Figures in GSTR-9C Reconciliation Cannot by Themselves Found a Tax Demand: GSTAT Lucknow and Agra Benches Remand Return-Mismatch Cases

Both benches held that demands built on portal comparisons — GSTR-9 against 9C, or an adjustment in Table 5(O) — must be verified against actual returns, ledgers and ITC reversals before tax can be confirmed.

In two separate rulings, benches of the GST Appellate Tribunal have set aside demands that rested on figures drawn from annual returns and reconciliation statements, holding that the authorities must verify the actual tax effect before confirming liability [Nitin Bakers Pvt. Ltd. v. Deputy Commissioner, Kanpur; Satyendra Kumar Singh v. Peoples Honda].

In Nitin Bakers, the Lucknow Bench of Santosh Kumar Srivastava, Member (Judicial) and Arvind Kumar, Member (Technical) examined a demand of Rs. 56.24 lakh for FY 2018-19. The largest component, Rs. 25.93 lakh, arose from comparing Table 9 of GSTR-9 with Table 9P of GSTR-9C, which the Tribunal held was a reconciliation figure reflecting ITC reversals and not unpaid tax. A Rs. 2,589 excess-ITC demand ignored reversals in Table 4(B) of GSTR-3B, and a Rule 42 demand treated the entire ITC as common credit without segregating specific credit. Citing the need to determine the “net ITC position”, the Tribunal remanded the matter for de novo verification.

In Peoples Honda, the Agra Bench of Ajeet Singh, Member (Judicial) and Vivek Kumar, Member (Technical) dealt with Rs. 14,19,144 shown by a two-wheeler dealer in Column 5(O) of GSTR-9C as incentives from Honda. The Tribunal held that Section 15(3) governs the value of the supplier’s supply, not the recipient’s turnover, and that “the mere disclosure of the amount in Column 5(O) of GSTR-9C would not, without more, justify a demand of output tax” unless the dealer actually reduced its outward turnover or tax in GSTR-1 or GSTR-3B.

The Agra Bench also refused to let the Revenue recast the incentives as consideration for promotional services, since that ground was never raised in the show cause notice. It set aside both lower orders and directed fresh adjudication within the four corners of the existing notice, after verifying credit notes, the supplier’s GSTR-1, the pre-supply agreement and any ITC reversal.

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