Facts of the Case

The petitioner, Gammon Engineers and Contractors Pvt. Ltd., a company with a branch office at Kautilya Nagar, Patna, holding GSTIN 10AAECN8067D1ZR, was assessed by the Assistant Commissioner of State Taxes, Patliputra Circle, Patna, by an order dated 24.02.2021 under Section 73 of the CGST/BGST Act, 2017 for the period 01.04.2018 to 31.03.2019, along with a summary of order in Form GST DRC-07 dated 23.02.2021 and a rectification order dated 24.02.2021 (Form GST-08). The dispute centred on denial of input tax credit on account of a mismatch between the petitioner's Form GSTR-3B and the auto-populated GSTR-2A. The petitioner's statutory appeal under Section 107 was rejected by the Additional Commissioner of State Taxes (Appeals), Central Division, Patna, by order dated 03.02.2022 (Appeal Case No. AD1003210016911). Aggrieved that the appellate order gave no reasons, the petitioner moved the Patna High Court.

Issues Involved

  1. Whether a GST appellate order rejecting the appeal without addressing the grounds urged, including on GSTR-2A/GSTR-3B mismatch, is sustainable.
  2. Whether mere absence of auto-populated GSTR-2A resulting in a mismatch can, by itself, deprive the assessee of input tax credit.
  3. Whether the writ court can interfere with the underlying assessment order along with the non-speaking appellate rejection.

Petitioner's Arguments

  • The appellate order dated 03.02.2022 was cryptic, misconceived and non-speaking, and did not deal with the grounds raised in the appeal.
  • Mere absence of auto-populated GSTR-2A resulting in a mismatch with the return filed in Form GSTR-3B cannot deprive the petitioner of the benefit of input tax credit.
  • The petitioner cannot be penalised for defaults of the supplier once tax has genuinely been paid to the supplier, which is as good as payment to the government within the meaning of Section 16(2)(c) of the CGST/BGST Act, 2017.
  • Recovery of tax and interest under the impugned orders ought to be restrained during pendency of the writ petition.

Respondent's Arguments

  • Counsel for the Revenue raised no objection to the matter being remanded to the Assessing Authority for a fresh decision on merits.
  • The Revenue agreed that no coercive steps would be taken against the petitioner during pendency of the remanded proceedings.

Court Order/Findings

  • The Division Bench held that it could interfere in writ jurisdiction, notwithstanding the statutory remedy, since the impugned order was ex facie bad in law.
  • The order suffered from a violation of natural justice — insufficient opportunity of hearing and no discernible reasons for the amount determined.
  • The authorities had failed to adjudicate the matter on the attending facts and circumstances despite the underlying proceeding being ex parte in nature.
  • The appellate order dated 03.02.2022, the assessment order dated 24.02.2021, and the DRC-07 summary dated 23.02.2021 were quashed and set aside, with the matter remanded for a fresh, reasoned decision on merits.
  • The Court accepted the 10% pre-deposit already made and directed an additional 10% deposit of the demand within four weeks, with attached bank accounts to be de-frozen immediately.

Important Clarification

  • The Court did not decide the substantive GSTR-2A/GSTR-3B mismatch and Section 16(2)(c) contentions on merits, leaving all such issues open for the Assessing Authority to consider afresh after affording a proper hearing — a non-speaking appellate order cannot substitute for that adjudication.

Sections Involved

  • Section 73, CGST/BGST Act, 2017 — determination of tax not paid for reasons other than fraud or wilful misstatement.
  • Section 107, CGST/BGST Act, 2017 — appeals to the Appellate Authority.
  • Section 16(2)(c), CGST/BGST Act, 2017 — conditions for availing input tax credit, including payment of tax by the supplier.
  • Form GST DRC-07 — summary of the demand order under the GST law.

Decision – In Favour of

Disposed of with directions, substantially in favour of the Assessee — the non-speaking appellate rejection and the underlying assessment order were quashed and remanded for fresh adjudication on merits, subject to an additional 10% pre-deposit; the ITC/GSTR-2A mismatch question remains open.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: Patna High Court
  • Case No.: Civil Writ Jurisdiction Case No. 3742 of 2022
  • Coram: Hon'ble The Chief Justice (Sanjay Karol, CJ) and Hon'ble Mr. Justice S. Kumar
  • Date of Order: 05 April 2022

Link to Download the Order

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