The Madurai Bench of the Madras High Court has set aside an ex parte GST assessment order passed against a registered dealer after noting that the taxpayer had already reversed the disputed Input Tax Credit (ITC) through Form GST DRC-03 and sought an opportunity to place supporting documents before the assessing authority.
The bench of Justice D. Bharatha Chakravarthy remanded the matter back to the jurisdictional GST officer for fresh consideration and directed that any bank attachment made pursuant to the impugned assessment order be lifted.
The case arose from an assessment order dated December 12, 2025, issued under Section 73 of the GST law for the assessment year 2021-22. The department alleged excess availment of IGST input tax credit amounting to ₹6,71,212 in GSTR-3B as compared to the credit auto-populated in GSTR-2A. The order also imposed interest under Section 50 and penalty under Section 73(9) read with Section 122(2)(a) of the GST Act.
According to the taxpayer, the disputed ITC amount of ₹6,71,212 had already been paid through Form GST DRC-03 on October 30, 2025, following issuance of the show cause notice dated September 9, 2025. The petitioner contended that the assessment proceedings were not effectively pursued because GST compliance work had been entrusted to a part-time accountant who failed to monitor the matter, submit a reply, or notice the upload of the assessment order on the GST portal.
On merits, the petitioner argued that interest under Section 50 is generally not leviable on tax paid through available ITC in the Electronic Credit Ledger and is applicable only on the net tax liability discharged through the Electronic Cash Ledger. The dealer also contended that in the absence of any excess or wrongful ITC claim, the levy of penalty under Section 73 was unwarranted.
After examining the nature of the discrepancies, the taxpayer’s explanation and the reasons advanced for non-participation in the assessment proceedings, the Court observed that a fresh opportunity could be granted to the assessee to present submissions and supporting documents before the assessing authority. The Court noted that such opportunities have been extended on equitable grounds in appropriate cases.
Importantly, the Court recorded that the disputed amount had already been realized and therefore declined to impose any additional pre-condition for granting relief.
Allowing the writ petition, the High Court set aside the assessment order dated December 12, 2025; remanded the matter to the assessing authority for fresh adjudication; directed the assessee to appear before the respondent within four weeks and submit replies and supporting documents; directed the assessing authority to reconsider the matter afresh in accordance with law; and ordered that any bank attachment arising from the impugned assessment order shall stand lifted.
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