Facts of the Case

Tvl. Sri Bhuvaneshwari Cartons challenged an assessment order dated 29.12.2023 and consequential suo motu rectification proceedings dated 27.06.2024, both passed under Section 73 of the TNGST Act, 2017 for the assessment year 2017-18, arising from a mismatch between GSTR-3B and GSTR-2A. The petitioner had not responded to the show cause notice uploaded on the portal, resulting in an ex-parte order, and explained that this was because its GSTIN account had itself been closed at its own request long ago, making periodic portal monitoring impracticable.

Issues Involved

  1. Whether a taxpayer whose GSTIN has already been closed can be expected to monitor the GST portal for notices issued after closure.
  2. Whether an ex-parte order passed for a GSTR-3B/GSTR-2A mismatch, in such circumstances, should be set aside and on what terms.
  3. Whether continued freezing of the taxpayer's bank account should persist once the matter is remitted.

Petitioner's Arguments

  • Submitted that since the GSTIN account had been closed at the petitioner's own request long ago, it could not reasonably be expected to periodically check the portal or participate in proceedings initiated thereafter.
  • Sought one more opportunity to present its case regarding the GSTR-3B/GSTR-2A mismatch.

Respondent's Arguments

  • The Additional Government Pleader did not seriously contest the petitioner's explanation regarding closure of the GSTIN, focusing instead on the conditions for remand.

Court Order / Findings

  • The Court accepted the petitioner's explanation that, having closed its GSTIN account at its own request, it could not be expected to continue monitoring the portal.
  • Held that one more opportunity could be granted, conditional on the petitioner paying 25% of the disputed tax amount within four weeks, upon which the impugned orders dated 29.12.2023 and 27.06.2024 shall stand set aside and the matter remitted for fresh consideration.
  • Directed the petitioner to appear before the respondent, file a reply, and produce documentary evidence, with the respondent to pass fresh orders as expeditiously as possible.
  • Directed that the freezing of the petitioner's bank account stand raised upon the matter being remanded for fresh disposal.

Important Clarification

  • A taxpayer whose GST registration has already been closed at its own request cannot fairly be expected to continue monitoring the common portal for notices relating to that closed registration — this is treated as a valid explanation for non-response, distinct from ordinary negligence.
  • GSTR-3B versus GSTR-2A mismatch disputes are commonly resolved through the Court's conditional-remand practice: setting aside the ex-parte order upon a percentage pre-deposit and granting a fresh opportunity, alongside immediate relief from any bank account freeze.

Sections Involved

  • Section 73, TNGST Act, 2017 – governs demand and recovery for short payment of tax, applicable to mismatch-based demands.
  • Rule 21, CGST Rules, 2017 (implicit, governing cancellation/closure of GSTIN) – relevant to the petitioner's closed registration.

Decision – In Favour of

Disposed of on a conditional basis, in substance in favour of the assessee — the ex-parte orders were set aside on payment of 25% of the disputed tax, with the bank freeze lifted and a fresh opportunity granted.

Case Details

  • Court: Madurai Bench of the Madras High Court
  • Case No.: W.P(MD)No.6100 of 2026 & W.M.P(MD)No.5119 of 2026
  • Coram: Hon'ble Mr. Justice D. Bharatha Chakravarthy
  • Date of Order: 06 March 2026

Link to Download the Order

Click here to view/download the full order

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.