Union of India vs Bharti Airtel Judgment dt 28.10.2021
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. OF 2021 (ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)
UNION OF INDIA APPELLANT(S)
VERSUS
BHARTI AIRTEL LTD. & ORS. RESPONDENT(S)
J U D G M E N T
A.M. KHANWILKAR, J.
- This appeal emanates from the judgment and order dated
05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345
of 2018, whereby the High Court allowed the writ petition filed by
respondent No.1 herein and read down paragraph 4 of the
Circular No. 26/26/2017GST dated 29.12.2017 issued by the
Commissioner (GST), Government of India, Ministry of Finance,
Department of Revenue, Central Board of Excise and Customs,
GST Policy Wing , to the extent it restricted the rectification of
Form GSTR3B in respect of the period in which the error had Digitally signed by
NEETU KH AJURIA
Da te: 2021.10.28
11:27: 22 IST occurred. The High Court also allowed respondent No.1 to rectify
1 for short, “impugned Circular”
2 for short, “Commissioner (GST)”
2
Form GSTR3B for the period in which error had occurred, i.e.,
from July to September 2017. Further, the High Court directed
the appellant that on filing of the rectified Form GSTR3B, they
shall, within a period of two weeks, verify the claim set forth by
respondent No.1 and give effect to the same once verified.
- This lis is aftermath of enacting the Central Goods and
Services Tax Act, 2017 , which came into force with effect from
01.07.2017. Vide Notification No.10/2017 dated 01.07.2017,
Rules 59, 60 and 61 of the Central Goods and Services Tax Rules,
2017 were brought into force along with Forms GSTR1, GSTR2,
GSTR2A, GSTR3 and GSTR3B.
- In the context of the matter in issue, it may be apposite to
take note of the Notification No.17/2017Central Tax dated
27.07.2017 issued for amending Rule 61 by altering the wording
of Rule 61(5) and introducing Rule 61(6). Rule 61(5), as it stood
earlier when it came into force, read thus:
“(5) Where the time limit for furnishing of details in
FORM GSTR1 under section 37 and in FORM GSTR2
under section 38 has been extended and the circumstances so warrant, return in FORM GSTR3B,
in lieu of FORM GSTR3, may be furnished in such
manner and subject to such conditions as may be notified by the Commissioner”
3 for short, “2017 Act”
4 for short, “2017 Rules”
3
- This provision was not only substituted, but subRule (6) was
also inserted in Rule 61 by the said amendment vide Notification
No.17/2017Central Tax. The amended provision reads thus:
“Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Notification No. 17/2017 – Central Tax
New Delhi, the 27th July, 2017
G.S.R. ( )E.: In exercise of the powers conferred by
section 164 of the Central Goods and Services Tax Act,
2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:
(1) …..
…..
- In the Central Goods and Services Tax Rules,
2017,
…..
(v) in rule 61, with effect from 1st July, 2017, for
subrule (5), the following subrules shall be substi tuted, namely:
“(5) Where the time limit for furnishing of details
in FORM GSTR1 under section 37 and in FORM
GSTR2 under section 38 has been extended
and the circumstances so warrant, the Commis
sioner may, by notification, specify that return shall be furnished in FORM GSTR3B electroni
cally through the common portal, either directly
or through a Facilitation Centre notified by the
Commissioner.
(6) Where a return in FORM GSTR3B has been
furnished, after the due date for furnishing of details in FORM GSTR2—
(a) Part A of the return in FORM GSTR3 shall
be electronically generated on the basis of infor
mation furnished through FORM GSTR1, FORM
GSTR2 and based on other liabilities of preced
ing tax periods and PART B of the said return
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shall be electronically generated on the basis of
the return in FORM GSTR3B furnished in re spect of the tax period;
(b) the registered person shall modify Part B of
the return in FORM GSTR3 based on the dis
crepancies, if any, between the return in FORM
GSTR3B and the return in FORM GSTR3 and
discharge his tax and other liabilities, if any;
(c) where the amount of input tax credit in
FORM GSTR3 exceeds the amount of input tax
credit in terms of FORM GSTR3B, the addi tional amount shall be credited to the electronic
credit ledger of the registered person.”;
…..”
- This was followed by Notification No.18/2017Central Tax
dated 08.08.2017, whereby time to file Form GSTR1 for the
months of July and August 2017 was extended to 05.09.2017 and
20.09.2017 respectively. On the same day, in exercise of the
powers conferred by Rule 61(5) of the stated Rules, the Central
Government issued Notification No.21/2017Central Tax
specifying that the return for the months of July and August 2017
shall be furnished in Form GSTR3B electronically through the
common portal before the dates as specified in the corresponding
entry in column (3) of the table given therein. To wit, the date for
filing of Form GSTR3B for the month of July 2017 was notified as
20.08.2017 and that for the month of August 2017 was notified as
20.09.2017.
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- The Under Secretary to the Government of India issued
another Notification bearing No.23/2017Central Tax dated
17.08.2017 to extend the time for filing Form GSTR3B for the
month of July 2017 for persons opting to file Form GST TRAN1
on or before 20.08.2017 till 28.08.2017, subject to fulfilment of
certain conditions like depositing of tax payable under the Act and
payment of interest, if any. Respondent No.1 filed its return in
Form GSTR3B for the month of July 2017 on 31.08.2017.
- The Commissioner (GST) issued another Circular
No.7/7/2017GST dated 01.09.2017 relating to systembased
reconciliation of information furnished in Forms GSTR1, GSTR2
and GSTR3B and the mechanism for correction of erroneous details furnished in Form GSTR3B.
- On the representations received from the business
community, the Under Secretary to the Government of India
issued Notification No.35/2017Central Tax dated 15.09.2017 in
exercise of the powers conferred by Section 168 of the 2017 Act
read with Rule 61(5) of the 2017 Rules and other enabling
provisions, on the recommendations of the Goods and Services
Tax Council , specifying the dates for filing of return for the 5 for short, “the Council”
6
concerned month as per the table given therein, in Form GSTR3B
electronically, through the common portal on or before the last
date specified in the corresponding entry in column (3) of the said
table. The last date for the concerned English calendar month
was specified as 20 day of the succeeding English calendar
month for the period between August and December 2017.
Respondent No.1 filed its return in Form GSTR3B on 20.09.2017
for the month of August 2017 and on 16.10.2017 for the month of
September 2017.
- The Under Secretary to the Government once again issued
Notification No.56/2017Central Tax dated 15.11.2017, specifying
the timeline for filing of return in Form GSTR3B for the month of
January, February and March 2018 as 20 February, 20 March and 20 April, 2018 respectively.
- The Commissioner (GST) then issued the impugned Circular
on the subject of filing of returns under GST, clarifying certain
issues considered by the Central Board of Indirect Taxes and
Customs to usher in uniformity in implementation across field
formations. By this Circular, the earlier Circular issued on
01.09.2017 was kept in abeyance until the systembased 6 for short, “the Board”
7
reconciliation prescribed under that Circular was to be
operationalized consequent to issue of relevant notification. Sub
paragraphs 3.1 and 3.2 of paragraph 3 of this Circular dealing
with amendment/corrections/rectification of errors, provided as follows;
“3. Amendment / corrections / rectification of
errors:
3.1 Various representations have been received
wherein registered persons have requested for clarification on the procedure for rectification of errors
made while filing their FORM GSTR3B. In this regard,
Circular No. 7/7/2017GST dated 1st September 2017
was issued which clarified that errors committed while
filing FORM GSTR – 3B may be rectified while filing FORM GSTR1 and FORM GSTR2 of the same month.
