The Bombay High Court has allowed a Goods and Services Tax (GST) taxpayer to rectify bonafide mistake in GST Form GSTR-1 beyond the stipulated time limit.
The petition challenged a communication dated 27 September 2023 issued by the respondent-Deputy Commissioner, State Tax, whereby on an application of the petitioner for seeking approval to modify / amend FORM GSTR-1 for financial year 2021-2022 dated 11 September 2023, the petitioner has been informed that such a request for amendment of Form GSTR-1 cannot be approved considering that the matter is time barred and accordingly, the petitioner’s application would stand rejected.
The communication stated as follows: —
“From the evaluation of facts and supporting thereof, though there does not appear to be any loss of revenue to the Government exchequers, however, provisions under the GST Act prohibits any additional modifications or adjustments post the due date.
Therefore, the request of the Company for amendment of GSTR-1 now for sales transactions pertaining to FY 2021-22 is not approved considering the matter is time-barred and thus, your application stands rejected.”
The petitioner is engaged in designing, developing, manufacturing and supplying a wide range of electronic components for industrial purposes. It is the petitioner’s case that it is a regular supplier to Bajaj Auto Limited (BAL) and delivers its products based on varying delivery terms as specified in the purchase orders received from BAL.
The petitioner contends that during the financial year 2021-2022 the petitioner had carried out delivery of the goods to several third-party vendors and simultaneously invoices were generated “Bill-to-Ship-to-Model” in line with the instructions received from BAL. During the said period, the company had correctly issued the e-invoices and credit notes in favour of BAL by appropriately citing its GST identification number (“GSTIN”).
The petitioner contends that BAL was made aware of such error, post the due date of correction in Form GSTIN-1 for the financial year 2021-22 by one of the vendors to whom the goods were shipped, as the transaction was notified in Form GSTR-2B.
In pursuance thereto, the petitioner tried to rectify the invoices in question to address the error, however, as the mistake came to the notice of the petitioner in the month of November 2022, GST Portal did not allow any modification in Form GSTR-1 pertaining to the period of July 2021, November 2021 and January 2022. 5. In such circumstances, the invoices submitted by the petitioner did not appear in BAL’s Form GSTR-2B but instead inadvertently appeared in vendor’s Form GSTR-2B.
Resultantly, BAL was unable to claim Input Tax Credit (“ITC”) for those invoices and consequently at the time of processing the payment of the petitioner for the month of March 2023, BAL reduced the amount equivalent to the GST amount, interalia stating that BAL had not claimed the said invoices for ITC as same were not appearing in Form GSTR-2B, as the GSTIN of a third party was given instead of BAL. Consequently BAL debited the mismatched amount to the petitioner’s account.
However, at the time of filing of Form GSTR-1 for the period July 2021, November 2021 and January 2022, inadvertently GSTIN of third parties to whom shipment was delivered, was reported instead of declaring GSTIN of BAL.
Bharat Raichandani with Prathamesh Gargale, appeared for the Petitioner and Shruti D Vyas, Additional Govt. Pleader appeared for the State.
Raichandani, Counsel for the petitioner would submit that it was arbitrary for the Deputy Commissioner of State Tax to reject the request of the petitioner to amend or rectify the Form GSTR-1 filed by the petitioner for the period July 2021, November 2021 and January 2022, either Online or by manual means.
It was contended that it is not in dispute and as clear from the impugned letter, that there was no loss of revenue to the Government exchequer, however, on a pure technical ground the provisions of GST Portal prohibited any adjustment post the due date, the petitioner’s request has been rejected. It was submitted that such technicalities ought not to defeat the requirement of justice.
It was thus submitted that the prayer of the petitioner that it be permitted to amend or rectify the Form GSTR-1 for the period in question ought to be granted.
On the other hand, Vyas, Counsel for the Revenue while not disputing the factual matrix would submit that no fault can be found in the impugned communication as the provisions of the GST Act itself would not permit the State Tax Officer to accept the request as made by the petitioner for amendment/rectification of Form GSTR-1 which was filed by the petitioner for the period in question.
Vyas has also fairly stated that if the request as made by the petitioner is to be accepted, there is no loss of revenue whatsoever to the public exchequer.
The bench noted that, Sub-section(9) to Section 39, although provides for rectification of any omission or incorrect particulars, the proviso therein precludes the assessee from any such rectification or omission or incorrect particulars being allowed after 30th day of November following the end of financial year to which such details pertain, or the actual date of furnishing of relevant annual return, whichever is earlier. Sub-section (10) provides for extension of time in the event the assessee has not furnished the return for one or more previous tax period or has not furnished the details of outward supplies as per subsection (1) of section 37 in the said tax period.
The bench further observed that, “the proviso ought not to defeat the intention of the legislature as borne out on a bare reading of subsection (3) of Section 37 and sub-section (9) of Section 39 in the category of cases when there is a bonafide and inadvertent error in furnishing any particulars in filing of returns, accompanied with the fact that there is no loss of revenue whatsoever in permitting the correction of such mistake.”
It was further noted that, “Any contrary interpretation of subsection (3) of Section 37 read with sub-sections (9) and (10) of Section 39 would lead to absurdity and / or bring a regime that GST returns being maintained by the department having incorrect particulars become sacrosanct, which is not what is acceptable to the GST regime, wherein every aspect of the returns has a cascading effect. This is necessarily required to be borne in mind when considering the cases of inadvertent human errors creeping into the filing of GST returns.”
Further observing that, “the State Tax Officer had all materials before it which went to show that there was nothing illegal and / or that what had happened at the end of the petitioner was that the invoices generated by the petitioner under the bill-to-ship-to-model for delivery of goods to third party vendors of BAL of which input tax credit for the invoices in question, were not availed by BAL due to error of credit not being reflected in the GSTR-1, as the petitioner had mentioned GSTIN of third party instead of GSTIN of BAL.”
The bench opined that, “the State Tax officer ought to have granted the petitioner’s request to rectify / amend the Form GSTR–1 for the period July 2021, November 2021 and January 2022, either through Online or manual means.”
Notably, the case was differentiated by the bench that, “We may also observe that the situation like in the present case, was also the situation in the proceedings before the different High Courts as noted by us above, wherein the errors of the assessee were inadvertent and bonafide. There was not an iota of an illegal gain being derived by the assessees.”
In result, the bench of Justice Jitendra Jain and G S Kulkarni held that, “The respondents are directed to permit the petitioner to amend / rectify the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means within a period of four weeks from today.”
The revenue authorities were directed to permit the petitioner to amend / rectify the Form GSTR-1 for the period July 2021, November 2021 and January 2022, either through Online or manual means within a period of four weeks from the date of judgment.
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