Xiaomi Technology India Pvt Ltd Vs Additional Commissioner, CGST Delhi West Commissionerate & Ors.
Date: October 28, 2024
Court: High Court
Bench: Delhi
Type: Writ Petition
Subject Matter
Mere mismatch between GSTR-3B & GSTR-1 doesn’t attract Section 74 without an element of fraud
Summary
In the case of Xiaomi Technology India Pvt Ltd vs Additional Commissioner, CGST Delhi West Commissionerate & Ors., the Delhi High Court addressed a dispute regarding discrepancies between GSTR-3B and GSTR-1 filings for the financial year 2017-18. The Central Goods and Services Tax (CGST) department identified a mismatch totaling Rs. 4,37,27,280 in reported tax liabilities and an excessive claim of Input Tax Credit (ITC) amounting to Rs. 15,66,77,314. The department issued a Show Cause Notice (SCN) to recover these discrepancies. Xiaomi contended that they had submitted relevant replies addressing earlier notices and sought to clarify the differences noted by the department. The court pointed out that Section 74 of the CGST Act, which could lead to recovery actions, requires evidence of fraudulent intent or willful misrepresentation, rather than merely a mismatch between tax returns. While allowing the department to continue its inquiry, the court placed a hold on any final orders until further hearings. It directed that the next hearing would take place on December 16, 2024, indicating that the matter still required thorough examination. Overall, the court stressed the necessity for substantive proof of fraud or misrepresentation before actions under Section 74 could be validly invoked, highlighting the need for a fair process in tax compliance disputes.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 64250/2024 (Ex.)
Allowed, subject to all just exceptions. Application stands disposed of.
W.P.(C) 15297/2024 & CM APPL. 64249/2024 (Interim Stay)
1. Since the respondents are duly represented by Mr. Singla, let a reply be filed within a period of four weeks from today. The petitioner shall have a week therefrom to file a rejoinder affidavit.
2. Prima facie, we bear in consideration the submissions addressed by Mr. Lakshmikumaran, learned counsel for the writ petitioner, who draws our attention to the ongoing inquiry which was being undertaken by the respondents and the various responses which were submitted by the writ petitioner in the course thereof. Our attention was drawn to the initial notice of 14 July 2023 and the detailed reply which was submitted by the writ petitioner in response thereto.
3. From the order impugned before us, we note that the respondents lay the following allegations:
“11. In view of above, it has been found that the department had given many opportunities to the noticee to rebut the allegations, but the noticee had not submitted any documents neither to this office nor to the Audit-II Commissionerate, New Delhi, as replied vide letter C. No. GST/Delhi(West)/ Audit Draft SSCA on GST data quality/ 99/2022-23 dated 10.06.2024 issued by the Assistant Commissioner (Audit) CGST WEST Commissionerate, Bhikaji Cama Place, New Delhi and just wasting the time of the department.
12. Whereas, it appears that as per Table-A above the noticee had declared tax liability in GSTR-3B as Rs. 5,10,21,02,608/- (IGST- 32,53,11,56,59/-, CGST- Rs. 90,26,29,835/- and SGST- Rs. 90,26,29,835/-) whereas, tax liability declared in GSTR-1 is Rs. 5,05,83,75,329/- (IGST-Rs. 3,29,53,95,072/- CGST- Rs. 90,33,53,768/- and SGST-Rs. 90,33,53,768/-) therefore, it has been found that there is a huge difference of IGST- Rs. 4,22,79,413/-, CGST – Rs. 7,23,933/- and SGST-Rs. 7,23,933/- (total amount of Rs. 4,37,27,280/-). Therefore, it appears that there is a mis-match in GSTR-3B and GSTR-1 for amount of Rs. 4,37,27,280/- in the financial year 2017-18 and as per GSTR-9 (for FY 2017-18) the same has not been corrected by the noticee.
13. Whereas, the noticee had availed IGST of Rs. 4,80,64,08,184/- as reflected in (GSTR-3B) table -6(A) of the GSTR-9 for financial year 2017-18, however, IGST of Rs. 4,64,97,30,870/- reflected in (GSTR-2A) table 8(A) of the GSTR-9 for the financial year 2017-18. Therefore, there is a huge difference of IGST-Rs. 15,66,77,314/- which was excess availed by the noticee during financial year 2017-18. As discussed above many opportunities have been given to the noticee to submit the relevant records for verifying the said difference but a vague reply has been submitted by the noticee, which could not help in reaching any conclusion, in this regard.
14. Whereas, it also appears that as per Table-B above of para -5, the noticee had utilized the amount of ITC as Rs. 3,83,67,99,504/- (IGST- Rs. 3,81,33,16,312/-, CGST-Rs. 1,17,41,596/- and SGST- Rs.1,17,41,596/-), whereas, it has been found that the noticee had availed ITC as per GSTR-2A (FY 2017-18) as Rs.4,65,74,10,474/- (IGST-Rs. 4,64,67,30,268/-, CGST-Rs. 53,40,103/- and SGST- Rs. 53,40,103/-). Therefore, it has been found a huge difference of ITC as Rs. 82,06,10,970/- (IGST Rs. 83,34,13,956/-, CGST- (-) Rs. 64,01,493/- and SGST- (-) Rs. 64,01,493/-), which has been availed/ utilized in this regard has been received. DRC-01A dated 28.06.2024 has been issued to the taxpayer, but no reply in this regard has been received. Therefore, same is recoverable from the noticee under Section- 74(1) of the CGST Act, 2017.”
4. Prima facie, we doubt how the provisions of Section 74 of the Central Goods & Services Tax Act, 2017 would stand attracted on a mere allegation of a mismatch between GSTR-3B and GSTR-1. This we note since the said provision would itself be liable to be invoked only if it be alleged that a case of fraud, wilful misstatement or suppression of facts is made The matter requires consideration.
5. We, accordingly, provide that while it shall be open for the respondents to proceed further with the impugned Show Cause Notice, any final orders, if passed, shall not be given effect to till the next date of hearing.
6. Let the matter be called again on 16.12.2024.