This is an appeal filed by M/s. Sri Kali Krishna Industries (Chinaveeranna Golkonda), 20-1026, Industrial Area Road, Dowlaishwaram, East Godavari District (hereinafter referred to as ‘Appellant’) against the tax orders passed by the Assistant Commissioner (ST), Alcot Gardens Circle, Kakinada Division (hereinafter referred to as ‘Assessing Authority’/for short ‘A.A.’) during the tax period from July, 2017 to June, 2018 under CGST/APGST Act, 2017 in GSTIN : 37ALVPG7858C1ZK vide Orders dated 4-1-2019, disputing levy of tax of ₹ 38,648/-.

2. The case is posted for hearing details are as under :

3. Sri N. Venu Gopala Rao, Authorized Representative of the appellant (hereinafter referred to as ‘A.R.’) has appeared finally on 14-10-2019 for arguing the case. Finally, the appeal was heard by the Appellate Authority.

Statement of facts :

4. The appellant M/s. Sri Kali Krishna Industries (Chinaveeranna Golkonda), 20-1026, Industrial Area Road, Dowlaishwaram, East Godavari District on the rolls Assistant Commissioner (ST), Alcot Gardens, Kakinada Division.

5. The assessing authority has caused scrutiny of GST returns of the appellant for the tax period from July, 2017 to June, 2018. On such scrutiny, the AA noticed that the appellant’s declared turnover in GSTR-3B, is not equaling to the GSTR-1 declared sale turnover as shown below :

(Amount in Lakhs)

6. Thus, the assessing authority has determined under declared tax of ₹ 38,648/- under CGST APGST Acts, 2017, and passed orders dated 4-1-2019.

7. Aggrieved by the above orders passed by the assessing authority, the appellant has preferred the present appeal and disputed the levy of tax of ₹ 38,648/-.

Grounds of appeal :-

8. The grounds of appeal filed by appellant in the appeal are extracted hereunder;

We primarily explain that due to unknown problems in GSTN network software, though we have attempted to file GSTR-3B return for the month of October, 2017, it was automatically conceived ‘NIL’ return and we could not file any return for this month afterwards since no pending return shown in the GSTN login.

However, after 10/2017, we have migrated to composition scheme and duly discharged the actual tax liability for the month of 10/2017 as shown below;

Thus, after adjusting the GST ITC of ₹ 25,080/-, we have made payment of remaining tax due of ₹ 13,568/-, but without causing verification of these records, the assessing authority has determined total tax liability basing on the difference between GSTR-1 & GSTR-3B turnovers.

We request to examine the ITC eligible to us in the month of 10/2017 and tax paid by us on 28-12-2017 after which the levied tax through the impugned order would have to be set aside.

It is respectfully submitted that for these grounds and other grounds to be submitted at the time of hearing, it is prayed that the respectable Appellate Joint Commissioner (ST), Vijayawada may be pleased to consider the above facts and legal position may be pleased to allow the appeal by annulling the impugned orders passed by the Assistant Commissioner (ST), Alcot Gardens Circle, Kakinada.

Discussion :

9. Perused the grounds of appeal filed by the appellant alongside the impugned order passed by the assessing authority i.e. Assistant Commissioner (ST), Alcot Gardens Circle, Kakinada Division.

10. During the course of appeal hearings, the A.R. has appeared and reiterated the contentions set-forth in the grounds of appeal.

11. The appellant explained that due to unknown problems in GSTN network software, though they have attempted to file GSTR-3B return for the month of October, 2017, it was automatically conceived ‘NIL’ return and they could not file any return for that month afterwards since no pending return shown in the GSTN login.

12. The appellant further submitted that after October, 2017, they have migrated to composition scheme and paid the actual tax liability for the month of October, 2017 as shown below;

13. The appellant contended that through the above computation and procedure, they have discharged the net tax liability of ₹ 13,568/- before issuing any show cause notice by the Department. But, without appraising these facts, the AA has unilaterally determined under declared tax merely basing on mismatch between GSTR-1 and GSTR-3B.

14. The appellant finally pleaded that since they have discharged the liable tax for the month of October, 2017, the supposed under declared tax arrived through mismatch reports, is not factual and requested to set aside such levy by annulling the assessment order and prayed for appeal orders in their favour.

Issues for Adjudication :

(1)     Whether the appellant contention that they have discharged the actual net tax liability for the month of October, 2017, hence the suppression of tax arrived through mismatch report is not factual and correct, has been substantiated with logical explanation and dependable evidence or not?

Analysis :

15. Perused the grounds of appeal along with assessment order passed by the A.A., and after thorough verification of records, the findings of the appellate authority are stated below;

16. The primary explanation of the appellant is that due to certain software error though they have attempted for filing return of the month of October, 2017, but the system has conceived Nil return, as such they could not file return for that month. As per the computation of actual accounts, the gross tax liability for the month of October, 2017, was admitted by the appellant for ₹ 38,647/- the same as determined by the A.A. However, the appellant explained that after adjusting eligible ITC of ₹ 25,080/-, they have paid the remaining tax liability of ₹ 13,568/- on 28-12-2017. This fact could not be verified by the assessing authority, because the AA has not correctly scrutinized the appellant contentions and one sidedly construed the under declared tax even though the appellant has established that they have duly discharged the net tax payable for the month of October, 2017.

Conclusion :

17. These facts & evidence adduced by the appellant with reference to balance liable tax obviously suggest that the determination of under declaration by AA is lacking certainty and authenticity. On the other hand, the appellant has strongly proffered and corroborated that after adjusting the eligible ITC, they have duly paid the net tax liability for the month of October, 2017. It is pertinent here to observe that mismatch reports is indicative in nature, but cannot be seen as final to conceive any suppression of turnover/tax. The AA ought to have examined the appellant contentions submitted in response to the show cause notice, which the AA failed to do so. Hence, the determined under declared tax liability by AA, cannot be upheld as bona fide. Therefore, the tax levied basing on mismatch reports is annulled & the appellant contentions are found sustainable with reference to rational arguments and corroborative evidence. Thus, the appeal on this aspect is allowed and the tax so levied is annulled.

18. In the end, the assessment is annulled on the levy made by the assessing authority