HC: Matter remanded as authorities failed to consider assessee’s explanation on GSTR-3B and GSTR-2A mismatch {Anjani Seeds and Fertilizers Depo vs. State of Gujarat [2025] 180 taxmann.com 348 (Gujarat)}
Facts
- Assessee (Anjani Seeds & Fertilizers Depo) received a show-cause notice alleging a mismatch between its GSTR-3B return and GSTR-2A / GSTR-1.
- Assessee submitted a detailed reply, explaining the discrepancies, providing reconciliation, supporting documents, and justification for the mismatches.
- Despite this reply, the adjudicating authority did not properly consider the assessee’s arguments.
- The authority passed a demand order based only on the mismatch data (i.e., without engaging with the substance of the reply)
Issue
Whether the demand raised purely on the basis of GSTR-3B / GSTR-2A (or GSTR-1) mismatch without giving due consideration to the assessee’s reply and without a proper hearing is lawful, and whether such a demand should be quashed or remanded.
Held
- The court set aside the demand order it found that the adjudicating authority’s failure to consider the assessee’s reply violated principles of natural justice.
- It remanded the matter back to the adjudicating authority for fresh consideration. On remand, the authority must:
- Give the assessee a proper hearing (including a personal hearing, if appropriate)
- Carefully examine the assessee’s reconciliation, documents, and explanations for the mismatches
- Apply its mind to whether the mismatch is genuine or due to system / data issues
- As a condition for the remand, the court directed that the assessee deposit 10% of the disputed tax demand.
- After deposit and fresh hearing, the authority may decide whether to confirm, reduce, or drop the demand based on merits.
