Ex Parte Mismatch Orders Set Aside for Fresh Adjudication Due to Non-Compliance with Circular 183

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Ex Parte Mismatch Orders Set Aside for Fresh Adjudication Due to Non-Compliance with Circular 183

 

Ex Parte Mismatch Orders Set Aside for Fresh Adjudication Due to Non-Compliance with Circular 183

Issue
Whether an ex parte adjudication order and subsequent appellate order confirming an ITC mismatch demand between Form GSTR-3B and Form GSTR-2A under Section 73 are legally sustainable when passed without adhering to the verification procedures mandated by Circular No. 183/15/2022-GST.
Facts
  • Traders’ Status & Period: The petitioners were traders subjected to GST proceedings for the period July 2017 to March 2018 (FY 2017-18).
  • SCN & Ex Parte Orders: The Revenue issued a Show Cause Notice alleging Input Tax Credit (ITC) mismatch between Form GSTR-3B and Form GSTR-2A, culminating in an ex parte assessment order under Section 73 confirming the demand due to non-response.
  • Dismissal of First Appeal: The appellate authority subsequently dismissed the petitioners’ appeal ex parte and affirmed the assessment order.
  • Writ Petition Filed: The petitioners filed a writ petition alleging non-service of notices and breach of Circular No. 183/15/2022-GST regarding mandatory reconciliation and verification of Section 16 eligibility conditions.
  • Revenue’s Defense: The respondents contended that adequate opportunity had been extended to the petitioners and that the orders suffered from no legal infirmity.
Decision
  • Non-Compliance with Circular: Held, yes. The impugned orders were passed without complying with Paragraph 4 of Circular No. 183/15/2022-GST, which mandates seeking details and verifying Section 16 conditions before confirming ITC mismatch demands.
  • Prima Facie Case Established: Held, yes. A clear case for judicial interference existed as the proper procedure for verifying and reconciling ITC mismatches was omitted.
  • Orders Remanded for Reconsideration: Held, yes. Without deciding on the overall merits, the writ petition was disposed of by remanding the matter back to the adjudicating authority for fresh consideration in accordance with the circular, after providing a fair opportunity of hearing.
Key Takeaways
  • Mandatory Reconciliation: Adjudicating authorities cannot confirm ITC mismatch demands between GSTR-3B and GSTR-2A without strictly following the verification steps outlined in Circular No. 183/15/2022-GST.
  • Verification of Eligibility First: Before fastening tax liability for ITC discrepancies under Section 73, officers are required to actively seek details and verify the underlying conditions of Section 16.
  • Remand on Procedural Default: Both original and appellate ex parte orders that ignore binding administrative circulars are liable to be set aside for de novo adjudication.
HIGH COURT OF CALCUTTA
Mongal Deep Enterprise
v.
State of West Bengal
Sumita Das De, J.
WPA No. 13375 of 2025 †
AUGUST  11, 2026
Himangshu Kumar Ray, Saptak Sanyal, Ms. Shiwani Shaw, Amit Saha, Sushant Bagaria, Animitra Roy and Rantu Bose for the Petitioner. Ms. Manasi Mukherjee and Bijitesh Mukherjee for the Respondent.
ORDER
1. Affidavit of service filed in Court today by the petitioner is taken on record.
2. The petitioners are engaged as traders of food products under the franchise of brand of “Monginis Snacks” now known “Mio Amore”. Petitioner no. 1 is an unregistered partnership firm 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 11.12.2023 passed under Section 73 of the CGST Act, and the ex parte appellate order dated 1.3.2025 affirming the same, are 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 petitioners submits that a show-cause notice was issued on 29.09.2023 for the period of July 2017 to March 2018 by raising a demand of Rs. 2,28,241/-, on account of alleged mismatched of ITC.
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 11.12.2023 was passed by the respondent no.4.
7. Aggrieved thereby the petitioners preferred a statutory appeal for Financial Year 2017-18 upon deposit of the requisite pre-deposit. However, the appellate authority vide order dated 1.3.2025 dismissed the appeal ex parte without considering the grounds raised in the appeal.
8. It is therefore contended that both the adjudication order and the appellate order are exfacie illegal, in violation of principles of natural justice, and a liable to be set aside.
9. The learned Counsel appearing for the respondent authorities vehemently opposes the submission of the petitioner and submits that there is no illegality and/or irregularity committed by the respondent authorities. Since the petitioners did not file any reply to the show-cause notice, the adjudicating authority was justified in passing the ex parte order.
10. 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.
11. 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.
12. This Court has taken judicial note of the screenshot of the show-cause notice at page 71 of the writ petition and also the consequential orders passed ex parte by the respondent authorities.
13. 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.
14. In view of the above observations, the writ petition is disposed of on the following grounds:
(1) The petitioner are directed to file a comprehensive representation before respondent no. 4 on or before 30th September, 2026 along with all supporting documents.
(2) Respondent no. 4 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.
(3) The petitioner shall not seek any unnecessary adjournments before the adjudicating authority.
(4) The adjudicating authority shall be at liberty to take an independent decision on merits without being influenced by any observations in this order.
15. With the aforesaid observations and directions, the writ petition is disposed of without going into the merits of the case.