Order to Be Set Aside as Assessee’s Explanation for Mismatch in GSTR-1 and GSTR-3B Was Dismissed Without Proper Reasoning | HC

Case Details: Masany Construction Equipment (P.) Ltd. vs. State Tax Officer - [2025] 172 taxmann.com 661 (Kerala)

Judiciary and Counsel Details

• Bechu Kurian Thomas, J.
• P. Raghunathan, Premjit Nagendran, M. Shylaja, Rishal. K, Advs. for the Petitioner.
• P.R. Sreejith, Adv. & Smt. Dr. Thushara James, Senior Government Pleader for the Respondent.

Facts of the Case

The Revenue issued a show cause notice under Section 73 of the CGST Act, 2017, alleging a mismatch between the assessee’s GSTR-1 and GSTR-3B for Financial Year 2019-2020. The assessee explained that the discrepancy arose due to an entry error in GSTR-1, later corrected in GSTR-3B, with no tax liability as sufficient ITC was available. However, the reply was summarily rejected as ‘not convincing and non-explanatory’ leading to an adverse order, which the assessee challenged before the High Court on grounds of violation of natural justice.

High Court Held

The Hon’ble High Court held that dismissing a reply with a mere sentence does not constitute a speaking order. The officer was obligated to verify the bona fides of the discrepancy and examine relevant records. The failure to provide proper reasoning, despite an opportunity for a hearing, rendered the order unsustainable. Accordingly, the order was set aside, and the matter remanded for reconsideration with a fresh opportunity of hearing.