The Supreme Court held that law permits rectification of errors, omissions only at the initial stages of Forms GSTR-1 and GSTR-3 in the specified manner.
The division bench of Justice A.M. Khanwilkar and Justice Dinesh Maheshwari assessee, Bharti Airtel 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.
The appellant revenue contended 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.
“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 error had occurred. Any unilateral change in such return as per the present dispensation, would have a 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 self assessment return filed electronically,” the Apex Court said.
The court said that 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 Forms GSTR1 and GSTR3, but in the specified manner. It is a different dispensation provided than the one in the pre GST period, which did not have the provision of auto populated records and entries.
In May 2020, a two-judge bench of the Delhi High Court allowed Bharti Airtel to seek GST refunds and also directed the government to verify the excess GST claim. The case pertains to underreporting of input tax credit in the GST summary return form, GSTR 3B, during those three months in 2017 due to absence of the purchase-related return form during the transition period. The operator argued that in the absence of the statutory forms GSTR 2 and 3, the summary return form was introduced. It does not allow validation before uploading. In the absence of such validation, chances of incorrect details being uploaded could not be eliminated.
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