Subh Sri Agencies vs Deputy State Tax Officer

An order dated 09.06.2023 is challenged in this writ petition. The petitioner received a show cause notice dated 26.12.2022 in respect of disparity between the petitioner’s GSTR 1 and GSTR 3B returns. By reply dated 17.03.2023, the petitioner explained the disparity by pointing out that the error occurred on account of reflecting an amount of Rs.59,430.68/- each wrongly towards CGST and SGST instead of IGST. In spite of such reply, the impugned order was issued. Learned counsel for the petitioner invited my attention to the petitioner’s reply and pointed out that if amounts specified against output CGST and output SGST are added and compared with the disparity pointed out with regard to output IGST, the reason for disparity would be clear. In spite of providing such reply, learned counsel points out that the respondent confirmed the tax demand. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the respondent and submits that the impugned order is dated 09.06.2023 and that the period of limitation for filing an appeal long expired. Therefore, he submits that no case is made out for interference.

The petitioner, in this writ petition, has challenged the order dated 09.06.2023. This challenge arises from a show cause notice that was issued to the petitioner on 26.12.2022, wherein there was a noted disparity between the returns filed by the petitioner under GSTR 1 and GSTR 3B. The petitioner, through a reply dated 17.03.2023, provided an explanation for this disparity, stating that the error occurred due to mistakenly reflecting an amount of Rs.59,430.68/- each towards CGST and SGST, when it should have been reflected towards IGST. Despite this detailed explanation and clarification, the impugned order was nevertheless issued against the petitioner. The learned counsel for the petitioner highlighted the explanation provided in the reply and emphasized that if one were to add the amounts specified against output CGST and output SGST, and then compare these sums with the amount mentioned under output IGST, the cause of the disparity would be evident. Despite presenting this clear explanation, the respondent proceeded to confirm the tax demand against the petitioner. Mr. T.N.C.Kaushik, the learned Additional Government Pleader who is representing the respondent, acknowledged the receipt of the notice and made submissions in response. He pointed out that the impugned order in question is dated 09.06.2023 and noted that the period of limitation for filing an appeal against this order has long expired. Consequently, he argued that no valid grounds exist for the court to interfere with the impugned order. The learned counsel for the petitioner, however, continued to press the point that the explanation provided should have been sufficient to clarify the discrepancy and that the confirmation of the tax demand was unjust and unwarranted. The petitioner’s counsel urged the court to take into consideration the detailed explanation provided in the reply dated 17.03.2023 and to recognize that the impugned order was issued despite the petitioner’s compliance with the requirement to explain the noted disparity. The case thus presents a situation where the petitioner is challenging the validity of the order issued on 09.06.2023, arguing that the clarification provided in response to the show cause notice should have been adequate to address the concerns raised by the tax authorities, and that the confirmation of the tax demand represents an unjust and erroneous decision by the respondent.

On examining the petitioner’s reply dated 17.03.2023, it appears prima facie that the disparity was on account of wrongly specifying higher amounts in the GSTR 3B returns as regards output CGST and output SGST. This aspect was not duly taken note of while issuing the impugned order. At the same time, it should be noticed that the impugned order was issued in June 2023 and the petitioner has approached this Court belatedly. On instructions, learned counsel for the petitioner agrees to remit 10% of the disputed tax demand as a condition for remand. In the facts and circumstances set out above, the impugned order calls for interference albeit by putting the petitioner on terms. Therefore, the impugned order dated 09.06.2023 is quashed subject to the condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. Upon being satisfied that the above-mentioned amount was received, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of a copy of this order. W.P.No.8451 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.9410 and 9411 of 2024 are closed. On further examining the petitioner’s reply dated 17.03.2023, it becomes evident that the disparity highlighted by the petitioner arose due to an error in reflecting higher amounts in the GSTR 3B returns, specifically in relation to output CGST and output SGST. This crucial aspect, however, was not given due consideration when the impugned order was issued. Additionally, it is important to note that the impugned order was issued in June 2023, and the petitioner has only now approached this Court, which indicates a delay in seeking judicial intervention. The learned counsel for the petitioner, following instructions, has agreed to remit 10% of the disputed tax demand as a prerequisite for remanding the case. Given the facts and circumstances outlined above, it is clear that the impugned order warrants interference, albeit on specific terms. Consequently, the impugned order dated 09.06.2023 is quashed, provided that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. Once it is confirmed that the aforementioned amount has been received, the respondent is directed to afford the petitioner a reasonable opportunity, including a personal hearing, and subsequently issue a fresh order within two months from the date of receipt of a copy of this order. As a result, W.P.No.8451 of 2024 is disposed of based on the aforementioned terms, with no order as to costs. Consequently, W.M.P.Nos.9410 and 9411 of 2024 are closed. This order reflects a careful consideration of the petitioner’s reply dated 17.03.2023, which prima facie indicates that the disparity arose from erroneously reflecting higher amounts in the GSTR 3B returns concerning output CGST and output SGST. This critical factor was overlooked when the impugned order was issued. It is also significant to observe that the impugned order was issued in June 2023, and the petitioner has approached this Court only after a considerable delay. However, the learned counsel for the petitioner, following instructions, has agreed to remit 10% of the disputed tax demand as a condition for remand. In light of the facts and circumstances mentioned above, the impugned order requires interference, albeit with specific conditions. Accordingly, the impugned order dated 09.06.2023 is quashed, subject to the condition that the petitioner remits 10% of the disputed tax demand within fifteen days from the date of receipt of a copy of this order. Upon confirming receipt of the aforementioned amount, the respondent is instructed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within two months from the date of receipt of a copy of this order. Therefore, W.P.No.8451 of 2024 is disposed of on the above terms, with no costs. Consequently, W.M.P.Nos.9410 and 9411 of 2024 are closed.

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