The Goods and Services Tax Appellate Tribunal (GSTAT), Lucknow, has set aside orders confirming a demand of ₹56.24 lakh against Nitin Bakers Private Limited after observing that the lower authorities had failed to properly reconcile statutory returns and input tax credit (ITC) reversals.
The Division Bench comprising Judicial Member Santosh Kumar Srivastava and Technical Member Arvind Kumar remanded the entire matter to the adjudicating authority for fresh adjudication and verification in accordance with law. The appeal was allowed by way of remand through an order dated October 21, 2026.
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The dispute concerned the financial year 2018–19 and involved alleged excess ITC, differences between figures reported in GSTR-9 and GSTR-9C, and an alleged short reversal of credit under Rules 42 and 43. The total disputed demand, comprising tax, interest and penalty, amounted to ₹56,24,458.40.
The central issue was whether the demand could be sustained without proper reconciliation of the return figures and verification of the disputed ITC reversals.
The proceedings originated from an adjudication order dated April 18, 2024. The company challenged that order before the Additional Commissioner, Grade-2 (Appeal)-05, State Tax, Kanpur. However, the first appellate authority upheld the demand through an order dated February 22, 2025, followed by the corresponding APL-04 dated March 5, 2025.
According to the Tribunal’s order summary, the first appeal was dismissed ex parte for non-appearance despite four hearing notices. The listed hearing dates were October 16, 2024, January 16, 2025, February 1, 2025, and February 7, 2025. The summary also records that a partial hearing through counsel took place on January 16, 2025.
The first appellate authority proceeded on the basis that the company had failed to substantiate its grounds with supporting evidence.
Three specific discrepancies formed part of the dispute. The first concerned an ITC difference of ₹22,589.62. The appellate authority held that the company had not produced evidence explaining the difference. It also referred to Section 16(2)(c), which concerns the requirement that tax charged on the relevant supply must have been paid to the government.
The second issue involved a difference of ₹25,93,217.12 between GSTR-9 and GSTR-9C. The first appellate authority found that no evidence had been furnished to explain either the discrepancy or its cause.
The third issue related to an alleged short reversal of ITC amounting to ₹51,756.67 under Rules 42 and 43. The appellate authority recorded that evidence supporting the company’s position on this issue had also not been produced.
On these grounds, the first appellate authority upheld the original adjudication order in its entirety, confirming the disputed demand of ₹56.24 lakh.
Before the Tribunal, the matter required consideration of whether the discrepancies and reversals had been adequately examined. The Tribunal observed that the lower authorities had failed to properly reconcile the statutory returns and ITC reversals.
It consequently set aside the impugned orders and directed that the entire matter be reconsidered by the proper officer through a fresh, de novo adjudication.
“The entire matter is remanded back to the Adjudicating Authority (Proper Officer) for a fresh, de novo adjudication and proper verification in accordance with the law,” the operative direction recorded in the order summary states.
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