No Demand to Be Raised Merely on Difference Between GSTR-1 & GSTR-3B Without Considering Reply Filed by Assessee

Case Details: Baccarose Perfumes and Beauty Products (P.) Ltd. v. State of Gujarat - [2025] 170 taxmann.com 803 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & D.N. Ray, JJ.
• Uchit N. Sheth for the Petitioner.
• Raj Tanna, AGP & Siddharth H. Dave for the Respondent.

Facts of the Case

The petitioner was having a Free Trade Warehousing Zone Unit in Kandla Special Economic Zone. It paid IGST through TR-6 challan on clearance of goods from Special Economic Zone Area to Domestic Tariff Area. However, the GST portal did not reflect tax paid with TR-6 challan on portal and demand was raised due to difference between Form GSTR-1 and GSTR-3B returns. It filed writ petition against the demand order and contended that it was not required to pay IGST on the goods supplied from SEZ unit to DTA.

High Court Held

The Honorable High Court noted that the supply from SEZ Unit to DTA is treated as import for DTA Unit and therefore the DTA unit is required to pay IGST and other applicable duties on filing of the Bill on Entry. The petitioner was not required to pay IGST on the goods supplied from SEZ unit to DTA. Moreover, the petitioner had not even claimed refund of IGST and the tax was paid through Treasury Challan (TR-6).

The Court further noted that as per provisions of Section 74, the authority is required to consider reply of assessee before passing any demand order. In the present case, the department passed the impugned order merely on account of difference between Form GSTR-1 and GSTR-3B. Therefore, the Court held that the demand order was liable to be set aside.