(2026) 1 GSTAT E- Journal 181 (Bengaluru)Input Tax CreditDecision: In Favour of Assessee
GSTAT on GSTR-2A Mismatch and Section 75(4): Marking Hearing as 'NA' in SCN Vitiates Order; Circular 183 Verification Mandatory
The GSTAT Bengaluru Bench held that summary disallowance of ITC due to GSTR-3B vs GSTR-2A mismatch without verifying Section 16(4) carry-over under Circular 183/15/2022 is illegal. Furthermore, recording 'NA' for personal hearing in an SCN violates mandatory Section 75(4), vitiating the order.
Case Name / Parties
M/s N. R. Builders v. Commissioner of Commercial Taxes, Karnataka
Appeal Number
APL/2/BUR/2026
Tribunal Bench
Bengaluru Bench
Date of Judgment / Order
31/08/2026
Coram
Hon'ble Shri Prabhakaran P.M., Judicial Member • Hon'ble Shri Ravi Jesuraj S., Technical Member (State)
For Appellant: Shri Sujay Subramanya Naidu, CA (Authorized Representative)
For Respondent: Departmental Representative
Facts of the Case
The Appellant, a quarrying and crushed stones proprietary concern, was assessed for FY 2018–19. The Revenue noticed an apparent mismatch between ITC claimed in Form GSTR-3B and credit auto-populated in Form GSTR-2A to the extent of ₹2,33,502/- (CGST ₹1,16,751/- and SGST ₹1,16,751/-). An SCN in Form GST DRC-01 was issued under Section 73(1), but the fields for date, time, and venue of personal hearing were recorded as 'NA'. The Proper Officer passed an ex parte Order-in-Original confirming tax of ₹2,33,502/-, interest under Section 50(1) of ₹2,03,730/-, and penalty of ₹23,350/- (total ₹4,60,582/-). The First Appellate Authority dismissed the appeal, holding that non-appearance in GSTR-2A proved suppliers had not paid tax. Before GSTAT, the Appellant demonstrated that the difference arose because ITC on FY 2017–18 invoices was availed in FY 2018–19 within the extended window permitted by Section 16(4) read with Removal of Difficulties Order No. 02/2018, and that the order was void for lack of a personal hearing.
Issues Before GSTAT
- 1Whether the difference between ITC claimed in Form GSTR-3B and Form GSTR-2A for FY 2018–19 can be summarily treated as inadmissible without verifying the taxpayer's explanation that it pertained to FY 2017–18 invoices availed within the Section 16(4) window.
- 2Whether an Order-in-Original is vitiated and void where the Show Cause Notice records the date, time, and venue of personal hearing as 'NA', in contravention of Section 75(4) of the CGST Act.
- 3Whether the absence of a scrutiny notice in FORM GST ASMT-10 invalidates Section 73 proceedings initiated pursuant to an audit reference.
- 4What consequential relief is appropriate where demands of tax, interest, and penalty were confirmed without statutory verification or hearing.
Relevant Statutory Provisions & Rules
Statutory Sections
Section 16 of CGST Act, 2017Section 16(2)(c) of CGST Act, 2017Section 16(4) of CGST Act, 2017Section 50(1) of CGST Act, 2017Section 61 of CGST Act, 2017Section 73 of CGST Act, 2017Section 73(1) of CGST Act, 2017Section 73(9) of CGST Act, 2017Section 73(11) of CGST Act, 2017Section 75(4) of CGST Act, 2017Section 75(6) of CGST Act, 2017Section 107 of CGST Act, 2017Section 112 of CGST Act, 2017Section 155 of CGST Act, 2017
GST Rules
Rule 36 of CGST Rules, 2017Rule 99 of CGST Rules, 2017Rule 142 of CGST Rules, 2017Rule 142(1-A) of CGST Rules, 2017
Circulars & Notifications
CBIC Circular No. 183/15/2022-GST dated 27.12.2022CBIC Order No. 02/2018-Central Tax dated 31.12.2018
Contentions of the Parties
Appellant / Taxpayer Contentions
- •The discrepancy was not an excess claim: ITC on FY 2017–18 invoices was availed in FY 2018–19 within the extended deadline of March 2019 return under Section 16(4) read with CBIC Order No. 02/2018-CT. This credit was reflected in the GSTR-2A of 2017–18, not 2018–19.
- •GSTR-2A was purely a facilitation tool during the relevant period; CBIC Circular No. 183/15/2022-GST specifically directs officers to verify suppliers' returns and invoices rather than summarily disallowing the credit.
- •The SCN marked personal hearing as 'NA'; under Section 75(4), grant of an opportunity of hearing is mandatory wherever an adverse decision is contemplated, rendering the order void ab initio under Supreme Court and Madras/Calcutta High Court rulings.
- •Scrutiny was initiated without ASMT-10 notice, violating Rule 99.
Respondent / Revenue Contentions
- •Section 16(2)(c) conditions require proof of tax payment by the supplier, and non-appearance in GSTR-2A is prima facie evidence of non-payment.
- •The taxpayer failed to respond to DRC-01A and DRC-01, leading to an ex parte order on available record.
- •The Revenue fairly conceded that Section 61 and 73 are independent and raised no objection to remanding the matter for factual verification of invoices under Circular 183.