Further, in the said circular, it was clarified that the
system will automatically reconcile the data submitted
in FORM GSTR3B with FORM GSTR1 and FORM GSTR2, and the variations if any will either be offset
against output tax liability or added to the output tax
liability of the subsequent months of the registered
person.
3.2 Since, the GST Council has decided that the time
period of filing of FORM GSTR2 and FORM GSTR 3
for the month of July 2017 to March 2018 would be
worked out by a Committee of officers, the system
based reconciliation prescribed under Circular No. 7/7/2017GST dated 1st September 2017 can only be
operationalized after the relevant notification is issued.
The said circular is therefore kept in abeyance till
such time.”
(emphasis supplied)
- It may be useful to advert to paragraph 4 of the same
Circular, which reads thus:
“4. It is clarified that as return in FORM GSTR3B do
not contain provisions for reporting of differential
figures for past month(s), the said figures may be reported on net basis alongwith the values for current
month itself in appropriate tables i.e. Table No. 3.1,
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3.2, 4 and 5, as the case may be. It may be noted that
while making adjustment in the output tax liability or
input tax credit , there can be no negative entries in
the FORM GSTR3B. The amount remaining for adjustment, if any, may be adjusted in the return(s)
in FORM GSTR3B of subsequent month(s) and, in
cases where such adjustment is not feasible, refund
may be claimed. Where adjustments have been made
in FORM GSTR3B of multiple months, corresponding
adjustments in FORM GSTR1 should also preferably
be made in the corresponding months.”
(emphasis supplied)
- Respondent No. 1 was, however, keen on availing of the
dispensation specified in the Circular dated 01.09.2017 for the
relevant period (July to September 2017), having realized that
there was surplus amount of ITC in its ledger account (electronic
credit ledger). It is the case of respondent No.1 that it had been
receiving various services from suppliers situated throughout
India including Delhi. It being a supplier of services as well as
recipient of services under the 2017 Act, was required to file the
details of outward and inward supplies for every tax period and
also of monthly return under the GST Act. In order to calculate
the OTL and the claim of ITC, during the period from July till
September 2017, there was no formal or official mechanism to
check the authenticity of data so as to claim ITC for the relevant
period against the transactions effected by it with its suppliers. 7 For short, “OTL”
8 For short, “ITC”
9
Whereas, an inbuilt mechanism was guaranteed by the common
electronic portal to be put in place by the Competent Authority
under the 2017 Act. However, during the initial period, after
introduction of the common electronic portal, it had several
deficiencies and was not geared up to follow the specified regime of
auto populated data as predicated in Sections 37 and 38 of the
2017 Act.
- Form GSTR1 for the relevant months of July to September
2017 was required to be filed before 10.01.2018 vide Notification
No.72/2017Central Tax dated 29.12.2017. Significantly, Form
GSTR2A became operational only in September 2018. For that
reason, as a stop gap arrangement, the registered persons were
required to submit returns in Form GSTR3B. It is only after
Form GSTR2A became operational in September 2018, it is stated
that respondent No. 1 realized that it had sufficient amount in the
ITC ledger account (electronic credit ledger) during the relevant
period. Further, due to nonfunctionality of GSTR2A, respondent
No. 1 had to discharge its OTL by depositing/paying in cash. Had
Form GSTR2A been functional, there would have been no need
for respondent No. 1 to pay the amount in cash, but could have
utilized the ITC account (electronic credit ledger) for payment of
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corresponding OTL. For that reason, respondent No.1 would urge
that if it was allowed to rectify Form GSTR3B, so as to avail ITC
for the relevant period in terms of Circular dated 01.09.2017, the
amount paid by it in cash towards the OTL would get credited to
its electronic cash ledger account. However, the impugned
Circular dated 29.12.2017 comes in the way of respondent No. 1
in doing so. Resultantly, respondent No.1 approached the High
Court by way of writ petition under Article 226 of the Constitution
of India, filed on 31.05.2018, praying for the following reliefs:
“PRAYER
“In light of the facts and circumstances mentioned
above and in consideration of grounds taken above,
the Petitioner most humbly prays that this Hon’ble Court may be pleased to:
(a) issue an appropriate writ, order or direction in nature of declaration that Rule 61(5), FORM GSTR3B
and Circular No.26/2017 dated 29.12.2017 are ultra
vires the provisions of the CGST Act to the extent they
do not provide for the modification of information in the return of the tax period to which such information
relates and are arbitrary, in violation of Articles 14, 19(1)(g), 265 and 300A of Constitution of India.
(b) issue an appropriate writ, order or directions declaring the Notifications No.23/2017Central Tax
dated 17.08.2017, 35/2017Central Tax dated 15.09.2017 and 56/2017Central Tax dated 15.11.2017, the same as ultra vires the provisions of Section 39(7) of the CGST Act to the extent it provides
for payment of tax finally under the CGST Act by the
date mentioned for filing FORM GSTR3B;
(c) issue an appropriate writ, order or direction in nature of certiorari or any other writ, order or direction
of like nature, to call for, examine the records in
relation to Circular No.26/2017 dated 29.12.2017 and
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quash the same to the extent it does not provide for
the modification of the information in the return of the
tax period to which such information relates as being
arbitrary, in violation of Articles 14, 19(1)(g), 265 and
300A of Constitution of India.
(d) issue an appropriate writ, order or direction declaring the tax liability of the Petitioner filed under
FORM GSTR3B is provisional and the output tax liability of the Petitioner will only crystalize after the filing of FORM GSTR1, 2 and 3.
(e) issue an appropriate writ, order or directions in
the nature of mandamus or any other writ, directing
the Respondents to operationalize/start the facility of
FORM GSTR2 and FORM GSTR3 for period commencing from 01.07.2017;
(f) issue an appropriate writ, order or directions in
the nature of mandamus or any other writ, directing
the Respondents to provide the Petitioner the facility
for amendment and modification of FORM GSTR3B
and grant such consequential relief as may be necessary;
(g) Pass any orders as this Hon’ble Court may deem
fit in the given facts and circumstances of the present
case;”
- During the pendency of the writ petition, Forms GSTR2,
GSTR2A and GSTR3 came to be operationalized w.e.f. September
- The Central Government then issued Notification
No.49/2019Central Tax dated 09.10.2019, thereby omitting Rule
61(6) w.e.f. 01.07.2017 and substituting Rule 61(5) from the same
date to read as follows:
“Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
Notification No. 49/2019 – Central Tax
12
New Delhi, the 9th October, 2019
G.S.R……(E). In exercise of the powers conferred by
section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central
Goods and Services Tax Rules, 2017, namely:
(1) …..
(4) In the said rules, in rule 61,
(a) for subrule (5), the following subrule shall be substituted, with effect from the 1 July, 2017 namely:
“(5) Where the time limit for furnishing of details in FORM GSTR1 under section 37 or in FORM GSTR2 under section 38 has been extended, the return specified in subsection (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that where a return in FORM GSTR3B is
required to be furnished by a person referred to in
subrule (1) then such person shall not be required
to furnish the return in FORM GSTR3;
…..”
