Belated appeal rejection overturned; full tax recovery warrants fresh adjudication to consider taxpayer’s reconciliation reply.

Belated appeal rejection overturned; full tax recovery warrants fresh adjudication to consider taxpayer’s reconciliation reply.

Issue

Whether a writ court should intervene and set aside an assessment order under Section 73 along with a belated statutory appeal rejection, where the taxpayer asserts that the alleged ITC differences stand fully reconciled through prior reversals and RCM payments, and the department has already recovered the entire disputed tax amount.

Facts

• The Discrepancy: The tax department issued a Show Cause Notice (SCN) alleging discrepancies and variations between the petitioner’s Form GSTR-2A and Form GSTR-3B data.

• Taxpayer’s Reconciliation: The petitioner submitted a reply explaining that the alleged differences did not exist once factoring in their prior reversal of relevant entries and accounting for valid Reverse Charge Mechanism (RCM) payments.

• Assessment & Dismissal: Disregarding the explanation, the Assessing Officer passed an adverse assessment order under Section 73 of the State GST Act. The petitioner’s subsequent statutory appeal was summarily rejected by the appellate authority for being filed belatedly (beyond the limitation period).

• The Writ Petition: Left without an administrative remedy, the petitioner approached the High Court via writ jurisdiction, highlighting that the department had already recovered 100% of the disputed tax liability.

Decision

• Need for Fresh Consideration: The High Court held that since the entire disputed tax liability had already been recovered by the revenue and the petitioner’s reconciliation submissions carried merit, a fair opportunity must be provided to agitate the case afresh.

• Alternative Remedy Bar Relaxed: Despite the statutory appeal being filed late, the presence of a natural justice breach and full revenue protection (via recovery) justified the court’s extraordinary intervention.

• Orders Set Aside & Remanded: The High Court set aside both the original assessment order and the subsequent appellate rejection order. The matter was remanded to the assessing authority for a fresh, de novo adjudication.

• Liberty to File Documents: The petitioner was granted explicit permission to submit an additional reply backed by comprehensive supporting documents, with a directive to the authority to pass a reasoned order after a personal hearing.

Key Takeaways

• Writ Protection Against Belated Appeals: While statutory appeal timelines are strict, High Courts can exercise their extraordinary writ jurisdiction to bypass limitation bars if there is a clear breach of natural justice and the tax has already been secured.

• Pre-Deposit and Recovery Influence Equity: When the revenue has already recovered 100% of the disputed tax, courts lean heavily toward granting the taxpayer a hearing on the merits, as there is zero risk of revenue loss during the remand proceedings.

• Reconciliation Merits an Evaluation: Data mismatches between GSTR-2A and GSTR-3B are not definitive proof of tax evasion; if a taxpayer provides logical explanations like prior reversals or RCM alignments, the assessing authority is duty-bound to factually verify them.