Findings of GSTAT
GSTR-2A was, during FY 2017–18 and 2018–19, a facilitation mechanism and not a statutory bar to ITC eligibility. CBIC Circular No. 183/15/2022-GST explicitly directs the Proper Officer to verify—not summarily disallow—instances where FY 2017–18 credit was availed in FY 2018–19 returns under Section 16(4). The finding that non-appearance in 2018–19 GSTR-2A proves non-payment of tax is an unsubstantiated departmental assumption.
Precedents from the pre-GST VAT regime (Mahalakshmi Cotton, ALD Automotive, Microqual Techno) are entirely distinguishable, as they operated under state enactments lacking provisions comparable to Section 16(2)(c) read with Rule 36 and Circular 183/2022.
Section 75(4) contains an inflexible statutory mandate: an opportunity of hearing shall be granted where an adverse decision is contemplated, irrespective of whether a specific request was made by the taxpayer. Recording 'NA' in the SCN for date, time, and venue of hearing is a fatal jurisdictional infirmity that vitiates the proceedings. Followed Sahara India (Firm) (SC) and High Court rulings in Gayathri Agencies, A.H. Enterprises, and Goutam Bhowmik.
Section 61 (scrutiny) and Section 73 (adjudication) are independent avenues. Where proceedings are initiated under Section 73 following an audit reference, the absence of an ASMT-10 notice does not, by itself, invalidate the proceedings.
Interest and penalty are consequential to a sustainable tax demand. Since principal liability requires factual verification under Circular 183, the matter must be remanded to the Proper Officer for de novo adjudication with a mandatory personal hearing.
Ratio Decidendi
Key Legal Principle
“Disallowance of Input Tax Credit cannot be sustained solely on GSTR-3B vs GSTR-2A mismatches without examining Section 16(4) carry-forward explanations under CBIC Circular No. 183/15/2022-GST. An order passed on a Show Cause Notice marking personal hearing details as 'NA' violates mandatory Section 75(4) of the CGST Act, rendering the order void and requiring remand.”
Final Decision & Relief Granted
Outcome: The appeal was allowed by way of remand. The Order-in-Original and the Order-in-Appeal were set aside. The matter was remitted to the Proper Officer, LGSTO-170, Tumakuru, for de novo adjudication in accordance with law, with specific directions to verify invoice-wise reconciliations under Circular 183/15/2022-GST and afford a personal hearing within 12 weeks.
Relief Granted: Quashing of ₹4,60,582/- ex parte demand; remand for de novo adjudication with mandatory personal hearing; direction to apply CBIC Circular No. 183/15/2022-GST; staying of consequential interest and penalty.
Operative relief was verified against the Tribunal's order and accurately summarized without altering its legal effect.
Practical Implications for Taxpayers
- Whenever a GST demand is raised alleging GSTR-2A mismatch for FY 2017–18 or 2018–19, prepare supplier certificates and invoice reconciliations in accordance with CBIC Circular No. 183/15/2022-GST.
- Examine the DRC-01 notice: if the date, time, and venue of personal hearing are filled as 'NA', raise this violation of Section 75(4) immediately; it guarantees the setting aside of any adverse order on natural justice.
- Ensure that GSTR-2A for both FY 2017–18 and FY 2018–19 are placed on record to establish that invoices claimed in 2018–19 were properly reported by suppliers in the preceding fiscal period.
Practical Takeaways for Tax Professionals
- Plead Section 75(4) mandatory hearing failure as a fatal jurisdictional defect under Supreme Court in Sahara India and High Court rulings in Gayathri Agencies and Goutam Bhowmik.
- Differentiate Section 61 ASMT-10 requirements from Section 73 audit proceedings: Tribunals will not quash Section 73 SCNs merely for lack of ASMT-10 if initiated following an audit reference.
- Insist that the Proper Officer strictly follow the de novo remand timeline (12 weeks) and issue a reasoned, speaking order complying with Section 75(6).
SKM
Editorial Commentary
SKM Laws Professional Analysis
The N. R. Builders judgment from GSTAT Bengaluru addresses two of the most pervasive procedural malpractices in GST adjudication. First, departmental officers frequently bypass the hearing requirement by treating portal templates as an automated checkbox, typing 'NA' into the personal hearing fields and condemning taxpayers unheard. GSTAT has sent an unequivocal message: Section 75(4) is an irreducible guarantee of natural justice, not an optional convenience. Second, the Tribunal demolished the widespread tendency of lower authorities to apply pre-GST VAT precedents (such as Mahalakshmi Cotton) to GSTR-2A mismatches, affirming that CBIC Circular 183/2022 created a specialized, mandatory verification code that field officers cannot ignore.
Related Cases & Precedents
(2026) 1 GSTAT E- Journal 131
Applying Section 16(5) relief to belated return filings.
(2026) 1 GSTAT E-Journal 1
Affirming GSTAT's fact-finding appellate powers and Section 75(2) remand.
Related GST Tools & Utilities
Source Citation & Forensic References:
Official Citation: (2026) 1 GSTAT E- Journal 181 (Bengaluru)
Source Publication: GSTAT E-Journal, Volume I (Till 31.08.2026), Published by Goods and Services Tax Appellate Tribunal
Journal Pages: 181-190
Legal Information Disclaimer
This case law analysis is published strictly for informational, educational, and research purposes. It does not constitute legal, tax, or professional advice. The ratio decidendi and commentary reflect professional editorial interpretations of the Goods and Services Tax Appellate Tribunal's reported judgment. Readers must refer to the full certified order of the Tribunal before initiating or defending litigation.