Madras HC Permits  Rectification of clerical errors in GSTR-1 beyond statutory timelines under CGST Act [Read Order]

The Madras High Court held that clerical errors must be rectifiable even beyond statutory timelines. Further held that denial of ITC to buyers for no fault of theirs results in double taxation and software limitations are not a justifiable ground to deny rectification.

The petitioner, Deepa Traders, made clerical mistakes in their GSTR-1 reports for specific months of FY 2017–18, including incorrect recipient names and GSTINs. IGST was unintentionally paid under CGST and SGST, incorrect invoice numbers and dates, and the omission of some invoice-level elements in GSTR-1, even though tax was correctly discharged through GSTR-3B. The petitioner asked for authorization to fix these mistakes in order to guarantee accurate reconciliation and allow purchasers to claim ITC.

The single judge previously ruled that there was no mala fide intent and that the tax obligation had been paid in full. The errors were solely clerical and had an impact on buyers' ITC and reconciliation. reliance on rulings in the cases of Pentacle Plant Machinery Pvt. Ltd. v. GST Council and Sun Dye Chem v. Assistant Commissioner. As a result, even though the portal lacks a defined procedure, rectification is permitted.

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The department, however, filed the current Writ petition in opposition to the order, arguing that Section 37(3) of the CGST Act, 2017 stipulates that "Error correction in GSTR-1 must be made prior to the GSTR-3B due date of September of the subsequent fiscal year or filing of the annual return, whichever is earlier." Corrective action after that date was therefore illegal.

The Court referred the case  Aberdare Technologies Pvt. Ltd. v. CBIC & Ors., wherein Supreme Court dismissed the SLP filed by the CBIC and affirmed the decision of Bombay High Court, allowing rectification of GSTR-1.

While allowing the appeal, the Court  K.R.Shriram, Chief Justice and.Justice Mohammed Shaffiq observed that the errors, especially clerical ones are normal and inevitable. Denial of ITC to the purchaser for such errors leads to double taxation. Right to correct mistakes is a natural extension of the right to do business. The GST portal’s inability to permit corrections is not a ground to deny relief. Software should enable compliance, not create hurdles.

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To Read the full text of the Order CLICK HERE

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