Facts of the Case

The petitioner, Tvl. Cirangamalai Veeranan, challenged the assessment order dated 12.09.2025 passed by the State Tax Officer for the assessment year 2023-24 under Section 73 of the GST law.

The impugned assessment was made ex parte on the ground that the petitioner had not utilised the opportunities provided during the assessment proceedings.

The principal discrepancy concerned a turnover difference between Form GSTR-3B and Form GSTR-7. According to the assessment proceedings, an alleged turnover of Rs. 49,34,750/- was reflected against the petitioner.

The petitioner’s case on merits was that the alleged turnover of Rs. 49,34,750/- did not pertain to any work executed by him. It was specifically contended that the amount had been wrongly tagged against the petitioner by the deductor department in Form GSTR-7.

The petitioner further maintained that he had neither received the corresponding consideration nor executed any such contract work. According to him, no independent verification of work orders, invoices, books of accounts or bank statements had been undertaken before raising the demand. Therefore, the petitioner asserted that the very foundation of the demand was factually incorrect.

Regarding non-participation in the assessment proceedings, the petitioner explained that the entire proceedings had merely been uploaded on the GST portal without effective communication. The petitioner was not well versed in GST portal procedures and depended entirely upon a part-time accountant.

Although a request seeking time to file a reply had been submitted, the accountant allegedly failed to inform the petitioner about the notices and hearing opportunities. Consequently, the petitioner remained unaware of the proceedings and could not submit a detailed reply, resulting in the ex parte assessment order.

Issues Involved

  1. Whether an ex parte assessment order under Section 73 could be sustained when the petitioner claimed that the alleged GSTR-3B and GSTR-7 turnover mismatch arose because the deductor department had wrongly tagged turnover against the petitioner.
  2. Whether the petitioner should be granted a fresh opportunity to submit a detailed reply and supporting documents before the assessing authority.
  3. Whether the alleged turnover of Rs. 49,34,750/- could form the basis of tax demand without independent verification of work orders, invoices, books of accounts and bank statements.
  4. Whether the petitioner’s explanation for non-participation in the assessment proceedings justified reopening the matter on equitable grounds.
  5. Whether any further condition was required for remand when a substantial amount had already been recovered from the petitioner towards the disputed tax.
  6. Whether the bank account attachment made pursuant to the impugned assessment order should continue after the assessment order itself was set aside.

Petitioner’s Arguments

The petitioner contended that the alleged turnover of Rs. 49,34,750/- did not relate to any work executed by him.

It was argued that the amount had been wrongly tagged against the petitioner by the deductor department in Form GSTR-7. The petitioner neither received the corresponding consideration nor executed any such contract work.

The petitioner further contended that the assessing authority had not independently verified the relevant work orders, invoices, books of accounts or bank statements. Therefore, according to the petitioner, the factual basis of the demand itself was incorrect.

On the issue of non-participation, the petitioner explained that the proceedings were uploaded on the GST portal without effective communication. As the petitioner was not well versed in GST portal procedures, he depended upon a part-time accountant.

Though a request seeking time to file a reply had been made, the accountant failed to inform the petitioner about subsequent notices and opportunities of hearing. As a result, the petitioner remained unaware of the proceedings and was unable to submit a detailed reply before the assessment order was passed ex parte.

The petitioner accordingly sought setting aside of the impugned order and a fresh opportunity to place the relevant submissions and supporting documents before the assessing authority.

Respondent’s Arguments

The learned Government Advocate represented the Revenue.

The assessment had been made ex parte because the petitioner did not utilise the opportunities provided during the assessment proceedings.

The Revenue’s position, as emerging from the impugned proceedings, was based on the discrepancy in turnover reflected between Form GSTR-3B and Form GSTR-7 and the petitioner’s failure to effectively participate in the assessment proceedings despite the opportunities provided.

Court Order / Findings

The Madras High Court considered:

  • the nature of the discrepancies noted in the assessment proceedings;
  • the explanation offered by the assessee on merits; and
  • the reason furnished before the Court for failure to avail the earlier opportunity.

The Court held that an opportunity could be granted to the assessee to present submissions and produce relevant supporting documents before the respondent assessing officer.

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

Significantly, the Court noted that the respondent had already recovered a sum of Rs. 3,21,898/-, comprising CGST and SGST components as recorded in the order, which was stated to be about 40% of the disputed tax.

In view of the recovery already effected, the Court granted an opportunity to the petitioner-assessee without imposing any further condition.

Accordingly, the writ petition was allowed on the following terms:

  1. The impugned assessment order dated 12.09.2025 was set aside.
  2. The matter was remanded back to the respondent assessing authority.
  3. The assessee was directed to appear before the respondent without fail and submit a reply and documents in support of the claim.
  4. The respondent was directed to consider the matter afresh and pass orders in accordance with law.
  5. Since the impugned assessment order was set aside, any attachment of the bank account made pursuant to the impugned order was ordered to stand raised.
  6. No costs were awarded.
  7. The connected miscellaneous petitions were closed.

Important Clarification

The judgment is significant in cases involving alleged turnover mismatch between GSTR-3B and GSTR-7 where the assessee specifically disputes the underlying transaction and claims that turnover has been wrongly tagged by the deductor in Form GSTR-7.

The Court did not finally adjudicate the factual correctness of the petitioner’s claim that the turnover of Rs. 49,34,750/- had been wrongly tagged. Instead, the assessment order was set aside and the matter was remanded so that the assessee could submit a proper reply and supporting documents and the assessing authority could reconsider the matter afresh in accordance with law.

The relief was therefore procedural and equitable in nature and should not be understood as a final determination that every GSTR-3B versus GSTR-7 mismatch is automatically invalid.

A further important aspect is that the Court took note of the amount already recovered, stated to be about 40% of the disputed tax, and therefore granted the fresh opportunity without imposing any additional condition.

The judgment also clarifies the consequential effect of setting aside the assessment order: any bank account attachment made pursuant to the impugned order was directed to stand raised.

Sections Involved

Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) – Proceedings concerning determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised for reasons other than fraud, wilful misstatement or suppression of facts.

Section 73 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act) – Corresponding State GST provision governing determination of tax in non-fraud cases.

Article 226 of the Constitution of India – Constitutional jurisdiction of the High Court invoked for issuance of an appropriate writ against the impugned assessment order.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783067045_413compressed.pdf

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