GSTR-1 and GSTR-3B Mismatch Latest Legal Update
GSTR-1 and GSTR-3B mismatch has become a common headache for GST-registered businesses. Many taxpayers fear that any difference between these two returns automatically means tax recovery under Section 75(12) of the CGST Act, 2017. But recent legal interpretations say otherwise.
In this blog, we break it down in simple terms, backed by case laws and practical advice.
Why GSTR-1 and GSTR-3B Mismatch Happens
A mismatch may occur due to:
- Wrong outward supply reporting in GSTR-1.
- Missing invoices in GSTR-3B.
- Timing differences in recording credit notes or amendments.
Such differences don’t mean tax is automatically “self-assessed” and recoverable.
What Section 75(12) Actually Says
👉 Section 75(12): Allows direct recovery of tax where an amount is shown as payable in a return furnished under Section 39 (i.e., GSTR-3B).
👉 Key Point: GSTR-1 is a statement of outward supplies, not a return under Section 39.
CBDT Reference:
- Supreme Court in Bharti Airtel Ltd. vs. Union of India clarified that GSTR-1 alone can’t be treated as final liability without reconciliation in GSTR-3B.
Case Laws on GSTR-1 and GSTR-3B Mismatch
📌 M/s Gulati Enterprises vs. State of UP (2023):
Allahabad High Court held that mismatch alone does not mean tax is due; proper adjudication under Section 73/74 is required.
📌 Bharti Airtel Ltd. vs. Union of India (2021):
SC upheld that GSTR-1 is just a record; GSTR-3B determines tax liability.
These judgments protect taxpayers from arbitrary recovery notices.
Practical Steps for Taxpayers
Reconcile regularly:
Match GSTR-1, GSTR-3B and books every month.
Rectify promptly:
Use amendment tables in GSTR-1 and adjust in GSTR-3B in the same FY wherever possible.
Respond to notices:
If a notice is issued solely on mismatch, refer to above case laws and request proper adjudication.
Maintain records:
Keep invoices, reconciliations and correspondence handy for future defence.
Expert View
“Mismatch is a compliance error, not always tax evasion. Tax officers must follow adjudication and natural justice before recovery.” — Efiletax GST Team
FAQs on GSTR-1 and GSTR-3B Mismatch
Q1. Is mismatch a ground for penalty?
Yes, if deliberate or repetitive. Genuine mistakes with proof usually get relief.
Q2. Can I adjust mismatch in next return?
Yes, make amendments in GSTR-1 and adjust liability in GSTR-3B.
Q3. Which section governs such proceedings?
Section 73 (non-fraud) or 74 (fraud) — not Section 75(12) alone.
Summary
GSTR-1 and GSTR-3B mismatch does not justify direct recovery under Section 75(12). Tax officers must issue a proper notice under Section 73 or 74 and allow taxpayers to present their side. Stay compliant by reconciling monthly and responding to notices with valid proofs.
Final Word
Facing a mismatch notice? Talk to Efiletax experts for smooth handling, reconciliations and representation before GST authorities.