GSTR-1 vs GSTR-3B Mismatch Demand Set Aside | HC

Case Details: Sri Saru Pharma vs. Assistant Commissioner (ST), Coimbatore - [2026] 182 taxmann.com 766 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• J. Madhusuthanan for the Petitioner.
• Mrs K. Vasanthamala, Govt. Adv. for the Petitioner.

Facts of the Case

The petitioner issued a show cause notice under Section 73 of the CGST Act alleging a mismatch between the outward supplies declared in GSTR-1 and the liability declared in GSTR-3B. It was noted in the notice that the liability reported in GSTR-3B was lower than that reflected in GSTR-1. It was contended that the mismatch resulted from an inadvertent error. It was submitted that the error had been rectified in subsequent GSTR-3B filings, but because annual filings are prepared based on GSTR-1, the mismatch persisted. The petitioner requested another opportunity to submit documents and offered to deposit 25% of the disputed tax. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned order confirming the demand could not be sustained without affording the petitioner a chance to substantiate the explanation and rectify the mismatch. It was observed that the petitioner’s explanation of a genuine clerical error was consistent with the view adopted in similar cases. The Court quashed the impugned order and remitted the matter to the jurisdictional officer under CGST to pass a fresh order after considering the petitioner’s detailed reply and supporting documents. It was directed that the petitioner should deposit 25% of the disputed tax in cash from the petitioner’s electronic cash register within 30 days as a precondition for fresh adjudication.