Ex Parte ITC Mismatch Order Set Aside for Non-Compliance with Circular Guidelines and Natural Justice

By | August 31, 2026
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Ex Parte ITC Mismatch Order Set Aside for Non-Compliance with Circular Guidelines and Natural Justice
Issue
Whether an ex parte adjudication order confirming an ITC mismatch demand under Section 73 is legally sustainable when passed without adhering to the mandatory verification procedures prescribed in Circular No. 183/15/2022-GST.
Facts
  • Assessee Profile: The petitioner operates a sole proprietorship trading in allopathic medicines and is registered under the CGST/WBGST Act.
  • Period Covered: The matter pertains to the period from April 2018 to March 2019.
  • Show Cause Notice: The respondent issued an SCN proposing a demand based on a mismatch between Input Tax Credit claimed in Form GSTR-3B and available in Form GSTR-2A.
  • Ex Parte Order: As no reply was submitted, the adjudicating authority proceeded to pass an ex parte assessment order confirming the demand.
  • Grounds of Challenge: The petitioner filed a writ petition alleging a breach of natural justice and non-compliance with Paragraph 4 of Circular No. 183/15/2022-GST, which mandates seeking specific details and verifying ITC eligibility conditions prior to confirming mismatch-based demands.
Decision
  • Violation of Circular Mandate: Held, yes. The adjudicating authority failed to follow the procedure mandated under Circular No. 183/15/2022-GST, which requires calling for information and verifying eligibility conditions before fastening liability.
  • Lack of Legal Sustainability: Held, yes. The ex parte adjudication order passed without completing the requisite verification exercise lacks legal sustainability.
  • Order Quashed and Remanded: Held, yes. The impugned ex parte adjudication order was set aside and the matter was remanded to the adjudicating authority for fresh consideration in light of the Circular, after providing a reasonable opportunity of being heard to the petitioner.
Key Takeaways
  • Binding Nature of Circulars: Adjudicating authorities are strictly bound to follow the verification mechanism laid down in Circular No. 183/15/2022-GST before confirming tax demands based on GSTR-3B and GSTR-2A mismatches for FY 2018-19.
  • Procedural Preconditions: Automatically confirming mismatch demands without first seeking supporting documents or supplier certifications violates mandatory statutory circular guidelines.
  • Breach of Natural Justice: Ex parte orders passed without fulfilling statutory verification prerequisites are liable to be quashed and remanded for fresh adjudication.
HIGH COURT OF CALCUTTA
Amaresh Ghosh
v.
State of West Bengal
Smita Das De, J.
WPA No. 20059 of 2025 †
AUGUST  20, 2026
Himangshu Kumar Ray, Saptak Sanyal, Subhasis Podder, Ms. Shiwani Shaw, Sushant Bagaria, Amit Saha and Animitra Roy for the Petitioner. Prithu Dudhoria for the Respondent.
ORDER
1. Affidavit of service filed in Court today by the petitioner is taken on record.
2. The petitioner is engaged as trader of allopathic medicines under the name and style o “M/s. The Life Guard” and the petitioner is proprietorship concern duly registered under the Central Goods and Services Tax Act, 2017 (hereinafter “CGST Act) and the West Bengal Goods and Services Tax Act, 2017(hereinafter referred to as WBGST Act.
3. The issue involved herein is whether the ex parte assessment order dated 03.04.2024 passed under Section 73 of the CGST Act/WBGST Act is sustainable in law, particularly in light of circular of 183/15/2022-GST Dated 27th December, 2022 stating to reconciliation of ITC between FORM GSTR-3B and FORM GSTR-2A.
4. The learned Counsel appearing for the petitioner submits that a show-cause notice was issued on 21.12.2023 for the period of April 2018 to March 2019 by raising a demand of Rs. 2,40,21,589/-, on account of alleged mismatched of ITC, including Tax, interest and penalty.
5. The said demand is contrary to Circular No. 183/15/2022-GST dated 27th December, 2022. Reliance is placed upon paragraph 4 of the said circular, “that before raising any demand on account of ITC mismatch, the proper officer is mandated to” which is reproduced below:
“The proper officer shall first seek the details from the registered person regarding all the invoices on which ITC has been availed by the registered person in his FORM GSTR 3B but which are not reflecting in his FORM GSTR 2A. He shall then ascertain fulfillment of the following conditions of Section 16 of CGST Act in respect of the input tax credit availed on such invoices by the said registered person:
(i) That he is in possession of a tax invoice or debit note issued by the supplier or such other taxpaying documents;
(ii) That he has received the goods or services or both;
(iii) That he has made payment for the amount towards the value of supply, along with tax payable thereon, to the supplier”.
The said procedure was not followed in the present case.
6. It is submitted that since the show-cause notice was not served upon the petitioner. As a result the petitioners had no knowledge of the same and were unable to file a reply. Consequently an ex parte order of adjudication order dated 03.04.2024 was passed by the respondent no.3.
7. It is therefore contended that the adjudication order is exfacie illegal, in violation of principles of natural justice, and a liable to be set aside.
8. Learned Counsel appearing for the respondent authorities vehemently opposes the submission of the petitioner and submits that no illegality and/or irregularity has been committed by the respondent authorities. Learned counsel further submits that as per Section 169(1)(d) of the CGST/WBGST Act, 2017 uploading any notices or orders in the common portal constitutes valid service. In the present case, the show-cause notice was duly uploaded on the portal. Since the petitioner did not file any reply to the show-cause notice, the adjudicating authority was justified in passing the ex parte order.
9. It is further submitted that an opportunity of personal hearing was afforded to the petitioner which was not availed. Therefore, the petitioners cannot now claim violation of natural justice.
10. After hearing the rival contention of the parties and upon perusal of the materials on record, this Court is of the view that the petitioner has been able to make out a prima facie case warranting interference at this stage.
11. This Court has taken judicial note of the screenshot of the show-cause notice at pages 49 and 60 of the writ petition and also the consequential order passed ex parte by the respondent authorities.
12. It appears that the impugned orders have been passed without adhering to the procedure prescribed in paragraph 4 of circular no. 183/15/2022-GST dated 27th December, 2022. The mandate of the said circular requires the proper officer to first seeks details and verify fulfillment of the conditions of Section 16 before confirming any demand on account of ITC mismatch. Such exercise does not appear to have been undertaken.
13. In view of the above observations, the writ petition is disposed of on the following grounds:
a. The order of adjudication dated 03.04.2024 is hereby quashed and set aside.
b. The petitioner is directed to file a comprehensive representation before respondent no. 3 on or before 30th September, 2026 along with all supporting documents.
c. Respondent no. 3 shall consider and dispose of the said representation in light of circular no. 183/15/2022 GST dated 27.12.2022 by passing a reasoned order in accordance with law after affording a reasonable opportunity of hearing to the petitioner. Such decision shall be communicated to the petitioners within a week thereafter.
d. The petitioner shall not seek any unnecessary adjournments before the adjudicating authority.
e. The adjudicating authority shall be at liberty to take an independent decision on merits without being influenced by any observations in this order.
14. With the aforesaid observations and directions, the writ petition is disposed of without going into the merits of the case.