Opportunity for Fresh Hearing in GST Assessment on Turnover Mismatch

Case Details

• Case Title: Tvl. R. Jayaramakrishnan v. Deputy State Tax Officer-1 & Anr.

• Court: Madras High Court

• Petition No.: W.P. No. 36499 of 2024 with W.M.P. Nos. 39344–39346 of 2024

• Date of Judgment: 09.12.2024

• Category of Dispute: Input Tax Credit / Assessment Dispute (Mismatch of Turnover in Returns and 26AS)

• Relevant Sections:

  • Section 73 & 74 of the CGST Act, 2017 (Determination of tax not paid/short paid)

  • Section 169 of the CGST Act, 2017 (Service of notice)

  • Section 203AA of Income Tax Act, 1961 (Form 26AS statement)

  • Rule 142 of CGST Rules, 2017 (Notice and order for demand of amounts)

Facts of the Case (Paras 2–5)

1. The petitioner, a Goods Transport Agency, was registered under GST but his earlier registration was cancelled (20.09.2018) and a new GSTIN was issued effective 19.09.2019.

2. Returns (GSTR-1 and GSTR-3B) were filed for FY 2019–20.

3. A show cause notice in DRC-01 dated 22.08.2023 and personal hearing on 22.09.2023 were issued, but the petitioner neither replied nor attended.

4. The assessment order dated 19.06.2024 was passed imposing CGST ₹6,93,900 and SGST ₹6,93,900, along with interest and penalty, based on turnover mismatch with Form 26AS.

5. The petitioner argued notices/orders were uploaded only on the GST portal under “Additional Notices & Orders” and not served properly (Section 169 violation).

Questions in Consideration (Paras 4–6)

• Whether the assessment order passed without proper service of notice and without effective opportunity of hearing is sustainable?

• Whether the petitioner should be given a fresh opportunity subject to deposit of part of the disputed tax?

Observations of the Court (Paras 6–8)

1. Court noted petitioner relied on M/s. K. Balakrishnan, Balu Cables v. AC, GST & Central Excise (W.P. (MD) No.11924/2024, dated 10.06.2024), where similar matter was remanded subject to 25% deposit.

2. The petitioner was willing to deposit 25% of disputed tax and sought an opportunity to explain the mismatch.

3. Respondent’s counsel raised no serious objection to granting such relief.

Judgment of the Court (Para 8)

• The impugned order dated 19.06.2024 was set aside.

• Directions issued:
  a) Petitioner must deposit 25% of disputed tax within 2 weeks.
  b) The impugned assessment shall be treated as show cause notice.
  c) Petitioner to file objections with documents within 4 weeks.
  d) Respondents to pass fresh order after hearing.
  e) If deposit/objections not filed in time, the original assessment order shall stand revived.

Between Fine Lines

This judgment underscores that GST assessments passed without effective notice or hearing can be set aside. Courts may remand such cases for reconsideration, balancing taxpayer’s rights with revenue’s interest by insisting on part-payment (25%). Businesses facing mismatch issues between GST returns and Income Tax 26AS must proactively reply to notices. The ruling provides relief against ex parte orders but also enforces conditional compliance.

Summary of Referred Cases

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