(emphasis supplied)
We have adverted to this Notification whilst noting that validity
thereof has not been challenged, though it has come into effect
from 01.07.2017 and governs the period between July and
September 2017, which is subject matter of this proceedings. 15. Notably, the High Court did not set aside the impugned
Circular dated 29.12.2017, but preferred to read down only
paragraph 4 thereof to the extent it restricted the rectification of
Form GSTR3B in respect of period in which the error had
13
occurred. For, the High Court was of the view that the stated
restriction was contrary to the provisions of the 2017 Act and the
Rules framed thereunder.
- The High Court in its judgment took note of the repeated
technical glitches in the electronic common portal introduced by
the Department, during the transition phase from the erstwhile
regime to the GST regime. The High Court then noted that
respondent No.1 had submitted its monthly Form GSTR3B based
on estimates, for the relevant period of July to September 2017.
Further, the exact ITC in the electronic credit ledger for the
relevant period could be known to respondent No. 1 a month later
in October 2018, when GSTR2A became operational. Only
thereafter, respondent No. 1 realized that there had been an
excess payment of Rs.923 crores in cash for discharging OTL. In
other words, despite the fact that a bona fide error had occurred
for reasons beyond the control of respondent No. 1, yet respondent
No. 1 was unable to correct the mistake in Form GSTR3B for the
relevant period. The High Court held that CGST contemplated a
selfpolicing system. Resultantly, the statutory provisions had
provided for generation of autopopulated data of the stakeholders.
That was a right and not a mere facility made available to
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registered persons. Thus, every registered person had a right to
correct the returns in the very month to which they relate and not
visited with any adverse consequences for uploading incorrect
data. The High Court noted the admission of the Department that
the operation of Forms GSTR2 and GSTR3 could not be effected
due to technical issues at their end necessitating postponement
for indefinite period. In other words, the Department itself was
not fully geared up to handle such an elaborate electronic
procedure. The High Court further noted as to how due to non
functioning of Forms GSTR2 and GSTR3, Rule 61(5) and 61(6)
was required to be inserted in the 2017 Rules and provide for
monthly return in Form GSTR3B, which was a summary return.
The High Court also accepted the contention of respondent No. 1
that it had to discharge the OTL for the relevant period in cash,
even though it had ITC available to its credit in electronic credit
ledger, due to the fault of the Department in not operationalizing
the statutorily prescribed Forms GSTR2, GSTR2A and GSTR3.
That had resulted in excess payment of cash by respondent No.1.
The High Court also took note of the refund provisions to observe
that even if there was a possibility to adjust the accumulated ITC
in future, it could not be a ground to deprive respondent No.1 of
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its option to fully utilize the ITC which it was statutorily entitled
to. The High Court held that there was no reason to restrict the
mechanism of rectification to the returns of subsequent months.
It also held that paragraph 4 of the impugned Circular dated
29.12.2017 was not in consonance with the provisions of the 2017
Act.
- Accordingly, the High Court allowed the writ petition and
permitted respondent No.1 to rectify Form GSTR3B for the period
to which the ‘error relates’ i.e., the months of July to September
- The operative directions issued by the High Court read thus:
“24. Thus, in light of the above discussion, the rectification of the return for that very month to which
it relates is imperative and, accordingly, we read down
para 4 of the impugned Circular No. 26/26/2017GST
dated 29.12.2017 to the extent that it restricts the rectification of Form GSTR3B in respect of the period
in which the error has occurred. Accordingly, we allow
the present petition and permit the Petitioner to rectify
Form GSTR3B for the period to which the error
relates, i.e. the relevant period from July, 2017 to September, 2017. We also direct the Respondents that
on filing of the rectified Form GSTR3B, they shall,
within a period of two weeks, verify the claim made
therein and give effect to the same once verified. In
view of the fact that the final relief sought by the
Petitioner has been granted and the petition is allowed,
no separate order is required to be passed in the application seeking interim relief. Accordingly, the said
application is disposed of as such.”
- The appellant has assailed the view so taken by the High
Court. At the outset, it was urged that the High Court had no
16
territorial jurisdiction to entertain the writ petition filed by
respondent No.1. This objection is founded on the argument that
the source of power to levy and collect GST under the 2017 Act
vests both in the State and the Centre. The Delhi High Court
could not have decided the issues concerning other State(s) and
that too without making them as party respondent. The writ
petitioner has chosen to only implead the Council which is a body
created only to decide about the policy and is not a tax collector as
such. Thus, besides the High Court had no territorial jurisdiction,
the writ petition suffered from the vice of nonjoinder of necessary
parties.
- As regards the merits, the appellant has invited our attention
to the constitutional background and the erstwhile regimes of the
central excise law, service tax law etc., and in contrast, the
dispensation provided in the GST regime and the obligation of
every outward supplier to pay OTL. It is urged that the GST is a
beginning of a new era of cooperative federalism and the purport of
Article 246A read with Article 279A of the Constitution fortify that
position. It is a regime to bring about paradigm shift in the
erstwhile taxes such as excise duty, service tax, entry tax, VAT
and other additional and minor levies based on multiple taxable
17
events, which have been subsumed into one taxable event called
“supply of goods and services”. The new dispensation enables
both the Union of India and the respective States to become joint
federal partner in taxing goods and services simultaneously and
have equal rates on the occurrence of the taxable event. Notably,
the 2017 Act is not ascribable to any Entry in List I, List II or for
that matter, List III. It is a sui generis regime in the Constitution
by virtue of Article 246A read with Article 279A and the field of
taxation thereunder is goods and services and the power to tax is
simultaneous and coextensive.
- Shri N. Venkataraman, learned Additional Solicitor General
of India, took us through the provisions of the 2017 Act regarding
payment of duties/taxes and availing of ITC including the
eligibility and utilization of ITC. As regards the eligibility and
utilization of ITC, there is a statutory duty fastened on every
registered person governed under various regimes and presently
under the GST law, to pay OTL and a corresponding right to avail
and utilize ITC, subject to eligibility and conditions specified
therefor. The right to claim ITC, being a statutory right, is
circumscribed by conditions and restrictions, subject to which a
registered person is entitled to take credit. The provisions
18
regarding entitlement of ITC enable a registered person to utilize
the same for discharging the OTL. It is imperative upon a
registered person to maintain records regarding transactions
between suppliers and the recipients based on their agreements,
invoices and books of accounts, either manually or electronically.
