ORDER QUASHED & REMANDED: GSTR-3B ERROR RECTIFIED AND TAX PAID WITH INTEREST BEFORE NOTICE

ISSUE

Whether an assessment order confirming tax, interest, and penalty under Section 73 is sustainable when the taxpayer had already rectified the GSTR-3B error and paid the disputed tax along with interest in a subsequent return before the issuance of the show cause notice.

FACTS

Period: July 2017 to March 2018.
The Error: The petitioner correctly declared outward supplies for February 2018 in their GSTR-1 but committed an inadvertent error in the corresponding GSTR-3B.
The Rectification: The petitioner rectified this mistake in the return filed for December 2018. The disputed tax amount was credited to the Electronic Credit Ledger, and the applicable interest was also paid in December 2018.
The Demand: The Department issued a notice in Form GST DRC-01 for the said period.
The Default: The petitioner failed to respond to the notice. Consequently, the Adjudicating Authority passed an order under Section 73 confirming the tax demand, interest, and penalty.
Appellate Stage: The petitioner’s appeal against this order was dismissed on the ground of limitation (time-barred).

DECISION

Evidence of Payment: The High Court noted that the return for December 2018 prima facie indicated that the petitioner had remitted the tax along with interest, suggesting an attempt to correct the earlier discrepancy.
Balancing Interests: Although the petitioner failed to reply to the initial notice, the Court held that the substantive fact of payment warranted consideration.
Remand: To serve the ends of justice, the impugned assessment order was quashed. The matter was remitted to the Original Authority for de novo (fresh) consideration on merits, specifically to verify the payment made in December 2018.
Verdict: [Matter Remanded]

KEY TAKEAWAYS

Section 73(5) Protection: This case highlights the importance of Section 73(5), which allows a taxpayer to pay tax and interest before the service of a notice. If done correctly, no penalty should be levied, and no notice should be issued.
GSTR-3B vs. GSTR-1 Mismatch: Mismatches often trigger notices. If you have already fixed it in a later return (Circular 26/26/2017 method), ensure you reply to the notice citing the specific month of rectification.
Limitation Not Absolute: Even if a statutory appeal is dismissed as time-barred, High Courts may exercise writ jurisdiction to remand the matter if the tax has already been paid and the demand appears unjust.

HIGH COURT OF MADRAS

Chandra Enterprises

Deputy State Tax Officer^*

C.Saravanan, J.

W.P. Nos. 46026 & 46030 of 2025
W.M.P. Nos. 51339, 51340, 51344 of 2025

NOVEMBER 26, 2025

K.A. Parthasarathy for the Petitioner. V. Prashanth Kiran, Govt. Adv. for the Respondent.

ORDER

1. Mr. V. Prashanth Kiran, learned Government Advocate, takes notice for the Respondents.

2. These Writ Petitions are being disposed of at the time of admission with the consent of the learned counsel for the Petitioner and the learned Government Advocate for the Respondents.

3. By this common order, both these Writ Petitions are being disposed of. In W.P.No.46026 of 2025, the petitioner has challenged the orders dated 29.12.2023 passed for tax period 2017-2018 under Section 73 of the respective GST Enactments Act. The impugned order has preceded a notice in DRC 01 dated 20.9.2023 for the tax period July 2017 – March 2018. By the impugned order, following amount has been confirmed against the petitioner.

Tax Period From To	Tax	Interest	Penalty	Total
JUL-2017-MAR 2018	46,825.00	48,701.00	10,000.00	1,05,526.00
JUL-2017-MAR 2018	46,825.00	48,701.00	10,000.00	1,05,526.00

	93,650.00	97,402.00	20,000.00	2,11,052.00

4. Learned counsel for the Petitioner would submit that the disputed tax amount of Rs.93,650/- was credited into the electronic credit ledger on 15.12.2018. It is submitted that the petitioner has also paid the interest on the belated payment of tax subsequently in the returns filed for the month of December for the tax period 2018-19 for a sum of Rs.7070/- towards belated payment of CGST and SGST each

5. The case of the petitioner is that the during the month of February, 2018, the petitioner had correctly declared the outward supplied in GSTR 1. However, there was a mistake in the monthly return filed in GSTR 3B which stood rectified in the returns filed for the month of December 2018 -19 and thus, the entire disputed tax and penalty for the disputed tax and interest have been paid by the petitioner.

6. However, it is submitted that since the petitioner failed to respond to the notice in DRC 01 dated 20.09.2023, the impugned order dated 29.12.2023 has been passed.

7. Learned counsel for the Petitioner submits that aggrieved by the aforesaid order, the petitioner filed an appeal before the appellate authority namely the 2^nd respondent on 24.06.2024. By an order dated 22.10.2024, which is impugned in WP.No.46030 of 2025, appeal has been rejected on the ground that the appeal has been filed beyond the statutory period of limitation.

8. Learned counsel for the Petitioner submits that over and above the amount paid along with the returns filed for the month of December, 2018 during the tax period 2018 -19, the entire amount of the disputed tax and penalty has been paid by the petitioner. Therefore, he would submit that the case may be remitted back without any pre-deposit.

9. Learned Government Advocate for the Respondents submits that in terms of proviso to Section 39 (9) of the respective GST Enactments, no rectification of any incorrect particular shall be allowed after the due date for furnishing the returns for the month of September or second quarter following the end of Financial Year or the actual date of furnishing the relevant annual returns, which ever is earlier. It is submitted that provision as it stood during the subject period did not permit any rectification.

10. Having considered the submissions made by the learned counsel for the Petitioner and the learned Government Advocate for the Respondents and having perused the impugned orders and the returns filed by the Petitioner for the month of December 2018, there was a prima facie indication that the petitioner has evaded tax due for the period 2017-2018 and remitted the same towards the tax liability in the returns filed for the month of December, 2018 together with interest

11. Therefore, to balance the interest of the petitioner and the respondent, the impugned orders are quashed and the case is remitted back to the 1^st respondent / the original Authority to pass a fresh order on merits.

12. The Petitioner shall however file a reply to the notice in DRC 01 dated 20.09.2023 by treating the impugned order dated 29.12.2023 as an addendum to notice in DRC 01 dated 20.09.2023 within a period of 30 days from the date of receipt of a copy of this order.

13. Needless to state, before passing any such order, the Respondent shall give due notice to the Petitioner.

14. Consequently, W. P. No. 46026 of 2025 stands disposed by way of remand.

15. In view of the order passed in WP.No.46026 of 2025, W.P.No.46030 of 2025 challenging the order of the Appellate Commissioner, dismissing the appeal on the ground of limitation is closed and no further order is passed.

16. These Writ Petitions stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petitions are closed.