Facts of the Case

The petitioner, Tvl. Sivasakthi Amman, represented by its proprietor T. Sermathurai, approached the Madurai Bench of the Madras High Court under Article 226 of the Constitution of India.

The petitioner challenged the assessment order dated 17.12.2025 for Tax Period 2021-22 and sought a Writ of Certiorarified Mandamus to:

  • call for the records relating to the impugned order;
  • quash the order as illegal;
  • quash it as being without jurisdiction;
  • quash it for gross violation of the principles of natural justice; and
  • direct the respondent to redo the assessment afresh after providing an opportunity of personal hearing in accordance with the GST Act, 2017.

The impugned order was expressly an assessment order passed under Section 73 of the TNGST Act, 2017.

The assessment was completed ex parte because the petitioner had not utilised the opportunities provided during the proceedings.

The detailed three-column table on page 3 of the judgment identifies two separate discrepancies:

  1. Input mismatch – GSTR-3B vs GSTR-2A
  2. ITC to be reversed on non-business transactions and exempted goods

The same table separately records:

  • the assessee’s explanation on merits; and
  • the explanation for not availing the opportunity.

This page 3 table is central to understanding the precise scope of the dispute.

Issues Involved

The principal issues involved were:

  1. Whether the ex parte assessment order dated 17.12.2025 passed under Section 73 of the TNGST Act, 2017 could be sustained without considering the petitioner’s proposed reply and supporting documents.
  2. Whether there was any actual excess claim of ITC arising from the mismatch between GSTR-3B and GSTR-2A.
  3. Whether the petitioner should be permitted to submit connected records in accordance with Circular No. 183/15/2022 dated 27.12.2022.
  4. Whether compliance with the said circular would affect the alleged liability arising from the GSTR-3B vs GSTR-2A mismatch.
  5. Whether ITC was liable to be reversed on the ground of non-business transactions.
  6. Whether ITC was liable to be reversed in relation to exempted goods.
  7. Whether the petitioner had in fact claimed ITC only on goods related to its business.
  8. Whether the petitioner had maintained taxable goods and exempted goods separately in its books of account.
  9. Whether the petitioner’s explanation that it had no knowledge of the GST Portal-uploaded order and that its accountant had not informed it justified another opportunity.
  10. Whether equitable relief should be conditioned upon deposit of 25% of the disputed tax amount.
  11. Whether any bank account attachment made pursuant to the impugned assessment should continue after the assessment order was set aside.

Petitioner’s Arguments

The petitioner advanced separate explanations for each discrepancy.

1. GSTR-3B vs GSTR-2A Input Mismatch

The petitioner contended that:

There is no excess claim of ITC under Section 16 of the Act.

The petitioner stated that it was ready to:

  • file a detailed reply;
  • submit connected records; and
  • comply with the requirements contemplated under Circular No. 183/15/2022 dated 27.12.2022.

The petitioner further contended that once the requirements of the circular were complied with, there would be no liability under the GST Act.

Thus, the petitioner’s case was that the mismatch required proper reconciliation and verification of supporting documents rather than continuation of an ex parte determination.

2. ITC Reversal on Non-Business Transactions and Exempted Goods

The petitioner contended that:

  • ITC had been claimed only on related business goods;
  • ITC had not been claimed on exempted goods;
  • taxable goods and exempted goods were separately maintained in the books of account; and
  • therefore, according to the petitioner, the question of reversal of ITC did not arise.

This explanation is expressly recorded in the second row of the page 3 table.

3. Reason for Non-Participation

The petitioner explained that:

  • the impugned order had been uploaded on the GST Portal without its knowledge; and
  • the accountant had not informed the petitioner about the impugned order.

The same reason was recorded in relation to the second discrepancy by use of “do”/ditto in the judgment table.

The petitioner therefore sought another opportunity to place its reply and documentary records before the assessing authority.

Respondent’s Arguments

The respondent was represented by the learned Government Standing Counsel.

The judgment records that the High Court heard:

  • learned counsel for the petitioner; and
  • learned Government Standing Counsel for the respondent.

