Retail Chain — Resolving a GST Input Tax Credit Mismatch Demand
A pan-India retailer was hit with a DRC-01 demand over an ITC mismatch caused by defaulting vendors. We built the reconciliation and the legal defence that cut the demand by 80%.
A demand built on someone else's omissions.
The retailer was served a GST DRC-01 notice demanding a large sum in unpaid taxes, interest, and penalties. The demand arose from a significant Input Tax Credit (ITC) mismatch between the client's GSTR-3B filings and the GSTR-2A data — the direct result of poor vendor management. Numerous small-scale suppliers had simply failed to upload their invoices, leaving the client legally exposed for tax it had already paid to those vendors. The job was to reconcile commercial reality with GST law, and to defend credit that was genuine.
How we turned the demand around.
Automated Forensics
We ran a line-by-line automated reconciliation of the purchase register against GSTR-2A/2B to isolate every non-compliant vendor.
Vendor Enforcement
We identified the defaulters and coordinated directly with them to get missing returns filed — effectively forcing the data to populate the portal.
Legal Defence
We drafted a comprehensive reply invoking Section 16(2) of the CGST Act, with a bulletproof evidence trail: proof of payment and proof of receipt of goods establishing the credit's legitimacy.
Adjudication Representation
We represented the client before the Adjudicating Authority, arguing that a taxpayer should not be penalised for the clerical omissions of third parties when the underlying transaction is genuine.
The capabilities we brought to bear.
GSTR-2A / 2B Reconciliation
Automated matching of the purchase register to portal data to isolate every gap.
Section 16(2) Defence
Credit legitimacy established on documentary merits, not portal artefacts.
Vendor Compliance Systems
A dashboard that releases payment only once a vendor's filings are confirmed.
Adjudication Representation
Direct appearance and argument before the GST authority.
The results we delivered.
GST ITC is a cash asset, and proactive vendor management is the only way to protect it from departmental scrutiny.