Kerala GST Tribunal Quashes Cess Demand Over Cigarette Seller’s GSTR-1 Error, Citing ₹2.56 Lakh Paid In GSTR-3B And No Evidence Of Shortfall

For January 2019, the appellant declared cess of ₹6,55,544.24 in its GSTR-1 but paid ₹2,56,350 in its GSTR-3B.

It maintained that the GSTR-1 entry was a clerical error and that the lower amount was the correct cess liability on the declared supplies.

The State authorities treated the discrepancy as short payment and demanded the differential cess, interest and penalty; the Joint Commissioner (Appeals) rejected the appellant’s explanation for want of evidence.

The Tribunal considered the appeal against that appellate order.

The order does not identify or apply a specific statutory provision or precedent.

Its reasoning rests on the principle that a tax demand for alleged short payment must be supported by evidence and assessed against the relevant return and supply particulars; an unexplained mismatch in a return entry is not, by itself, sufficient where the surrounding tax figures are consistent and there is no evidence of suppressed supplies or taxable value.

The Tribunal found that the appellant reported the same taxable value and corresponding CGST and SGST in GSTR-1 and GSTR-3B, and that those figures were not disputed by the Revenue.

It also accepted that cess of ₹2,56,350 had been paid through input tax credit and found that the GSTR-1 cess entry of ₹6,55,544.24 did not correspond with the declared taxable value or the CGST/SGST figures.

Because the Revenue produced no evidence of suppressed cigarette supplies, suppressed taxable value or short payment of CGST/SGST, the Tribunal treated the excess GSTR-1 entry as an erroneous clerical entry and held that the short-payment allegation was unsustainable.

It quashed and set aside the Joint Commissioner (Appeals)’ order dated 9 January 2026 and allowed the appeal with consequential relief.