The records so maintained by the registered person would itself
reveal about the eligibility to credit; and its availment is within the
exclusive domain of the supplier and the recipient concerned. The
registered person under the law is obliged to do a selfassessment
of its transactions and determine the OTL and exercise the option
to avail of and utilize the ITC to the extent required or to pay the
OTL by cash. The Authorities have no role to play whatsoever in
that regard. It is an option to be exercised by the registered
person and not by the Authorities. This principle has remained
the same both before the GST and also post GST regime. Indeed,
the registered person has been provided with a common electronic
portal or tax electronic portal, which is only an enabler and a
facilitator in bringing on board all the registered persons which
include the supplier, recipient, registered person and other
recipients. The efficacy of common electronic portal or so to say
malfunctioning thereof, does not extricate the registered person
19
from the primary obligation of selfassessment of OTL as
predicated in Section 16 of the 2017 Act. For doing so, the
registered person is obliged to maintain accounts and records as
envisaged under Chapter VII of the 2017 Rules. That ought to be
the basis for selfassessment of OTL in the first place. On the
basis of the facts and figures emanating from such records, the
registered person can collate the relevant information regarding
entitlement to avail ITC collected from supplier of goods or services
or for both which are used or intended to be used in the course of
furtherance of his business. Suffice it to observe that the
registered person is expected to exercise the option of utilizing ITC
or to pay by cash for discharging his OTL at the time of filing of
return on the information gathered from the primary record in his
possession.
- The eligibility and availment of ITC is indeed subject to
conditions and restrictions in the manner specified in Section 49
of the 2017 Act. If the registered person intends to avail ITC, he
can do so by paying the OTL from his electronic credit ledger
referred to in Sections 2(46) and 49(2) of the 2017 Act. He can
avail of ITC on the conditions specified in Section 16(2) read with
Sections 41 and 49(2) of the 2017 Act. As per Section 59 of the
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2017 Act, every registered person is required to selfassess the
taxes payable under the 2017 Act and furnish a return for each
tax period as specified under Section 39 of the 2017 Act.
- It is urged that the scheme of the 2017 Act makes it amply
clear that the obligation in the matter of deciding about the
eligibility and mode of payment of OTL including selfassessment,
is to be exercised by the registered person himself and the
Authorities have no role to play at that stage. The registered
person cannot find fault with the deficiencies in the common
electronic portal so as to extricate from this obligation. Similar
obligation was required to be discharged by him even before the
GST regime came into being vide the 2017 Act with effect from
01.07.2017. The functions or features provided in the common
electronic portal of auto matching and auto populating of the record of the supplier and the recipient and vice versa are only a
facility made available to the registered person. The features
provided in the context of Sections 42 and 43 of the 2017 Act
relating to ITC and OTL, are dynamic and seamless processes of
matching of invoices of the supplier and the recipient. The invoice
matching mechanism contemplated under Sections 42 and 43,
was expected to be accomplished by the introduction of a set of
21
forms, namely, GSTR1, GSTR1A, GSTR2, GSTR2A and GSTR
- As per the mechanism predicated in the 2017 Act, the entire
exchange processes were intended to happen between 11 and
17 of every following month and once the reconciliation gets over,
every registered person had to file a monthly return in Form
GSTR3 by 20 of the following month and discharge his OTL. As
aforesaid, to overcome the initial problems faced after introduction
of the common electronic portal and the nonoperability of the
concerned forms, it was decided to make a stop gap arrangement
enabling the registered person to file his return electronically in
Form GSTR3B, which contains necessary information relevant for
completing the selfassessment process and payment of OTL, if
any. Though a stop gap arrangement, it was always treated as
return within the meaning of Section 39 of the 2017 Act. Any
rectification regarding omission or incorrect particulars referred to
therein, could be furnished in the month or quarter during which
such omission or incorrect particulars came to be noticed. Taking
any other view would result in ushering in inconsistency and
uncertainty not only to the concerned registered person, but also
to his recipient and supplier and other records not directly
connected with the registered person. Hence, allowing
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correction/rectification of Form GSTR3B of the concerned period
is not permissible in the new dispensation; and for which reason,
an express provision had been made in Section 39(9) that
rectification regarding omission or incorrect particulars in the
return so filed can be effected for the month or quarter during
which such omission or incorrect particulars are noticed and not
in the concerned return. The corrections permitted in Forms
GSTR1 and GSTR2 are of different nature, whereas the return
filed in Form GSTR3B for the relevant period ought to remain as
it is.
- It is further urged that Sections 37 and 38 of the 2017 Act do
not provide for right relating to eligibility of ITC. The obligation to
do selfassessment of ITC and of OTL and to pay the selfassessed
OTL by using the ITC or by cash payment, is a matter of exercising
9 39. Furnishing of returns.
(1) to (8) …..
(9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under subsection (1) or subsection (2) or
subsection (3) or subsection (4) or subsection (5) discovers any omission or incorrect particulars therein , other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed , subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect
particulars shall be allowed after the due date for furnishing of return for the
month of September or second quarter following the end of the financial year,
or the actual date of furnishing of relevant annual return, whichever is earlier.
(emphasis supplied)
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option for electing the mode of discharge of OTL. Further,
reconciliation predicated under Sections 37 and 38 between the
outward supplier, registered person and the subsequent recipient,
does not impact the rights and obligations of the registered person
regarding selfassessment of OTL and the duty to pay the self
assessed OTL in the manner he wants to discharge by using self
assessed ITC or cash payment.
- It is urged that the option so exercised by the registered
person is his own volition and the Authorities have no concern or
any role to play at that stage. The High Court has completely
glossed over this crucial aspect and proceeded to answer the
matter in issue being swayed by the fact that common electronic
portal had faced rough weather during the initial phase and that
the statutory forms were not operationalized. The High Court was
impressed by the argument of the writ petitioner that due to non
operability of the stated forms, the writ petitioner was denied of
access to the relevant information, in particular about the ITC
amount in its electronic credit ledger. This plea could not have
been taken by the writ petitioner considering the obligation of self
assessment of ITC and of OTL and duty to pay selfassessed OTL.
The eligibility of ITC and the right to exercise option to pay the
24
OTL through the mode of his choice would come later. For doing
the selfassessment, the registered person is fully equipped with
accounts and records maintained by him as per the statutory
requirement, which are in his complete control and knowledge. In
other words, the High Court committed manifest error in opining
that the stipulation specified in the impugned Circular, is contrary
to the provisions of the 2017 Act; whereas, express provisions of
the 2017 Act provide to the contrary. Further, the High Court
erroneously assumed that the writ petitioner had submitted the
monthly Form GSTR3B for the period of July to September 2017,
based on its estimate. The writ petitioner cannot be permitted to
take such a plea despite the statutory requirement of maintaining
accounts and records as provided by the 2017 Act and the Rules
framed thereunder. Furthermore, effecting correction/rectification
in the returns for the month or quarter during which such
omission or incorrect particulars have been noticed, does not in
any way result in denying the right to avail ITC. The fact that
respondent No.1 would not be eligible to get refund of cash also,
cannot be the basis to permit the registered person to swap the
entry in the electronic cash ledger with the entry in the electronic
credit ledger or vice versa. No such mechanism has been provided
25
in the 2017 Act or the Rules framed thereunder. If permitted,
even as one of the cases because of nonoperability of the forms at
the relevant time, may result in chaotic situation and collapse of
the tax administration of the Union, States and the Union Territories.
