Durga Steel Corporation vs. The Superintendent Of Central Tax Range Asd-7
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The petitioner declared outward supplies in GSTR-1 but failed to discharge the corresponding tax liability in GSTR-3B, attributing it to a technical glitch and claiming substantial Input Tax Credit (ITC). An adjudication order under Section 73(1) was passed, which was subsequently upheld by the Appellate Authority under Section 107. The petitioner challenged these orders via a writ petition.
Held
The High Court held that the Appellate Authority erred by not considering crucial factual aspects, such as the petitioner's claim of a technical glitch and the availability of ITC. It found that the Appellate Authority decided on technicalities without a complete adjudication on merits, and therefore recalled the Appellate Authority's order.
Key Issues
Whether the Appellate Authority correctly dismissed the appeal without examining the petitioner's claims of a technical glitch preventing GSTR-3B filing and the availability of Input Tax Credit. Whether a complete adjudication on merits was denied by the Appellate Authority.
Sections Cited
Section 73(1), Section 107, Section 39, Section 49
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Cause title — parties, addresses and appearances
ORAL ORDER
The petitioner has called in question the Adjudication Order dated 27.02.2025 [Annexure-A] under Section 73(1) of the Central Goods and Services Tax Act/Karnataka Goods and Services Tax Act, 2017 [for short, 'the Act'], and in fact, the petitioner has filed an appeal against this Adjudication Order with the Appellate Authority under 107 of the Act. The petitioner's appeal is dismissed by the next impugned order dated 24.03.2026 [Annexure-B]. The Appellate Authority has observed thus HC-KAR NC: 2026:KHC:35943 on why there should not be interference with the Adjudication Order: "5.1 After careful examination of the case records, the impugned order, the impugned order, the grounds of appeal, the written submissions, and the submissions made by the appellant during the Personal Hearing, the following findings emerge.
2 The issue for consideration is whether the respondent's confirmation of the alleged tax short- payment of Rs.16,75,173/- (IGST Rs.4,812/-, CGST Rs.8,35,181/-, and SGST Rs.8,35,181/-), along with the corresponding interest and penalty, is correct and legally sustainable under the provisions of law.
3 It is noted that the appellant does not dispute that the outward tax liability was correctly reported in GSTR-1 but not discharged in GSTR-3B for the month in question. Under Section 39 read with Section 49 of the CGST, 2017, a liability reported in GSTR-1 must be paid through GSTR-3B. In this case, the appellant did not pay the tax in GSTR-3B, leading to a short-payment. The appellant claims this was due to a GSTN technical glitch, but no evidence such as GSTN tickets, error reports, or contemporaneous communications has been produced to substantiate this claim. HC-KAR NC: 2026:KHC:35943
4 It is further observed that CBIC Circular No.26/26/2017-GST dated 29.12.2017 prescribes the procedure to rectify any under-reporting or misreporting in GSTR-3B. The appellant had the opportunity to correct the error in the subsequent month's return but did not take any coercive action."
Sri. Pradyumna Hejib, the learned counsel for the petitioner, and Sri. Aravind V. Chavan, the learned standing counsel who accepts notice for the respondents, are heard on: Whether there must be interference, and if there is to be interference, the terms of such interference.
The petitioner's case is that all the outward supplies have rightly been declared in the prescribed form GSTR1 for July 2020, but, because of a technical glitch, notwithstanding ITC in excess of Rs.20 lakhs, the petitioner could not upload all the details in the Form GSTR 3B. HC-KAR NC: 2026:KHC:35943
Sri. Pradyumna Hejib submits that even the ITC available as on that date in Form GSTR-3 were shown as Nil. The learned counsel submits that if this aspect is considered either by the Adjudicating Authority or by the Appellate Authority, instead of the petitioner being delegated to further appeal under Section 108 of the Act, the petitioner's grievance would be expeditiously addressed because the petitioner is on the verge of closing down the business. Sri. Aravind V. Chavan submits that it was open to the petitioner in terms of CBIC Circular dated 29.12.2017 to rectify the misreporting in Form GSTR 3B, but not having done that, the Appellate Authority has rightly confirmed the Adjudication Order.
This Court must observe that the crucial aspects such as whether the petitioner had an ITC credit of about Rs.20 lakhs as of the relevant date and whether there could have been a technical glitch restricting the petitioner from filing all the details must be considered HC-KAR NC: 2026:KHC:35943 and the petitioner cannot be non-suited on the ground that a rectification application has been filed or that the petitioner has not availed a particular opportunity envisaged in the circular dated 29.12.2017. The Appellate Authority should have examined all the factual aspects for a complete adjudication without denying the petitioner [a Registered Tax Person] an opportunity enabling a complete adjudication on merits.
The Appellate Authority must consider all circumstances for a decision so that if there are further proceedings, the Authority thereafter can have the benefit of the consideration of all circumstances. If the Appellate Authority decides on technicalities without examining all material aspects for a complete adjudication, there can only be protraction as against a complete adjudication at the earliest. As such, this Court is of the view that this Court must intervene with the Appellate Authority's order dated 24.03.2026 restoring the appeal for reconsideration. Hence, the following. HC-KAR NC: 2026:KHC:35943 ORDER [a] The petition is allowed-in-part, and the Order-in-Appeal dated 24.03.2026 [Annexure-B] is recalled restoring the appeal to the appellate authority. [b] The petitioner shall, without further notice, appear before the Appellate Court on 23.09.2026. (B M SHYAM PRASAD) JUDGE
BSV List No.: 2 Sl No.: 18
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.