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The Gauhati High Court has refused to quash a GST show-cause notice over an alleged GSTR-2A input tax credit (ITC) mismatch, leaving the taxpayer to present its evidence and legal defence before the proper officer. The ruling does not decide whether the disputed ITC is ultimately allowable.
What the Gauhati High Court decided
In M/s Surya Business Private Limited v. State of Assam and Others, WA/321/2026, the Division Bench dismissed the company’s appeal and affirmed the single judge’s refusal to interfere with a notice issued under Section 73(1) of the Assam Goods and Services Tax Act. The judgment, delivered on 22 September 2026, was by Chief Justice Ashutosh Kumar and Justice Arun Dev Choudhury. The single judge had allowed the company to reply and raise its arguments before the proper officer, and the Division Bench upheld that approach.
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The court treated the notice as the start of a proceeding, not a final determination of liability. As it put it, “The show cause notice is not the adjudication of the liability, but its initiation with due opportunity to the appellant.” The question of entitlement to the disputed credit remains for adjudication.
How the dispute arose
Surya Business Private Limited, which does business in Jorhat, was audited under Section 65 for financial year 2018–19. An audit observation dated 13 December 2023 alleged excess ITC of approximately ₹27.25 lakh. The stated basis was that invoices for certain inward supplies from registered supplier M/s Atikur Rahman did not appear in the company’s GSTR-2A.
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The company responded to the audit observation on 17 December 2023. It said it held valid tax invoices, had received the goods, and had paid the supply value, including tax, through banking channels. It also argued that GSTR-2A was a facilitating mechanism and should not, on its own, determine eligibility. The audit report in Form GST ADT-02 followed on 8 January 2024, and the Section 73(1) show-cause notice was issued on 11 January 2024, proposing recovery of the disputed ITC with interest and penalty.
Those statements about invoices, receipt, and payment were the company’s submissions, not findings by the High Court that every statutory requirement for ITC had been met.
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Why the court sent the defence to adjudication
The Bench recognized that entitlement to ITC should not be decided solely by looking at an electronic statement without considering the statutory conditions. But it held that the notice-stage writ proceeding was not the point at which to decide the company’s ultimate entitlement or quash the notice on the basis of its defence.
Whether the company actually paid GST to its supplier and whether the supplier filed the relevant returns are matters the proper officer can examine. The company may place its supporting evidence and legal authorities before that officer. The court stated: “The defense of the appellant against the proposed demand, as noted hereinabove, is a matter which the appellant is entitled to establish before the proper officer.”
The company had also relied on its documents, the absence of a counter-affidavit, and the argument that proceedings should first have been taken against the supplier. The Bench did not consider those points sufficient to make the notice jurisdictionally invalid. The possibility that the taxpayer could succeed after the evidence is assessed does not, by itself, prevent the proceeding from beginning.
What the ruling does not establish
- It does not hold that a GSTR-2A mismatch can never support an ITC demand.
- It does not establish that invoices and bank payments, by themselves, prove ITC eligibility.
- It does not decide that Surya Business Private Limited is liable for the proposed demand or that the company has already won its ITC claim.
- It does not set a universal reply deadline for other taxpayers. The single judge’s order in this case allowed a reply within 30 days; that case-specific opportunity was affirmed on appeal.
What the case means for a taxpayer facing a similar notice
The decision is about where the evidence and arguments should be evaluated, not a general ruling on the merits of all GSTR-2A mismatches. For this appellant, the proper officer is the forum to assess the claimed purchase, supporting invoices, receipt of goods, payment, supplier-return information, and applicable law. A taxpayer in another matter should treat the deadline and instructions in their own notice and orders as controlling; the 30-day period in this case should not be assumed to apply automatically.
The judgment is the Gauhati High Court Division Bench’s decision in M/s Surya Business Private Limited v. State of Assam and Others, WA/321/2026, Neutral Citation 2026:GAU-AS:13966-DB, dated 22 September 2026.
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