- Per contra, learned counsel for respondent No. 1 has
supported the reasons as had weighed with the High Court in
upholding the challenge and reading down paragraph 4 of the
impugned Circular dated 29.12.2017 to the extent it restricts the
rectification of Form GSTR3B in respect of the period in which the
error had occurred. It is emphasized that Form GSTR3B is only a
stop gap arrangement to overcome the technical glitches in the
common electronic portal and nonoperability of the concerned
statutory forms enabling autopopulating of relevant entries and
records. The fact that circumstances prevalent at the initial stages
of introduction of common electronic platform has been
acknowledged by the authorities and introduction of Form GSTR
3B is a testimony of that admission. Having done so, it was not
open to the authorities to deny the taxpayers their dues, in
particular, right to revise their returns and avail of ITC. The
provision made in the impugned Circular dated 29.12.2017, not
26
permitting rectification of the return is conceptually flawed and
not consistent with the legislative intent and the provisions of the
2017 Act and the Rules framed thereunder. It denies the taxpayer
his statutory right to utilize credits, due to technical problems in
not putting the electronic platform in place. The respondent
realized that huge amounts of excess ITC is available in its books
only after Form GSTR2A was made operational in September,
- By not permitting the respondent to avail of ITC shown in
the electronic credit ledger had resulted in collection of double tax
from the respondent and an unfair advantage to the Government.
Permitting the registered person to avail of the excess ITC in its
electronic credit ledger, cannot be considered to be unfair advantage taken by the taxpayer.
- The 2017 Act provided that in a Business to Business (B 2 B)
transaction, a supplier (of goods/services) and a recipient (of
goods/services) would interact with each other through a common
electronic portal which as per the statutory framework was
required to provision for payment of tax and furnishing of returns
including availing/taking and utilization of credit. Sections 37, 38
read with Section 42 of the 2017 Act and Rules 59 and 60 of the
2017 Rules are indicative of the features that were required to be
27
provided in the common portal. It is supposed to provide for auto
populating of the records of supplier and the recipient including
the facility of interaction of GSTN through Forms GSTR1, 1A, 2,
2A and 3 and generation and filing of periodical returns. It
contemplated an automatic matching, reversal and reclaim of ITC.
The mechanism for rectification has been envisaged in Section
39(9) of the 2017 Act, which is subject to the steps to be taken
under Sections 37 and 38 regarding matching and verification.
The return to be filed in Form GSTR3B had no such features and
was only a stopgap arrangement, as the mechanism provided in
Sections 37 and 38 was not put in place. The provision regarding
rectification under Section 39(9), therefore, had no application to
the stopgap arrangement of filing return in Form GSTR3B, much
less for the relevant period (July to September 2017). Hence,
reliance placed on Section 39(9) of the 2017 Act to justify the
stipulations specified in the impugned Circular dated 29.12.2017,
cannot be countenanced.
- It is urged that Form GSTR3B is a summary return and does
not contain the invoicewise details. The recipient who had no
access to the vendor’s returns had no facility to verify the
correctness of the ITC taken. Form GSTR3B is a consolidated
28
return wherein the assessee manually files its total credit, OTL etc.
The appellant cannot take advantage of its own failure of not being
able to operationalize Forms GSTR2 and GSTR3 right at the
inception when the provisions of the Act came into force. It is
unfair and inequitable that failure of the department should
benefit the department by forcing the registered person to
discharge OTL. On the other hand, the assessees were given to
understand right from 2015 that the system of return filing will be
automated under GST. The entire industry and trade accordingly
contemplated system changes based on these declarations i.e.,
return filing and taking/utilizing credit will be on the basis of
autopopulated returns. Notably, three days before the
implementation of GST, even though Sections 37, 38, 39, 42 and
43 were notified and were brought into force, the appellant issued
Notification No. 10/2017 Central Tax dated 28.06.2017 stating
that the automated system will not be implemented and a
summary manual return under Section 61(5) in Form GSTR3B,
which is “in lieu of” Form GSTR3 has to be filed. The parameters
specified in Form GSTR3 were substituted in Form GSTR3B.
This arrangement was soon altered by issuing Notification No.
17/2017Central Tax dated 27.07.2017, thereby amending Rule
29
61(5) retrospectively with effect from 01.07.2017, omitting the
words “in lieu of” and expressly mentioning that Form GSTR3B
was introduced only till the period Sections 37 and 38 were not in
operation. Further, Form GSTR3B was only a stopgap
arrangement and while filing of Form GSTR2 is operationalized,
Form GSTR3 of the preceding tax periods will be automatically
generated and filled after acceptance/rejection contemplated
under Sections 37 and 38 of the 2017 Act. In October 2019, by
amending Rule 61(5) retrospectively making the return filed in
Form GSTR3B final return, the automated system contemplated
under Sections 37 to 39 was formally done away with in the teeth
of statutory mandate.
- According to respondent No. 1, it is only after
operationalization of GSTR2A in September, 2018 that complete
data for July to September 2017 became available to it and on the
basis of which it wanted to revise the return filed for that period.
It was possible to do so in terms of Circular No. 7/7/2017 dated
01.09.2017, which predicated that the details furnished in Form
GSTR3B will be corrected based on Forms GSTR1 and GSTR2
and will be autopopulated and will reflect in Form GSTR3 in that
particular month. However, that was done away with by
30
introducing impugned Circular No. 26/26/2017GST dated
29.12.2017. The arrangement specified in the impugned Circular
was against the spirit of the Act and the Rules framed thereunder.
Hence, the High Court justly recorded that finding. It is urged
that rectification/adjustment mechanism for the month when the
errors are noticed is contrary to the scheme of the 2017 Act and
would defeat the statutory right of the assessee by putting a fetter
to not avail the ITC, though available in his account of electronic
credit ledger. The High Court rightly read down paragraph 4 of
the impugned Circular dated 29.12.2017 and also issued direction
to allow the respondent to rectify Form GSTR3B for the period to
which error relates i.e., July to September 2017, subject to
verification by the authorities concerned. This was obviously an
equitable arrangement and not opposed to any provision of the Act
or the Rules. This direction would enable the respondent to avail
of the ITC from the surplus shown in his account of electronic
credit ledger and the excess amount paid in cash would
correspondingly be reinstated in electronic cash ledger of the
respondent, which is to the tune of Rs.923 crores. As a matter of
fact, the impugned Circular dated 29.12.2017 is wholly without
jurisdiction as it arbitrarily alters the statutory framework. It is
31
also inconsistent with the return filing system under previous tax
regime, such as Service Tax Rules, Central Excise Tax Rules, Delhi
Value Added Tax Act, Income Tax Act etc. In all these legislations,
it would have been open to the assessee to rectify the original self
assessed return at a later point of time. It is urged that the High
Court was competent to issue writ of mandamus as it has been
done in the present case.
- We have heard Mr. N. Venkataraman, learned Additional
Solicitor General of India for the appellant and Mr. Harish N. Salve
and Mr. Tarun Gulati, learned senior counsel appearing for respondent No. 1.
