One Day Delay in GSTR-3B Filing: Madras HC Condones Delay, sets aside ITC Reversal Notice [Read Order]

The Madras High Court has condoned a one-day delay in filing GSTR-3B and set aside the Input Tax Credit ( ITC ) reversal notice issued by the Goods and Services Tax (GST) department. The court observed that the one day delay needed consideration.

The bench of Justice Krishnan Ramasamy found that the petitioner’s delay was minimal and caused by the COVID-19 pandemic. The court noted that the GST Council’s recommendation to extend the GSTR-3B filing deadline for financial years 2017-18, 2018-19, 2019-20, and 2020-21, applicable retrospectively from July 1, 2017, supported the petitioner’s case.

Ohm Sakthi Blue Metals, the petitioner-assessee received a notice issued by the respondent on January 25, 2024, for the financial year 2019-2020, demanding tax of ₹3,46,866 along with interest, due to a one-day delay in filing GSTR-3B for September 2020.

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The petitioner argued that the delay was caused by the COVID-19 pandemic and submitted objections on February 19, 2024. However, the respondent issued Form GST DRC-01A on March 22, 2024, proposing to levy the same amount of tax and direct payment by April 5, 2024, failing which a show cause notice under Section 73(1) of the GST Act for ITC reversal would be issued.

Feeling aggrieved, the petitioner filed Writ Petition, challenging the constitutionality of Section 16(4) of the CGST/TNGST Act, which is pending consideration. Despite the petitioner filing a detailed reply on June 29, 2024, the respondent issued another notice on July 4, 2024, directing the petitioner to appear for a personal hearing. The petitioner sought to quash the show cause notice dated May 16, 2024, through this writ petition.

Dr.A.Thiyagarajan Senior Counsel For Mr.D.Senthilkumar, the senior counsel argued that the demand was raised due to a one-day delay caused by the pandemic and that Section 16(4) is procedural, not mandatory.

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The counsel also pointed out that the 53rd GST Council meeting on June 22, 2024, recommended extending the deadline for availing ITC for specific financial years and proposed a retrospective amendment to GST Section 16(4). If the amendment were enacted, the petitioner would be entitled to the statutory benefit, rendering the respondent’s show cause notice void. The counsel cited a previous court order to support this argument.

On the other hand, the department’s counsel maintained that the delay, even by one day, falls under the mandatory provisions of Section 16(4) under GST law, and the petitioner cannot claim ITC beyond the statutory period. Thus, they sought the dismissal of the writ petition.

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The court concluded that the respondent’s refusal to condone the delay and the subsequent ITC reversal under Section 73(1) was unfair and detrimental to the petitioner. Thus, the Madras High Court set aside the show cause notice and allowed the writ petition, with no order as to costs.

To Read the full text of the Order CLICK HERE

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