GST Notice Resolution – ₹25.8 Lakh Tax Demand Successfully Dropped

A motor industry business received a GST notice involving two major issues: an output tax mismatch of ₹12,75,299 between GSTR-1 and GSTR-3B, and an alleged excess Input Tax Credit (ITC) claim of ₹13,15,788.

Key Challenges

The first challenge was the mismatch between the GST returns and the financial records. Our team established that the output tax reported in the financial statements was accurate and prepared a detailed reconciliation of GSTR-1 and GSTR-3B based on the correct financial figures.

The second issue related to the alleged excess ITC claim. The CGST and SGST input credits had been reported under the IGST head, creating an apparent excess claim under IGST. We demonstrated that the difference arose due to incorrect classification of eligible input tax credit under the wrong tax heads, rather than an actual excess claim.

Our Approach

We prepared a strong factual and technical response, supported by detailed reconciliations and appropriate explanations for both issues. The output mismatch reconciliation was accepted by the Assessing Officer. Although the ITC issue initially appeared to require further appeal proceedings, the matter was ultimately resolved in our favour.

Outcome

The Assessing Officer accepted the explanations and dropped the entire GST demand relating to both issues.

₹25.8 Lakh in disputed tax liability was successfully saved for the business.

Key Takeaway

Accurate reconciliation, proper classification of ITC and a well-supported GST response can make a significant difference in resolving tax notices and protecting business interests.