Simplified Explanation of the Judgment
The Patna High Court recently dismissed a writ petition filed by a registered taxpayer challenging an ex-parte tax assessment order under the Central Goods and Services Tax (CGST) and Bihar Goods and Services Tax (BGST) Acts for the financial year 2018–19. The petitioner, a dealer engaged in trading activities, had contested the assessment order dated 06.12.2023 and the appellate order dated 13.09.2024. The key issue revolved around discrepancies in the petitioner’s GST returns, particularly between GSTR-1, GSTR-3B, GSTR-2A, and GSTR-9 filings.
The petitioner argued that the discrepancies in the GST returns were the result of clerical errors and that the final return (GSTR-9) reflected the correct turnover. They contended that the Assessing Officer did not consider this or the documentary evidence during the assessment process. Furthermore, the petitioner claimed that the input tax credit (ITC) they availed was legitimate and supported by invoices.
However, the respondents, including the Central and State GST authorities, argued that the discrepancies were substantial and involved the suppression of turnover amounting to over Rs. 4.34 crore. They pointed out that the petitioner had claimed ITC in excess of what was reflected in GSTR-2A and had failed to respond to the show-cause notice. Accordingly, a demand of Rs. 44.42 lakhs, including tax, interest, and penalty, was raised.
The High Court observed that the petitioner was served with a show-cause notice but failed to respond. The court also noted that during the appeal process, the petitioner did not furnish sufficient evidence to reconcile the discrepancies or justify the ITC claim. The appellate authority had carefully considered the submissions but found no merit in the petitioner’s case.
Importantly, the Court referred to a prior decision in M/S Aastha Enterprises v. State of Bihar, where it was held that ITC claims would not stand if the seller had not paid the tax to the government, even if the purchaser had paid the seller. The court emphasized that such provisions had already been held constitutionally valid.
Concluding that there was no procedural illegality or violation of natural justice, the Court refused to interfere with the assessment or appellate orders in its writ jurisdiction. However, the petitioner was given liberty to pursue the statutory appellate remedy before the GST Tribunal.
Significance or Implication of the Judgment
This judgment serves as a critical reminder for all GST-registered dealers to ensure consistency and accuracy in their GST returns. Errors or mismatches, especially between GSTR-1, GSTR-3B, GSTR-2A, and GSTR-9, can lead to serious consequences including penalties and denial of ITC. The Court has reaffirmed the principle that ITC cannot be claimed merely based on invoices; it must be matched with the supplier’s tax payment.
This decision also underlines the importance of responding to show-cause notices and participating in assessment proceedings. Taxpayers cannot expect relief from courts if they ignore statutory procedures and remedies.
Legal Issue(s) Decided and the Court’s Decision
- Whether the ex-parte assessment order violated natural justice?
➤ No; the petitioner failed to respond to the duly served notice. - Can ITC be denied if the seller hasn’t paid the tax despite the buyer having proof of purchase?
➤ Yes; upheld based on Section 16(2) and earlier judgment in M/S Aastha Enterprises. - Was there jurisdictional error or procedural irregularity in assessment/appellate orders?
➤ No; the orders were held valid and legally sustainable. - Is writ jurisdiction applicable in this case?
➤ No; alternative remedy before GST Tribunal is available.
Judgments Referred by Parties
- D.Y. Beathel Enterprises v. State Tax Office, Madras High Court
- Bharat Aluminium Company v. Union of India, Chhattisgarh High Court
Judgments Relied Upon or Cited by Court
- M/S Aastha Enterprises v. State of Bihar, CWJC No.10395 of 2023
Case Title
M/s Suraj Agency v. The Union of India & Others
Case Number
Civil Writ Jurisdiction Case No.3595 of 2025
Coram and Names of Judges
Hon’ble Mr. Justice Rajeev Ranjan Prasad
Hon’ble Mr. Justice Ashok Kumar Pandey
Names of Advocates and who they appeared for
Mr. Madan Kumar, Advocate – For the petitioner
Dr. Krishna Nandan Singh, Sr. Advocate (ASGI), Mr. Anshuman Singh, Mr. Shivaditya Dhari Sinha – For the Union of India
Mr. Vikash Kumar, SC-11 – For the State of Bihar
Link to Judgment
21e74afd-ac31-4829-916b-4c2a78b29ecc.pdf
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