Facts of the Case

Tvl. VARS Enterprises filed a writ petition under Article 226 of the Constitution of India challenging the assessment order dated 14.11.2025 passed by the State Tax Officer for the assessment period 2018-19 under Section 74 of the CGST Act, 2017.

The impugned assessment order was passed ex parte because the petitioner had not utilised the opportunities provided during the assessment proceedings. The principal discrepancy concerned the difference between GSTR-3B and GSTR-2A.

The petitioner contended that the notice and the impugned order had been uploaded only on the GST portal and that the accountant had not informed the petitioner about the same, resulting in non-participation in the assessment proceedings and consequent passing of the ex parte order under Section 74. The case record, including the discrepancy/explanation table appearing on page 3 of the judgment, expressly records these grounds.

Issues Involved

  1. Whether the ex parte assessment order dated 14.11.2025 passed under Section 74 of the CGST Act, 2017 should be interfered with where the assessee failed to participate in the proceedings due to the notice and order being uploaded on the GST portal and the accountant allegedly failing to communicate the same.
  2. Whether the petitioner should be granted a fresh opportunity to submit its reply and supporting documents concerning the GSTR-3B vs GSTR-2A mismatch.
  3. Whether the petitioner’s claim that the mismatch issue was covered by Circular No. 183/15/2022-GST dated 27.12.2022 required fresh consideration by the assessing authority.
  4. Whether such fresh opportunity could be granted on equitable terms, including a condition requiring deposit of a portion of the disputed tax amount.

Petitioner’s Arguments

The petitioner submitted that the discrepancy related to the difference between GSTR-3B and GSTR-2A and asserted that the issue stood addressed by Circular No. 183/15/2022-GST dated 27.12.2022.

The petitioner expressed readiness to file a detailed reply together with connected records in accordance with the said Circular.

Regarding failure to participate in the assessment proceedings, the petitioner explained that the notice and the impugned order were uploaded only on the GST portal and that the accountant did not inform the petitioner about the same. Consequently, the petitioner could not take the necessary steps within the stipulated time, leading to the ex parte assessment order under Section 74.

The petitioner therefore sought quashing of the impugned order as illegal and in gross violation of the principles of natural justice.

Respondent’s Arguments

The respondent Revenue was represented by the learned Government Advocate. The assessment had been made ex parte on the ground that the petitioner did not utilise the opportunities provided during the assessment proceedings.

The Revenue’s position, as reflected in the impugned proceedings, was that the assessment order followed the petitioner’s failure to avail the opportunities granted. The judgment does not record any separate detailed substantive counter-argument by the respondent beyond the hearing and the circumstances leading to the ex parte assessment.

Court Order / Findings

The Madras High Court considered:

  • the nature of the discrepancies noted;
  • the explanation offered by the assessee on merits; and
  • the reason advanced for failure to avail the opportunity during the assessment proceedings.

The Court found 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 such opportunities had been extended on equitable grounds, but under appropriate conditions. Accordingly, the Court granted a fresh opportunity subject to the petitioner depositing 25% of the disputed tax amount.

The writ petition was allowed on the following terms:

  1. Deposit of 25%: Within four weeks from receipt of the web copy of the order, the petitioner shall deposit 25% of the disputed tax amount with the respondent, without waiting for a certified copy.
  2. Impugned Order to Stand Set Aside: Upon such deposit, the assessment order dated 14.11.2025 shall stand set aside.
  3. Matter Remanded: The matter shall stand remanded to the respondent assessing authority.
  4. Fresh Reply and Documents: The assessee shall appear before the respondent without fail and submit its reply and documents supporting its claim.
  5. Fresh Adjudication: The respondent shall consider the matter afresh and pass orders in accordance with law.
  6. Bank Account Attachment Raised: Since the impugned assessment order was set aside, any attachment of the bank account made pursuant to that order shall stand raised.
  7. No Costs: No order as to costs; the connected miscellaneous petition was closed.

These operative directions are specifically recorded on page 4 of the judgment.

Important Clarification

The judgment should not be understood as a final adjudication on the merits of the petitioner’s ITC claim or as a declaration that every GSTR-3B vs GSTR-2A mismatch automatically stands resolved by Circular No. 183/15/2022-GST.

The Court granted a fresh opportunity of adjudication on equitable grounds, subject to a 25% deposit of the disputed tax amount. The petitioner must submit its reply and supporting records, after which the assessing authority is required to reconsider the matter afresh in accordance with law.

A further significant clarification is that the setting aside of the assessment order was conditional upon the stipulated deposit. The Court directed that upon such deposit, the impugned order would stand set aside and the matter would be remanded.

The order also expressly provides consequential relief regarding bank account attachment, directing that any attachment made pursuant to the impugned assessment order shall stand raised once the assessment order is set aside.

Sections / Legal Provisions Involved

Section 74 of the CGST Act, 2017 – Proceedings concerning determination of tax not paid, short paid, erroneously refunded, or input tax credit wrongly availed or utilised by reason of fraud, wilful misstatement or suppression of facts.

Article 226 of the Constitution of India – Constitutional writ jurisdiction of the High Court.

Circular No. 183/15/2022-GST dated 27.12.2022 – Relied upon by the petitioner in relation to the GSTR-3B and GSTR-2A mismatch issue and supporting documentation for ITC-related discrepancies.


Link to download the order -
https://www.mytaxexpert.co.in/uploads/1783069968_432compressed.pdf

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