- At the outset, the preliminary issue raised by the appellant
regarding jurisdiction of the Delhi High Court to entertain the writ
petition or that the writ petition suffered from the vice of non
joinder of the necessary parties including that the High Court
could not have issued a writ of mandamus, need not detain us. As
regards the jurisdiction of the Delhi High Court, the registered
office of respondent No. 1 is in Delhi. The appellant (respondent
in the writ petition) also has its office in Delhi. The relief claimed
in the writ petition amongst others, was to challenge provisions of
the central Act and the circulars issued by the competent
32
authority having its office in Delhi. Hence, the jurisdiction of the
Delhi High Court cannot be a matter of any doubt. Similarly, the
argument of the appellant that State Governments/Union
Territories are necessary parties, does not take the matter any
further. As aforesaid, the writ petitioner was not challenging the
individual action of the States or the Union Territories, but a
policy decision of the Central authority who had issued the
impugned Circular, namely, the Commissioner (GST). If the writ
petitioner succeeded in that challenge, the consequential relief
would follow. In our opinion, nonimpleadment of respective
States/Union Territories would not come in the way of the writ
petitioner to pursue the cause brought before the High Court by
way of subject writ petition. Even the argument regarding High
Court having exceeded jurisdiction in issuing writ of mandamus,
does not commend to us. If the conclusion reached by the High
Court regarding the efficacy of impugned Circular was to be
upheld, no fault can be found with the directions issued by it in
paragraph 24 of the impugned judgment, reproduced above.
Accordingly, the preliminary objections regarding the
maintainability of the writ petition and the jurisdiction of the Delhi
High Court deserve to be rejected.
33
- Another issue that needs to be decided at the threshold is
whether the impugned Circular dated 29.12.2017 issued by the
Commissioner (GST) is without authority of law. Indisputably, the
Circular has been issued to notify the clarification given by the
Board in exercise of its powers conferred under Section 168(1) of
the 2017 Act in order to consolidate the information in various
notifications and circulars regarding return filing and to ensure
uniformity in implementation across field formations. The
decision was taken by the Board after considering various
representations received seeking clarifications on various aspects
of return filing such as return filing dates, applicability of
quantum of late fee, amendment of errors in submitting/filing of
Form GSTR3B and other related queries. In strict sense, it is not
the direction issued by the Commissioner (GST) as such, but it is
notifying the decision(s) of the Board taken in exercise of its
powers conferred under Section 168(1) of the 2017 Act. It is a
different matter that a circular is issued under the signatures of
Commissioner (GST), but in essence, it is notifying the decision(s)
of the Board, which has had authority and power to issue
directions. Accordingly, the argument that the impugned Circular
34
dated 29.12.2017 has been issued without authority of law, needs
to be rejected.
- Reverting to the analysis of the issues and contentions done
by the High Court, it is primarily focused on the grievance of the
writ petitioner that due to nonoperability of Form GSTR2A at the
relevant time (July to September 2017), it had been denied of
access to the information about its electronic credit ledger account
and consequently, availing of ITC for the relevant period and
instead to discharge the OTL by paying cash to its vendors. Thus,
it has resulted in payment of double tax and unfair advantage to
the tax authorities because of their failure to operationalize the
statutory forms enabling autopopulating statement of inward
supplies of the recipient and outward supplies including facility of
matching and correcting the discrepancies electronically. The
High Court, however, did not enquire into the cardinal question as
to whether the writ petitioner was required to be fully or wholly
dependent on the auto generated information in the electronic
common platform for discharging its obligation to pay OTL for the
relevant period between July and September 2017. The answer is
an emphatic No. In that, the writ petitioner being a registered
person, was under a legal obligation to maintain books of accounts
35
and records as per the provisions of the 2017 Act and Chapter VII
of the 2017 Rules regarding the transactions in respect of which
the OTL would occur. Even in the past (till recently upto the 2017
Act came into force), during the preGST regime, the writ
petitioner (being registered person/assessee) had been
maintaining such books of accounts and records and submitting
returns on its own. No such autopopulated electronic data was in
vogue. It is the same pattern which had to be followed by the registered person in the postGST regime.
- As per the scheme of the 2017 Act, it is noticed that
registered person is obliged to do selfassessment of ITC, reckon
its eligibility to ITC and of OTL including the balance amount lying
in cash or credit ledger primarily on the basis of his office record
and books of accounts required to be statutorily preserved and
updated from time to time. That he could do even without the
common electronic portal as was being done in the past till
recently preGST regime. As regards liability to pay OTL, that is
on the basis of the transactions effected during the relevant period
giving rise to taxable event. The supply of goods and services
becomes taxable in respect of which the registered person is
obliged to maintain agreement, invoices/challans and books of
36
accounts, which can be maintained manually/electronically. The
common portal is only a facilitator to feed or retrieve such
information and need not be the primary source for doing self
assessment. The primary source is in the form of agreements,
invoices/challans, receipts of the goods and services and books of
accounts which are maintained by the assessee
manually/electronically. These are not within the control of the
tax authorities. This was the arrangement even in the preGST
regime whilst discharging the obligation under the concerned
legislation(s). The position is no different in the postGST regime,
both in the matter of doing selfassessment and regarding dealing
with eligibility to ITC and OTL. Indeed, that selfassessment and
declarations would be any way subject to verification by the tax
authorities. The role of tax authorities would come at the time of
verification of the declarations and returns submitted/filed by the
registered person.
- Section 16 of the 2017 Act deals with eligibility of the
registered person to take credit of input tax charged on any supply
of goods or services or both to him which are used or intended to
be used in the course or furtherance of his business. The input
tax credit is additionally recorded in the electronic credit ledger of
37
such person under the Act. The “electronic credit ledger” is
defined in Section 2(46) and is referred to in Section 49(2) of the
2017 Act, which provides for the manner in which ITC may be
availed. Section 41(1) envisages that every registered person shall
be entitled to take credit of eligible input tax, as selfassessed, in
his return and such amount shall be credited on a provisional basis to his electronic credit ledger.
- As aforesaid, every assessee is under obligation to selfassess
the eligible ITC under Section 16(1) and 16(2) and “credit the same
in the electronic credit ledger” defined in Section 2(46) read with
Section 49(2) of the 2017 Act. Only thereafter, Section 59 steps
in, whereunder the registered person is obliged to selfassess the
taxes payable under the Act and furnish a return for each tax
period as specified under Section 39 of the Act. To put it
differently, for submitting return under Section 59, it is the
registered person who has to undertake necessary measures
including of maintaining books of accounts for the relevant period
either manually or electronically. On the basis of such primary
material, selfassessment can be and ought to be done by the
assessee about the eligibility and availing of ITC and of OTL, which
38
is reflected in the periodical return to be filed under Section 59 of
the Act.
- Section 59 does make reference to Section 39, which deals
with furnishing of returns, but the fact remains that for furnishing
of returns, preparatory work has to be done by the assessee
himself and is not fully or wholly dependent on the common
electronic portal for that purpose. Just couple of weeks before the
relevant period between July and September 2017, the writ
petitioner/respondent No. 1 had been doing that exercise which it
was expected to continue even under the postGST scheme. The
factum of nonoperability of Form GSTR2A, therefore, is flimsy
plea taken by the writ petitioner/respondent No. 1. Indeed, if the
stated form was operational, the same would have come handy to
the writ petitioner for doing selfassessment regarding eligibility of
ITC and availing thereof. But it is a feeble excuse given by the writ
petitioner/respondent No. 1 to assail the condition specified in
impugned Circular dated 29.12.2017 regarding the rectification of
the return submitted manually in Form GSTR3B for the relevant
period (July to September 2017).
