2024 (9) TMI 1142 - HC - GST

Discrepancies between the GSTR 3B return of the petitioner and the GSTR 1 statement - discrepancies arising out of alleged RCM supplies - HELD THAT - Since the finding was recorded by conflating a reply in respect of the credit notes with the RCM issue, the order calls for interference. Even otherwise, the petitioner has also placed on record a subsequent communication from the supplier to the effect that the error committed while making entries in the said supplier's GSTR 1 was subsequently rectified. In these facts and circumstances, the impugned order is not sustainable. The impugned order dated 26.12.2023 is set aside and the matter is remanded for reconsideration. The petitioner is permitted to file a reply to the RCM issue with in two weeks from the date of receipt of a copy of this order - Petition disposed off.

Summary

Issues:
1. Discrepancies between GSTR 3B return and GSTR 1 statement.
2. Discrepancies related to Reverse Charge Mechanism (RCM).
3. Interpretation of petitioner's reply by the respondent.
4. Sufficiency of petitioner's response to RCM issue.
5. Validity of the impugned order.

Analysis:
1. The petitioner received two notices regarding discrepancies in their returns. The first notice highlighted differences between GSTR 3B and GSTR 1, while the second notice focused on RCM supplies. The petitioner explained the GSTR discrepancies were due to unaccounted credit notes totaling Rs.1,94,948.

2. The petitioner's counsel argued that the respondent misunderstood the petitioner's response, mistaking it for a reply regarding RCM issues. The counsel presented evidence from the supplier indicating an error in the GSTR 1 statement related to RCM, which was subsequently rectified by an amended return.

3. The Government Advocate contended that the petitioner failed to address the RCM issue adequately and highlighted that the supplier's communication postdated the impugned order. The respondent's position was that the petitioner's reply was irrelevant to the RCM issue.

4. The court noted that the impugned order erroneously combined the petitioner's response on credit notes with the RCM matter, leading to an incorrect conclusion. Additionally, the supplier's subsequent clarification regarding the GSTR 1 error further undermined the validity of the order.

5. Consequently, the court set aside the impugned order and remanded the matter for reconsideration. The petitioner was granted two weeks to respond specifically to the RCM issue. The respondent was directed to provide a fair opportunity for the petitioner, including a personal hearing, and issue a fresh order within two months of receiving the petitioner's reply.

6. The writ petition was disposed of in favor of the petitioner, and connected miscellaneous petitions were closed without imposing any costs.