Facing GST Notices under ITC mismatch issues? The Madras High Court’s 2025 ruling in Dura Construction vs ACCT confirms that denial of ITC without giving a hearing violates Section 75(4) of the CGST Act. Know your rights and how to protect your credit.
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What’s the Issue?
Many businesses are receiving GST notices that say:
“Mismatch found between GSTR-3B and GSTR-2A/2B – Input Tax Credit reversed.”
This often happens because:
- The supplier filed GSTR-1 late
- There are errors in GSTIN or invoice numbers
- The credit reflects in your books but not in 2A/2B yet
In many such cases, GST officers reverse ITC without giving the taxpayer a proper chance to respond or clarify. But the Madras High Court has stepped in and issued a landmark judgment to protect taxpayer rights.
Case Summary: M/s Dura Construction vs Assistant Commissioner (GST) – 2025
- Court: High Court of Madras
- Year: 2025
- Petitioner: M/s Dura Construction
- Respondent: Assistant Commissioner, GST Department
- Issue: Denial of ITC due to mismatch without hearing
What Happened?
- The taxpayer claimed ITC on genuine purchases and filed GSTR-3B.
- The GST officer found mismatches with GSTR-2A and disallowed the ITC without issuing a proper notice or granting a hearing.
- The business challenged this in court, arguing that their side was not heard, and that the mismatch was due to supplier-side delays.
What Did the Madras High Court Say?
The High Court ruled in favor of the taxpayer and made these key observations:
1. Section 75(4) of the CGST Act Must Be Followed
“An opportunity of hearing shall be granted where a request is received in writing from the person chargeable with tax or penalty…”
The court stated that:
- Natural justice is a part of GST proceedings
- GST officers must give a chance to reply and be heard before denying ITC
- A proper show-cause notice should be issued, and reply time must be given
2. Mismatch is Not a Valid Ground for ITC Denial
- Mismatches can happen due to supplier delay in filing GSTR-1 or technical issues.
- The taxpayer cannot be punished for something that’s not their fault.
- GSTR-2A is only a reference tool, not a final authority.
3. Officers Must Record Proper Reasons
- Orders like “Mismatch found, ITC disallowed” without explanation are legally invalid.
- Section 75(6) of the CGST Act requires a reasoned order after considering replies.
Relevant GST Act Sections to Know
| Section | Topic | Why It’s Important |
|---|---|---|
| Section 16 | Eligibility for ITC | Tells you when you can claim credit |
| Section 73 | Recovery of tax or ITC wrongly availed (without fraud) | Used by officers to issue ITC reversal notices |
| Section 75(4) | Hearing before order | Makes hearing mandatory before ITC denial |
| Section 75(6) | Reasoned order | Final order must explain why ITC is disallowed |
| Rule 86A | Blocking of ITC | Often misused to block ITC without reason |
| Section 155 | Burden of proof | Taxpayer must prove claim is genuine |
Why This Judgment Is Important for Businesses
This ruling gives protection to businesses that:
- Claim genuine ITC
- Face mismatch issues because of their suppliers
- Receive sudden ITC reversal without a chance to reply
From now on, no officer can deny ITC based only on mismatch unless:
- A proper notice is issued
- You are given a chance to explain
- The officer records valid reasons
What You Should Do If You Receive an ITC Mismatch Notice
Here’s a quick checklist:
- Don’t ignore the notice
- Reply within the deadline.
- Attach all supporting documents
- Invoice copies
- GSTR-2A/2B download
- Proof of payment to the supplier
- Ask for a hearing in writing
- Use Section 75(4) to demand a personal hearing.
- Mention this judgment
- Reference this Madras High Court case to support your claim.
- File an appeal if needed
- You can appeal under Section 107 if the officer still denies your ITC without following procedure.
Advice:
Many small businesses suffer just because their supplier delayed filing a return. That’s not your fault. And now, even the High Court agrees.
This 2025 judgment clearly says – GST officers can’t take back your ITC without listening to you.
So next time you face such a notice:
- Stay calm
- Respond confidently
- Use this court decision as your legal support
- Contact taxgiveindia.com for filing appeals