- The question of reading down paragraph 4 of the said
Circular would have arisen only if the same was to be in conflict
39
with the express provision in the 2017 Act and the Rules framed
thereunder. The express provision in the form of Section 39(9)
clearly posits that omission or incorrect particulars furnished in
the return in Form GSTR3B can be corrected in the return to be
furnished in the month or quarter during which such omission or
incorrect particulars are noticed. This very position has been
restated in the impugned Circular. It is, therefore, not contrary to
the statutory dispensation specified in Section 39(9) of the Act.
The High Court, however, erroneously noted that there is no
provision in the Act, which restricts such rectification of the return
in the period in which the error is noticed. It is then noted by the
High Court that as there is no possibility of getting refund of
surplus or excess ITC shown in the electronic credit ledger,
therefore, the only remedy that can enable the writ petitioner to
enjoy the benefit of the seamless utilization of the ITC is by way of
rectification in its annual tax return (Form GSTR3B) for the
relevant period. Further, the High Court in paragraph 23 of the
impugned judgment, noted that the relief sought in the case before
it, was indispensable. This logic does not commend to us. For, if
there is no provision regarding refund of surplus or excess ITC in
the electronic credit ledger, it does not follow that the assessee
40
concerned who has discharged OTL by paying cash (which he is
free to pay in cash in spite of the surplus or excess electronic
credit ledger account), can later on ask for swapping of the entries,
so as to show the corresponding OTL amount in the electronic
cash ledger from where he can take refund. Payment for discharge
of OTL by cash or by way of availing of ITC, is a matter of option,
which having been exercised by the assessee, cannot be reversed
unless the Act and the Rules permit such reversal or swapping of
the entries. As a matter of fact, Section 39(9) provides for an
express mechanism to correct the error in returns for the month
or quarter during which such omission or incorrect particulars have been noticed.
- The entire edifice of the grievance of the writ petitioner
(respondent No. 1) was founded on nonoperability of Form GSTR
2A during the relevant period, which plea having been rejected as
untenable and flimsy, it must follow that the writ
petitioner/respondent No. 1 with full knowledge and information
derived from its books of accounts and records, had done self
assessment and assessed the OTL for the relevant period and
chose to discharge the same by paying cash. Having so opted, it is
not open to the respondent to now resile from the legal option
41
already exercised. It is for that reason, the respondent has
advisedly propounded a theory that in absence of (electronicauto
populated record) mechanism made available as per Sections 37
and 38, return filed in Form GSTR3B is not ascribable to Section
39(9) of the 2017 Act read with Rule 61(5) of the 2017 Rules. This
is yet another untenable plea taken by respondent No. 1. For, the
appellant having realized that the mechanism specified in Sections
37 and 38 of the 2017 Act cannot be put in place due to non
operability of the forms governing such mechanism, had to amend
the rules to make a stopgap arrangement until the entire
mechanism became operational. Appellant not only amended the
statutory rule but also provided for filing of return manually in
Form GSTR3B electronically through the common portal with
effect from July 2017. This is manifest from the
circulars/notifications issued from time to time including the timeline for submitting the returns.
- It is futile to urge that Section 39(9) has no application to the
fact situation of the present case. In that, allowing filing of return in FormGSTR3B albeit a stop gap arrangement, is ascribable to
Section 39 of the 2017 Act read with Rule 61 of the 2017 Rules.
Indeed, it is not comparable to the mechanism specified for
42
electronically generated Form GSTR3 referable to Rule 61.
Nevertheless, Form GSTR3B is prescribed as a “return” to be
furnished by the registered person and by the subsequent
amendment of Rule 61(5) brought into force with effect from
01.01.2017, it has been clarified that such person need not
furnish return in Form GSTR3 later on. Notably, the validity of
that amendment including that of Notification dated 09.10.2019
bearing No. 49/2019, is not put in issue before us.
- No doubt, in the initial stages, it was notified that Form
GSTR3B will be in lieu of Form GSTR3 but that was soon
corrected by deletion of that expression. At the same time, as the
mechanism for furnishing return in terms of Sections 37 and 38
was not operationalized during the relevant period (July to
September 2017) and became operational only later, the efficacy of
Form GSTR3B being a stop gap arrangement for furnishing of
return, as was required under Section 39 read with Rule 61,
would not stand whittled down in any manner. It would still be
considered as a return for all purposes though filled manually electronically.
- The Gujarat High Court in the case of AAP & Co., Chartered
Accountants through Authorized Partner vs. Union of India &
43
Ors. , was called upon to consider the question whether the
return in Form GSTR3B is the return required to be filed under
Section 39 of the 2017 Act. Although, at the outset it noted that
the concerned writ petition had been rendered infructuous but,
went on to answer the question raised therein. It took the view
that Form GSTR3B was only a temporary stopgap arrangement
till due date of filing of return Form GSTR3 is notified. We do not
subscribe to that view. Our view stands reinforced by the
subsequent amendment to Rule 61(5), restating and clarifying the
position that where return in Form GSTR3B has been furnished
by the registered person, he shall not be required to furnish the
return in Form GSTR3. This amendment was notified and came
into effect from 01.07.2017 retrospectively. The validity of this
amendment has not been put in issue.
- The Delhi High Court in the impugned judgment, has taken
note of decision of the Andhra Pradesh High Court in case of Panduranga Stone Crushers vs. Union of India & Ors. This
decision dealt with the period between July 2017 and March 2018
for the financial year 20172018. The petitioner therein had 10 2019-TIOL-1422-HC-AHM-GST
11 Vide Notification/GSR No. 772(E) dated 9 October, 2019
12 2019-TIOL-1975-HC-AP-GST
44
submitted Form GSTR3B return through GST portal, as required.
While doing so, he had inadvertently and by mistake reported
IGST input tax credit in a column relating to import of goods and
services instead of placing that particular amount, namely, IGST
input tax credit in all other ITC column. The writ petitioner
asserted that he was entitled to rectify such mistake which had
crept in Form GSTR3B returns. The Union of India had
contended that said situation was covered by Section 39(9) of the
2017 Act and the petitioner could rectify the omission, but did not
avail the chance to rectify or modify the returns. Therefore, he
was not entitled to relief as claimed in the writ petition. The
Andhra Pradesh High Court relied on the decision of the Gujarat High Court in AAP & Co. and the decision of the Kerala High
Court in Saji S. Proprietor, Adithya and Ambadi Traders &
Anr. vs. The Commissioner, State GST Department & Anr. ,
wherein the Kerala High Court had permitted the request for
transfer of tax liability from the head “SGST” to “IGST”, enabling
the registered person to carry out rectification. The Andhra
Pradesh High Court allowed the petitioner to follow the same suit.
The view taken in these decisions though not assailed before this 13 supra at Footnote No. 10
14 dated 12.11.2018 in W.P.(C) No. 35868/2018
45
Court cannot impact the logic commended to us in this judgment
on the basis of interpretation and application of the relevant provisions to the facts of this case.
