Understanding GSTR-1 vs GSTR-3B Mismatch
GSTR-1 vs GSTR-3B mismatch has been a major compliance headache for GST taxpayers. In a landmark judgment, the Calcutta High Court clarified that a mismatch alone does not empower tax officers to directly recover tax dues under Section 75(12) of the CGST Act, 2017.
Key point: Direct recovery applies only if tax declared in GSTR-1 is not included in GSTR-3B.
Key Takeaway from the Calcutta High Court Order
✅ The case: M/s LGW Industries Limited vs Union of India (Calcutta HC, 2024)
✅ Issue: Whether a simple difference between GSTR-1 and GSTR-3B justifies direct recovery.
✅ Ruling: No automatic recovery. If there is a mismatch, proper Show Cause Notice (SCN) and adjudication under Section 73/74 are mandatory.
When Does Section 75(12) Apply?
Under Section 75(12) of the CGST Act:
- Direct recovery can be initiated only for self-assessed tax not paid.
- This means tax declared in GSTR-1 but not included in GSTR-3B.
👉 Example:
| Scenario | Direct Recovery Allowed? |
|---|---|
| Tax shown in GSTR-1 but not paid via GSTR-3B | ✅ Yes |
| Mismatch due to other errors or ITC adjustments | ❌ No |
Reference: CBIC Circular No. 171/03/2022-GST, clarifies the same position.
Expert View: What Taxpayers Should Do
Practical Tip:
- Always reconcile GSTR-1 and GSTR-3B before filing returns.
- If you receive a notice, verify if proper adjudication has been done.
- Contest any demand made without SCN and adjudication citing the Calcutta HC ruling.
FAQs on GSTR-1 vs GSTR-3B Mismatch
Q1: Can GST officers recover dues immediately if my GSTR-1 and GSTR-3B differ?
A: No. They must issue a valid SCN and complete adjudication unless your GSTR-1 shows tax not paid in GSTR-3B.
Q2: What should I do if I get a recovery notice?
A: Seek legal advice immediately and refer to the Calcutta HC judgment. File a response challenging any illegal recovery.
Summary
GSTR-1 vs GSTR-3B mismatch alone cannot trigger direct tax recovery under Section 75(12) CGST Act. Calcutta High Court confirms proper SCN and adjudication are required.
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