HC Remands Case as GSTR-3B vs 2A Mismatch Reply Not Considered

Case Details: Anjani Seeds and Fertilizers Depo vs. State of Gujarat - [2025] 180 taxmann.com 348 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Pranav Trivedi, JJ.
• Uchit N Sheth, Adv. for the Petitioner.
• Abhishek Jain, Assistant Government Pleader for the Respondent.

Facts of the Case

The petitioner, a proprietorship engaged in trading chemical fertilizer and cement, was issued DRC-01A and a show-cause notice in Form GST DRC-01 proposing a demand for alleged differences between Form GSTR-3B and Form GSTR-2A. The petitioner submitted a detailed reply explaining that supplier credit notes were adjusted by increasing the output tax liability rather than reducing the input tax credit, resulting in no actual discrepancy or revenue impact. Despite this, demand was confirmed without addressing the petitioner’s explanation, and the subsequent appeal was rejected as time-barred. The matter was placed before the High Court.

High Court Held

The High Court held that non-consideration of the petitioner’s specific explanation on the Form GSTR-3B and Form GSTR-2A difference vitiated adjudication for breach of Audi alteram partem, as a fair hearing requires meaningful consideration of the reply. The court noted that Section 16 read with Section 107 of the Gujarat GST Act provides statutory remedies through appeal, but procedural fairness must be ensured before imposing a demand. Consequently, both the adjudication and appellate orders were quashed, and the matter was remanded for de novo decision, directing the authorities to provide the petitioner a proper opportunity of hearing before passing any fresh order.