The Calcutta High Court has set aside an ex parte GST adjudication order and the consequential recovery notice after finding that the tax authorities had failed to follow the procedure prescribed for reconciling differences between input tax credit claimed in GSTR-3B and credit reflected in GSTR-2A.
The bench of Justice Smita Das De directed the adjudicating authority to reconsider the taxpayer’s case in accordance with Circular No. 183/15/2022-GST dated December 27, 2022, after examining supporting documents and providing a reasonable opportunity of hearing. The dispute concerned a demand of ₹8,11,565, including tax, interest and penalty, for the period from July 2017 to March 2018.
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The taxpayer, who operates a proprietorship under the name “G. S. Fabrics”, is registered under the Central Goods and Services Tax Act, 2017, and the West Bengal Goods and Services Tax Act, 2017.
A show-cause notice dated June 13, 2023, proposed the demand on account of an alleged mismatch in input tax credit. An ex parte adjudication order followed on August 10, 2023, under Section 73 of the GST enactments. The authorities subsequently issued a recovery notice dated February 27, 2026.
Challenging the proceedings, the taxpayer argued that the authorities had raised the demand without undertaking the invoice-level verification required by the December 2022 circular.
The taxpayer relied on paragraph 4 of the circular, which requires the proper officer to first obtain details of invoices against which credit has been claimed in GSTR-3B but which do not appear in GSTR-2A.
According to the procedure reproduced in the judgment, the officer must then ascertain whether the relevant conditions under Section 16 have been fulfilled. These include possession of a tax invoice, debit note or other prescribed taxpaying document; receipt of the goods or services; and payment to the supplier of the value of the supply along with the applicable tax.
The taxpayer contended that this exercise had not been conducted before the demand was confirmed.
He also submitted that the show-cause notice had not been served on him and that, consequently, he had no knowledge of the proceedings and could not submit a reply. Relying on the Division Bench decision in Goutam Bhowmik v. State of West Bengal & Others, he raised the requirement of a personal hearing before an adverse order and alleged a violation of natural justice.
The State authorities opposed the petition, maintaining that the proceedings involved no illegality or irregularity.
They argued that uploading a notice or order on the common GST portal constitutes valid service under Section 169(1)(d) of the CGST and WBGST Acts. Since the show-cause notice had been uploaded and the taxpayer had not replied, the authorities defended the decision to proceed ex parte.
The department further submitted that an opportunity of personal hearing had been provided but was not availed of by the taxpayer.
After examining the submissions and the materials on record, including screenshots of the show-cause notice and the consequential ex parte order, the High Court found grounds for interference.
The Court observed that the impugned orders appeared to have been passed without adhering to paragraph 4 of Circular No. 183/15/2022-GST.
It explained that the circular requires the proper officer to seek the relevant details and verify compliance with Section 16 before confirming a demand arising from an ITC mismatch. The Court found that this exercise did not appear to have been undertaken in the present case.
The decisive basis for relief was therefore the failure to follow the prescribed verification procedure. The order does not declare that uploading a notice on the GST portal is invalid service.
The High Court quashed both the adjudication order dated August 10, 2023, and the recovery notice dated February 27, 2026.
It directed the taxpayer to submit a comprehensive representation, together with all supporting documents, before the adjudicating authority within four weeks from the date of the Court’s order.
The authority must consider the representation in light of the December 2022 circular and pass a reasoned order in accordance with law after providing a reasonable opportunity of hearing. The resulting decision must be communicated to the taxpayer within one week thereafter.
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