The Gujarat High Court has imposed the cost of Rs. 1 Lakh on the GST department as it raised the demand despite of rectification of mismatch between GSTR-3-1 and GSTR-3B.
The bench of Justice Bharghav D. Karia and Justice D.N. Ray has observed that GST department without careful examination of the submissions of the tax payer, reconciliation statement and audit findings have passed order and cursorily rejected the rectification applications filed by the petitioner resulting into the raising of the huge demand on the petitioner for no fault on part of the petitioner.
The petitioner is engaged in manufacturing of Viscose Filament Yarn and allied chemicals. After manufacture of theViscose Filament Yarn, the petitioner transferred the same tovarious depots/godowns/warehouses in different states uponpayment of GST under the tax invoices for onward sales to distributors and sellers.
The factory of the petitioner situated at Maharashtra and various godowns of the petitioner are located at multiple locations in the State of Gujarat Including Surat. The godown situated at Surat received the goods from the factory at Maharashtra and other warehouses/godowns across the India.
All the goods received at the godown/warehouse at Surat on which the Input TaxCredit (ITC) of the GST paid is taken/claimed, including theITC under disputes, was by way of stock transfer from other factories/units of the petitioner which are located acrossIndia. The petitioner, after September, 2018, took separate fresh registration for its godown at Surat in addition to the single registration of VFY trade/business in the State of Gujarat.
on the basis of theinvoices received from the Maharashtra and Delhi, thegodown situated at Surat availed the Input Tax Credit of theGST paid which was disclosed in the return filed in Form GSTR-3B under the new GSTIN registration.
However, inadvertently while filing the return in Form GSTR-I forFinancial Year 2018-2019, output supplies i.e. stock transfer valued at Rs.1,71,95,55,284 made by the factory in Maharashtra and Rs.8,67,846/- made by godown/warehouse inDelhi on which total GST of Rs.20,64,50,776 was paid, the old GSTIN was stated instead of the new GSTIN.
Upon realizing the error of disclosure of the wrongGSTIN in the return filed in the Form GSTR-1, the petitioner rectified the same within the time prescribed under Section37(3) of the GST Act by making the suitable amendments/disclosure in Table 9 of the returns filed for the month of April 2019, June, 2019, July 2019 and August 2019in Form-GSTR-1 in Maharashtra and Delhi.
The court held that there was no excess ITCclaimed and only because of the wrong mentioning of the GSTIN number in Form-GSTR-1, there was a mismatch between the Form-GSTR-3-1 and GSTR-3B which was duly rectified by the petitioner later on and the respondent therefore could not have passed the impugned order raising demand on the basis of the mismatch between the form GSTR1 and GSTR-3B inspite of the rectification/reconciliation made by the petitioner later on.
The court propose to impose exemplary costupon the respondents for passing of such order-in-original contrary to the submissions made by the petitioner and the reconciliation statements as well as without verification of the facts presented before the adjudication officer.
The court called upon the department to show cause as to why exemplary cost commensurating to the demand raised for no fault on part of the petitioner should not be levied upon them.
In compliance of the order, a common affidavit-in-reply is filed by the department tendering unconditional apology for passing the order-in-original and further justifying that passing of the rectification order on the basis of verification report on the basis of various replies submitted by the petitioner and other records so as to close the audit para observations raised by the D.G. Audit Center, (Central Ahmedabad).
The court imposed a token cost of Rs.1,00,000 upon the department to be deposited before the Gujarat State Legal Services Authority.
Case Details
Case Title: Grasim Industries Ltd. Versus Union Of India & Ors.
Citation: R/SPECIAL CIVIL APPLICATION NO. 10441 of 2024
Counsel for the Petitioner: DHAVAL SHAH
Counsel for the Respondent: CB GUPTA
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