- The Delhi High Court in the present case then relied on the
decision of the Punjab & Haryana High Court in the case of Adfert Technologies Pvt. Ltd. vs. Union of India & Ors. In
that case, the petitioner was unable to file return before
31.12.2017 being the extended time due to heavy load upon
accountants, who were having number of assesses, lack of proper
knowledge of computer system, complexity in filling different
columns of TRAN1 etc. The Punjab & Haryana High Court noted
that GST was an electronic based tax regime and most of people of
India were not conversant with electronic mechanism and not able
to load simple forms electronically. Be it noted that the factum of
inability to access the electronic portal to submit return within the
specified time due to technical faults in the portal is entirely
different than the assertion to grant adjustment of amount
voluntarily paid in cash by the assessee towards OTL. The latter
can be allowed only if the law enacted by the Parliament expressly
permitted such swapping of entries of the electronic credit ledger visavis electronic cash ledger; and certainly not permissible in
15 2019-TIOL-2519-HC-P&H-GST
46
the teeth of Section 39(9) of the 2017 Act. Relying on the decision of the Gujarat High Court in Siddharth Enterprises vs. The
Nodal Officer , however, the Court noted that denial of credit of
tax/duty paid under existing Acts would amount to violation of
Article 14 and 300A of the Constitution of India. It noted that
unutilized credit has been recognized as vested right and property
in terms of Article 300A of the Constitution. This decision was on
facts of that case concerning erroneous entry recorded in Form
GSTR3B and not regarding right asserted to swap the mode of
payment of OTL in cash to be adjusted against electronic credit
ledger as in the present case in the guise of rectification of return
filed in Form GSTR3B for the earlier period.
- Reference was then made to decision of this Court in MRF
Ltd., Kottayam vs. Asstt. Commissioner (Assessment), Sales
Tax & Ors. , wherein it is held that a person may have a
legitimate expectation of being treated in a certain way by an
administrative authority, even though he has no legal right in
private law to receive such treatment. The High Court then referred to the decision of Delhi high Court in Krish Authomotors
16 2019-TIOL-2068-HC-AHM-GST
17 (2006) 8 SCC 702
47
Pvt. Ltd. vs. Union of India & Ors. , which had permitted the
writ petitioners to either submit the TRANI form electronically by
opening the electronic portal or to tender the said form manually
before the specified date and thereafter to process the claim for
ITC in accordance with law. The Punjab & Haryana High Court
agreed with the view taken by the Gujarat High Court and the
Delhi High Court. The conclusion so recorded by the Punjab &
Haryana High Court will have no bearing on the facts of this case
in light of the opinion expressed in this judgment, as we have held
that consequent to submission/filing of Form GSTR3B, as
envisaged by the 2017 Act, it can be rectified only in the manner
specified in Section 39(9) read with Rule 61(5), as applicable at the
relevant time. In other words, the rectification can be done only in
the return to be furnished in the month or quarter during which
such omission or incorrect particulars are noticed and not in the
return for the period to which it relates.
- The High Court in the impugned judgment, has also adverted
to the decisions of the Delhi High Court in Blue Bird Pure Pvt.
Ltd. vs. Union of India & Ors. and in Lease Plan India
Private Limited vs. Government of National Capital Territory
18 2019-TIOL-2153-HC-DEL-GST
19 2019 SCC OnLine Del 9250
48
of Delhi & Ors. For the same reasons, the conclusion reached
in the said two decisions will be of no avail to respondent No. 1. 46. We need not multiply the authorities referred to in the
ccccccccc judgments, and cited before us, as in our opinion, these
ccccccccc have not dealt with the cardinal aspect of statutory
obligation fastened upon the registered person to maintain books
of accounts and record within the meaning of Chapter VII of the
2017 Rules, which are primary documents and source material on
the basis of which selfassessment is done by the registered
person including about his eligibility and entitlement to get ITC
and of OTL. Form GSTR2A is only a facilitator for taking an
informed decision while doing such selfassessment. Non
performance or nonoperability of Form GSTR2A or for that
matter, other forms, will be of no avail because the dispensation
stipulated at the relevant time obliged the registered person to
submit returns on the basis of such selfassessment in Form
GSTR3B manually on electronic platform. The provision
contained in Section 39(9) of the 2017 Act and Rule 61 of the
Rules framed thereunder, as applicable at the relevant time, apply
with full vigor to the returns filed by the registered person in Form
GSTR3B.
20 decided on 13.9.2019 in W.P.(C) No. 3309/2019
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- Significantly, the registered person is not denied of the
opportunity to rectify omission or incorrect particulars, which he
could do in the return to be furnished for the month or quarter in
which such omission or incorrect particulars are noticed. Thus, it
is not a case of denial of availment of ITC as such. If at all, it is
only a postponement of availment of ITC. The ITC amount
remains intact in the electronic credit ledger, which can be availed
in the subsequent returns including the next financial year. It is a
different matter that despite the availability of funds in the
electronic credit ledger, the registered person opts to discharge
OTL by paying cash. That is a matter of option exercised by the
registered person on which the tax authorities have no control,
whatsoever, nor they have any role to play in that regard. Further,
there is no express provision permitting swapping of entries effected in the electronic cash ledger visavis the electronic credit
ledger or vice versa.
- A priori, despite such an express mechanism provided by
Section 39(9) read with Rule 61, it was not open to the High Court
to proceed on the assumption that the only remedy that can
enable the assessee to enjoy the benefit of the seamless utilization
of the input tax credit is by way of rectification of its return
50
submitted in Form GSTR3B for the relevant period in which the
error had occurred. Any unilateral change in such return as per
the present dispensation, would have cascading effect on the
recipients and suppliers associated with the concerned
transactions. There would be complete uncertainty and no finality
could ever be attached to the selfassessment return filed
electronically. We agree with the submission of the appellant that
any indulgence shown contrary to the statutory mandate would
not only be an illegality but in reality, would simply lead to chaotic
situation and collapse of tax administration of Union, States and
Union Territories. Resultantly, assessee cannot be permitted to
unilaterally carry out rectification of his returns submitted
electronically in Form GSTR3B, which inevitably would affect the
obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records.
- As noted earlier, the matching and correction process
happens on its own as per the mechanism specified in Sections 37
and 38, after which Form GSTR3 is generated for the purposes of
submission of returns; and once it is submitted, any changes
thereto may have cascading effect. Therefore, the law permits
rectification of errors and omissions only at the initial stages of
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Forms GSTR1 and GSTR3, but in the specified manner. It is a
different dispensation provided than the one in preGST period,
which did not have the provision of autopopulated records and
entries.
- Suffice it to conclude that the challenge to the impugned
Circular No. 26/26/2017GST dated 29.12.2017, is unsustainable
for the reasons noted hitherto. We hold that stipulations in the
stated Circular including in paragraph 4 thereof, are consistent
with the provisions of the 2017 Acts and the Rules framed
thereunder. Having said that, it must follow that there is no
necessity of reading down paragraph 4 of the impugned Circular
as has been done by the High Court vide impugned judgment. In
any case, the direction issued by the High Court being in the
nature of issuing writ of mandamus to allow the writ petitioner to
rectify Form GSTR3B for the period July to September 2017, in
the teeth of express statutory dispensation, cannot be sustained.
- No other issue has been dealt with by the High Court except
to read down of the stated Circular, which as aforesaid, is wholly
unnecessary.
- In view of the above, this appeal is allowed. The impugned
judgment and order is set aside. Resultantly, the writ petition
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filed by respondent No. 1 before the High Court stands
dismissed. There shall be no order as to costs.
All applications stand disposed of.
………………………………J. (A.M. Khanwilkar)
………………………………J. (Dinesh Maheshwari)
New Delhi;
October 28, 2021.
