Case Title: A.R. Steels vs. Deputy Commissioner of Commercial Taxes (Audit)-5.7, Bengaluru & Anr.
Court: High Court of Karnataka, Bengaluru
Petition No.: W.P. No. 17451 of 2024 (T-RES)
Category: Input Tax Credit – Difference between GSTR-3B and GSTR-2A
Date of Judgment: 03 April 2025
Relevant Sections: Section 74(9) of the CGST Act, 2017; Rule 142 of the CGST Rules, 2017
Relevant Circular: Circular No. 183/15/2022-GST dated 27.12.2022
Facts (Paras 3–4):
A.R. Steels, a proprietary concern, filed GSTR-3B for FY 2018-19 and FY 2019-20. The department noticed discrepancies between Form GSTR-3B and Form GSTR-2A and issued intimations dated 31.01.2023 followed by show-cause notices. The petitioner, claiming non-receipt of the notices due to bona fide reasons, did not respond. Consequently, the Deputy Commissioner passed ex-parte adjudication orders under Section 74(9) and issued DRC-07 summaries and DRC-13 recovery notices. The petitioner sought quashing of these orders, citing violation of principles of natural justice and non-consideration of CBIC Circular 183/15/2022-GST (clarifying treatment of ITC mismatch between 3B and 2A).
Questions Before the Court (Paras 1–2):
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Whether ex-parte orders under Section 74(9) could be sustained when the petitioner did not receive or respond to the show-cause notices.
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Whether the adjudicating authority erred by not applying the CBIC Circular No. 183/15/2022-GST.
Observations (Paras 5–6):
Justice S.R. Krishna Kumar observed that the petitioner’s non-response to the show-cause notices was due to bona fide and unavoidable circumstances. The orders were admittedly ex-parte, and the Court stressed the need for a justice-oriented approach to provide one more opportunity to the assessee. The non-consideration of Circular 183/15/2022-GST further justified remand since it laid down parameters for verifying mismatches between 3B and 2A before denying ITC.
Judgment (Para 7):
The Court allowed the writ petition, set aside all impugned adjudication and recovery orders (dated 31.05.2023, 06.01.2024 & 06.06.2024), and remitted the matter to the Deputy Commissioner for fresh consideration strictly in accordance with law and the said Circular. The petitioner was directed to appear on 28 April 2025 with a detailed reply and supporting documents. Failure to appear would automatically revive the earlier orders.
Summary of Cases Referred
| Sl. No. | Case / Circular | Citation / Reference | Key Principle / Verdict |
|---|---|---|---|
| 1 | Circular No. 183/15/2022-GST dated 27.12.2022 | CBIC (Govt. of India) | Clarifies that differences between GSTR-2A and 3B should be verified and taxpayers given due opportunity before denial of ITC. Applied by the Court as mandatory guidance for re-adjudication. |
Between Fine Lines:
This judgment underscores that ex-parte GST demands cannot be sustained when show-cause notices are not effectively served and authorities must follow CBIC Circular 183/15/2022-GST before disallowing ITC based on 2A-3B differences. For taxpayers, it reaffirms that procedural lapses or non-receipt of notice can justify remand and rehearing if substantiated.
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