High Court Invalidates Recovery for GSTR-1 and GSTR-3B Differences Without Rule 88C Adherence

• Mr. A. P. Srinivas and Mr. A. N. R. Jayaprathap are representing the respondents.

• The petitioner had previously challenged a notice dated 7-9-2023 in W. P. No. 27296 of 2023, and that petition was closed with the liberty to challenge a recovery notice.

• The current writ petition challenges the recovery notice dated 13-9-2023, primarily on the grounds of non-compliance with Rule 88C of the CGST Rules, 2017, which was inserted via Notification No. 26/2022 on 26-12-2022.

• The petitioner claims that no notice in Part A of Form GST DRC 01B has been received on the common portal as mandated.

• The difference between sales declared in outward supplies and Form GSTR 1 and the returns filed is attributed to sales returns, which have been explained by the petitioner.

• The petitioner argues that despite explaining the differences between Form GSTR 1 and Form GSTR3-B in a reply dated 11-9-2023 to the notice in Form GST DRC - 01A, the respondents issued the impugned recovery notice, which is against the prescribed procedure in Rule 88C.

• Rule 88C of the CGST Rules, 2017 allows proceedings to be initiated based on the recommendations of the council, but the petitioner claims there has been no intimation of compliance with Rule 88C requirements.

• The respondents refer to Clarifications/Instructions/Orders from the Central Board of Indirect Taxes and Customs, GST Policy Wing, and GST Investigation Wing.

• A specific reference is made to Para 3.2 of the Clarifications/Instructions/Orders, which discusses genuine reasons for differences between GSTR-1 and GSTR-3B and the need for explanations before taking recovery actions.

• The petitioner has not provided a reply to the respondents.

• The respondents argue that the petitioner did not request a notice in Form GST DRC-01B on the common portal, which is required by Rule 88C.

• The arguments presented by both sides have been considered.

• The writ petition is disposed of by directing the respondents to issue a notice as prescribed in Form GST DRC - 01B, if not already done on the common portal, within seven days, as per Rule 88C of the CGST Rules, 2017.

• The impugned recovery notice issued under Rule 79 of the CGST Rules, 2017 is quashed, with the liberty for the respondents to issue an appropriate notice in Form GST DRC 01B before proceeding with any recovery based on differences in Form GSTR1 and Form GSTR 3B.

• The writ petition is allowed with the given liberty, and no costs are awarded. Consequently, connected writ miscellaneous petitions are closed. Caterpillar India (P.) Ltd. Vs. Assistant Commissioner