appellant. 1.6 The appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of the substantive merits of the ITC claim. 2.2 The appellant contended that, under Section 107(8) of the CGST Act, 2017, an effective opportunity of hearing was required to be afforded before disposal of the appeal. It is alleged that the appellate authority failed to properly consider the appellant's circumstances and contentions. 2.3 The appellant contended that the impugned appellate order does not properly identify the points for determination, examine the ITC claim, or record adequate reasons for rejecting the appeal. The appellant therefore alleges violation of Section 107(12), which requires a reasoned and speaking appellate order. 2.4 The appellant has relied upon decisions including Mukesh Kumar Singh, Sanjeet Kumar Bhagat, ITI Ltd. and R.A. Metal Finishers, to contend that tax authorities should not reject proceedings merely on procedural or technical grounds where substantive issues remain to be examined and relevant documents require consideration. 2.5 The appellant contended that the First Appellate Authority did not examine whether the ITC was actually eligible, whether the underlying purchases were genuine, whether the conditions of Section 16(2) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icer/Adjudicating Authority for fresh consideration, with clear directions. 3. Submission of Respondent 3.1 During the verification of return filed by the appellant following discrepancy were observed:- i. a difference of Rs.13,138.02 between the Input Tax Credit (ITC) claimed by the taxpayer in the monthly return GSTR-3B and the ITC reflected in GSTR-2A/2B. ii. the taxpayer had not reversed the ITC in accordance with Rules 42 and 43. S.No. Issue Table No. In GSTR-09 Taxable Value SGST CGST IGST Cess Total A B C D E F G H I 1 Total supplies 5N +10 -11 2,51,53,854.13 13,43,930.69 13.43,930.69 0.00 0.00 26.87.861.38 2 Exempt supplies 5C + 5D+5E+ 5F 19,74,267.00 0.00 0.00 0.00 0.00 0.00 3 Common input tax credit 60 + 13 - 12 0.00 11,63.007.01 11,63,007.01 0.00 0,00 23,26,014.02 4 ITC to be reversed (S.No. 2 /S.No. 1) (x) S.No. 3 0.00 91,281.69 91,281.69 0.00 0,00 1,82.563.38 5 ITC reversed as per GSTR-09 7C+7D 0.00 0.00 0.00 0.00 0.00 0.00 6 Difference/ Excess ITC claim....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2017 read with Rules 42 and 43 of the CGST Rules, 2017, and similarly, failed to comply with the statutory provisions 50 of the CGST Act, 2017. The taxpayer failed to discharge the statutory burden of establishing the admissibility of the disputed ITC under Section 155 of the CGST Act, 2017. 4. Findings and Discussion 4.1 We have carefully examined the impugned Order-in-Appeal dated 20.08.2025, the grounds raised in the present appeal, the order dated 22.08.2024 passed by the Proper Officer, and the judicial precedents relied upon by the appellant and the material available on record. 4.2 Upon examination of the appeal memorandum, the grounds raised by the appellant and the order passed by the First Appellate Authority, We find that the central issue involved in the proceedings was the difference in tax liability between GSTR-3B and GSTR-1 for the relevant period. 4.3 We find that the appellant lost opportunity to place any documentary evidence before appellate authority substantiate its contention regarding the said difference and to produce any supporting evidence or documentary proof explaining or reconciling the discrepancy between the tax liabilities reported in G....
X X X X Extracts X X X X
X X X X Extracts X X X X
....between GSTR-1 and GSTR-3B does not, by itself, establish actual short-payment; the authority must examine the taxpayer's explanation and reconciliation. 4.11 Similarly, the decision of Hon'ble Kerala High Court in Masany Construction Equipment Pvt. Ltd. v. State Tax Officer, WP(C) No. 33646 of 2024, dated 11.03.2025 is distinguishable on facts, as in the said case the specific explanation furnished by the petitioner regarding the data-entry error was discarded merely by stating that it was 'not convincing and non-explanatory', whereas in the present case the liability is required to be examined on the basis of the discrepancies noticed in the returns, the partial payment made by the appellant, and the absence of complete documentary reconciliation or supporting evidence.". 4.12 The ratio emerging from these decisions is that a return mismatch has to be examined factually and on the basis of reconciliation, and cannot be converted into a tax demand merely by adopting the differential figure without determining the reason for the difference. 4.13 The appellant has pleaded that the discrepancy was subsequently corrected and that the differential tax along wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned the legality and correctness of the demand arising from the alleged mismatch. 4.18 The appellant had raised specific grounds concerning the alleged reporting/calculation error, subsequent rectification and payment, procedural irregularities concerning ASMT-10 and DRC-01, multiple proceedings, interest and penalty, and applicability of Section 128A. 4.19 The impugned appellate order, however, principally proceeds on the basis that the appellant did not appear and did not furnish documentary evidence reconciling the difference between GSTR-1 and GSTR-3B. 4.20 In our considered view, such reasoning is not sufficient to finally determine all the material issues arising in the appeal. Particularly, where the appellant has pleaded that the differential tax was subsequently paid and the discrepancy was corrected, the authority is required to verify whether any tax actually remained unpaid. The absence of the appellant at the appellate hearing may affect the evidentiary weight of its unsubstantiated assertions, but it cannot convert an unverified return mismatch into an automatically established tax liability. 4.21 The appellant has also invoked Section 128A of the CGST Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e was subsequently discharged, the circumstances in which the discrepancy occurred, and whether the statutory conditions for imposition of penalty were satisfied. 4.28 Further, in view of the specific claim under Section 128A, the eligibility of the appellant for waiver of penalty also requires examination. Thus, the penalty cannot be conclusively sustained without determining the factual and statutory issues referred to above. 4.29 The appellant has also alleged that FORM GST ASMT-10 and DRC-01 were uploaded in the "View Additional Notices and Orders" section rather than the "View Notice and Order" section and that this resulted in the appellant not becoming aware of the proceedings in time. This contention also requires factual verification from the GST portal record. However, the mere allegation of improper uploading would not by itself invalidate the demand unless the appellant establishes that the manner of communication resulted in denial of the statutory opportunity or caused actual prejudice. 4.30 The appropriate authority should therefore verify the mode and date of service/communication of the relevant notice and determine whether the statutory requirements relat....