GST Audit & Demand in Gurugram: An Informational Case Study for Businesses in Delhi NCR

Background: A Manufacturing Company Under GST Scrutiny

In late 2023, a mid-sized automobile component manufacturer in Gurugram received a notice for a GST audit from the tax department. The company supplied goods across Delhi NCR — with customers in Delhi, Noida, and Greater Noida — and regularly claimed input tax credit (ITC) on raw materials, job-work charges, and transportation services.

The audit notice highlighted potential mismatches in returns and sought explanations on three points:

1. Input Tax Credit (ITC) Reconciliation Issues between GSTR-3B and GSTR-2A/2B.
2. Place-of-Supply Clarifications for goods processed in Noida and shipped to Delhi customers.
3. E-Way Bill and Invoice Discrepancies for high-value consignments during a seasonal sales period.

Facing the prospect of a substantial tax demand with interest and penalties, the company turned to experienced professionals, eventually consulting a GST lawyer in Gurugram for guidance.

Complications & Legal Risks in GST Disputes

GST law is document-driven, and disputes often arise due to mismatches between returns, invoices, and transport records. In this case, the risks included:

• ITC Denial Risk: If vendors had not filed returns correctly, the company’s ITC could be disallowed, despite genuine payments.
• Jurisdictional Complications: Transactions that straddled Delhi and Noida raised doubts about whether IGST or CGST-SGST should apply.
• E-Way Bill Penalties: Missing or inconsistent e-way bills can attract penalties, even when goods are actually delivered.
• Strict Deadlines: Failing to respond within notice timelines could crystallize tax demands, limiting defense options.

Such risks are common for businesses operating across NCR. Many firms seek clarity from a GST advocate in Delhi or consult a GST law firm in Noida when transactions involve multiple states and supply chains.

Informational Overview: How Such Cases Are Handled

While every case depends on facts and documents, the general process in GST disputes usually includes:

1) Mapping the Notice Against Records

Companies create a reconciliation sheet linking each notice query to invoices, ledgers, vendor filings, and e-way bill data. This helps identify gaps requiring explanation.

2) Vendor Reconciliation

Often, mismatches arise because vendors delay filing GSTR-1 or report incorrect invoice values. The company reaches out for vendor confirmations, amended returns, or affidavits to establish tax payment.

3) Substantiating Place-of-Supply

Contracts and job-work agreements are reviewed to clarify title transfer, risk of goods, and delivery points. This determines whether tax was correctly paid as IGST or CGST-SGST.

4) Supporting Transport Evidence

Transporter challans, warehouse gate registers, GPS logs, and ERP movement records are compiled to address e-way bill gaps. Courts and authorities often accept multiple forms of evidence to establish genuine supply.

5) Filing the Reply and Attending Hearings

A detailed, point-wise reply with annexures is filed, followed by personal hearings. Here, the company (through counsel) explains discrepancies, highlights vendor errors, and shows corrective measures.

6) Considering Appeal & ADR

If demands persist, companies can appeal before appellate authorities, citing proportionality and revenue-neutral principles. In some cases, litigation & ADR in Noida or Delhi may be considered, especially where commercial disputes overlap with GST issues.

Outcome in the Gurugram Case (Informational Illustration)

In this specific case, after thorough representation:

• ITC Mismatches: Most discrepancies were traced to vendor delays. Vendors filed corrected returns, which reduced the disputed ITC significantly.
• Place-of-Supply: Contracts showed that ownership transferred in Noida, justifying IGST on certain transactions. For a small subset, the company voluntarily corrected invoices prospectively.
• E-Way Bill Issues: Additional delivery records and ERP reports explained most gaps. Minor lapses were conceded, with penalties limited proportionally.

The adjudicating authority noted the reconciliations and considered the corrective measures, leading to a demand much lower than initially feared.

(This outcome is illustrative for informational purposes; results vary depending on individual facts, documents, and proceedings.)

Lessons for Businesses in Delhi NCR

1. Maintain Live Reconciliations – Regularly match GSTR-3B with GSTR-2B to catch mismatches early.
2. Vendor Health Checks – Monitor whether vendors file returns and pay taxes, since your ITC depends on it.
3. Clarity in Contracts – Draft agreements that clearly define title transfer and delivery obligations.
4. Transport Documentation – Keep supporting records beyond e-way bills, like gate logs and LR copies.
5. Timely Legal Consultation – Engage professionals promptly; deadlines in GST disputes are strict.

Companies operating across Delhi, Gurugram, and Noida often consult region-specific experts such as a GST lawyer in Gurugram, a GST advocate in Delhi, or a GST law firm in Noida depending on where audits and notices arise.

Subtle Contact Note

Businesses facing GST audits or disputes in Delhi NCR can seek structured advice tailored to their circumstances. For consultations, you may contact Tygar Law.

Declaration: This blog is intended for informational purposes only and contains general content and information so available on public Platforms. There is no intention to solicitate any kind of work through this medium. We should also like to clarify that Tygar Law Corporate is not responsible for any reliance so placed on the information so provided, herein readers are advised to take appropriate legal consultation as per there case and Jurisdiction for the advice pertaining to their specific situation.

Tygar Law – Corporate Legal Services
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www.tygarlaw.com