HC Sets Aside Ex Parte GST Assessment After Differential ITC Payment

Case Details: Tvl. Narumanam Spices vs. Superintendent of CGST & Central Excise - [2026] 187 taxmann.com 169 (Madras) 

Judiciary and Counsel Details

• D. Bharatha Chakravarthy, J.
• S. Karunakar for the Petitioner.
• R. Gowrishankar, Senior Standing Counsel for the Respondent.

Facts of the Case

The petitioner was subjected to an ex parte assessment for alleged excess input tax credit (ITC) arising from a mismatch between GSTR-3B and auto-populated GSTR-2A for the period 2021–22. A show cause notice (SCN) was issued; however, no reply was filed, resulting in an order confirming the differential ITC along with interest and penalty. The petitioner contended that the non-response was due to a lapse on the part of a part-time accountant and further submitted that the differential ITC had already been paid prior to the order through Form DRC-03. It was further submitted that an opportunity for an effective hearing, along with consideration of supporting documents, was necessary. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the impugned ex parte assessment could not be sustained in the absence of an effective opportunity of hearing, particularly when the assessee had already discharged the differential ITC liability prior to the passing of the order. It was observed that in view of the nature of discrepancies and the explanation offered for non-response, equitable considerations warranted that the assessee be permitted to present its submissions with supporting documents. The Court further held that since the entire amount had already been realised through DRC-03, no further precondition was required for granting relief. Accordingly, the Court set aside the impugned order and remanded the matter for fresh adjudication, after affording an effective opportunity of hearing under Section 16, read with Section 73, of the CGST Act and the Tamil Nadu GST Act.