However, the six-page order does not separately reproduce any detailed independent counter-submissions made by the respondent concerning:

  • the alleged GSTR-3B vs GSTR-2A mismatch;
  • the petitioner’s assertion that there was no excess ITC;
  • the applicability or satisfaction of Circular No. 183/15/2022;
  • the alleged non-business transactions;
  • exempted goods;
  • separate maintenance of taxable and exempted goods in the books of account; or
  • the petitioner’s explanation concerning the accountant.

Therefore, to preserve the meaning of the judicial record, no additional departmental argument should be attributed to the respondent beyond what is expressly recorded.

Court Order / Findings

The Madras High Court considered:

  • the nature of the discrepancies;
  • the explanation provided by the assessee; and
  • the reason given before the Court for not availing the earlier opportunity.

The Court held that an opportunity could be granted to the assessee to:

  • present its submissions; and
  • produce relevant supporting documents before the respondent assessing officer.

The Court observed that it had been extending such opportunities on equitable grounds, though under appropriate conditions.

Accordingly, the Court granted a fresh opportunity subject to the condition that the petitioner deposit 25% of the disputed tax amount.

The writ petition was allowed on the following terms:

  • within four weeks from receipt of a web copy of the order, the petitioner shall deposit 25% of the disputed tax amount with the respondent;
  • the petitioner need not wait for a certified copy of the order;
  • upon such deposit, the impugned order dated 17.12.2025 shall stand set aside;
  • the matter shall stand remanded back to the respondent;
  • the assessee shall appear before the respondent without fail;
  • the assessee shall submit its reply and documents in support of its claim;
  • the respondent shall reconsider the matter afresh and pass orders in accordance with law;
  • because the impugned assessment order is set aside, any attachment of the bank account made pursuant to the impugned order shall stand raised;
  • no costs were awarded; and
  • the connected miscellaneous petition was closed.

The conditional deposit and remand directions are set out on page 4, while closure of the proceedings is completed on page 5 of the judgment.

Important Clarification

This judgment does not finally hold that the petitioner had no excess ITC claim.

It also does not conclusively determine that:

  • every GSTR-3B vs GSTR-2A mismatch is legally irrelevant;
  • Circular No. 183/15/2022 automatically extinguishes GST liability;
  • the petitioner has already complied with all requirements of the circular;
  • ITC was actually claimed only on business-related goods;
  • no ITC was claimed on exempted goods;
  • the petitioner had conclusively maintained taxable and exempted goods separately in its books;
  • no proportionate ITC reversal was legally required; or
  • the impugned demand was incorrect on merits.

Those statements form part of the assessee’s explanation on merits, as recorded in the judgment.

The High Court did not finally adjudicate those factual and legal contentions. Instead, it:

  • granted a fresh opportunity;
  • permitted filing of replies and supporting documents;
  • directed reconsideration by the assessing authority; and
  • imposed a 25% disputed-tax deposit condition.

Therefore, this ruling is a conditional remand for fresh adjudication, not a final declaration of ITC eligibility.

A further important clarification is that the Court did not expressly hold that non-information by an accountant automatically invalidates a GST assessment. The explanation was considered together with:

  • the nature of the discrepancies;
  • the assessee’s proposed merits defence; and
  • the equitable basis for granting another opportunity.

Sections Involved

Section 73 of the TNGST Act, 2017:
The impugned assessment order dated 17.12.2025 was expressly passed under this provision.

Section 16 of the GST Act – Input Tax Credit:
The petitioner expressly contended that there was no excess claim of ITC under Section 16.

Article 226 of the Constitution of India:
The writ petition was filed under this provision seeking a Writ of Certiorarified Mandamus.

Circular No. 183/15/2022 dated 27.12.2022:
The petitioner relied upon this circular in relation to the GSTR-3B vs GSTR-2A mismatch and stated that it was prepared to submit connected records in accordance with it.

Important Provision Clarification on ITC Reversal

The judgment describes the discrepancy as:

“ITC to be reversed on non-business transactions and exempted goods.”

However, the six-page order does not expressly identify a separate statutory section number for this reversal issue.

Therefore, although broader GST law may involve provisions governing business/non-business use and exempt supplies, no unmentioned provision should be presented as having been expressly cited or adjudicated in this judgment.

Link to download the order -

https://mytaxexpert.co.in/uploads/1783061408_366compressed.pdf 

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