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SC bars Bharti Airtel from rectifying return for ₹923-cr GST refund

Shishir Sinha New Delhi | Updated on October 28, 2021

Sets aside Delhi High Court order

The Supreme Court on Thursday disallowed Bharti Airtel from seeking ₹923 crore in GST refund by rectifying its return.

The ruling comes after the Finance Ministry filed an appeal against a Delhi High Court order in May last year. The matter is related to rectification of return. The GST law mandates all taxpayers, except those registered under the composition scheme, to pay tax on a monthly basis and file form GSTR-3B by the 20th of the following month.

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The issue was over when a mistake in the return could be rectified. A division bench of the Supreme Court comprising Justices AM Khanwilkar and Dinesh Maheshwari said the registered person is not denied the opportunity to rectify an omission or incorrect particulars, which could be done in the return furnished for the month or quarter in which the omission or incorrect particulars are noticed. Thus, “it is not a case of denial of availment of ITC [input tax credit] 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,” the bench said.

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The bench noted that despite a mechanism provided under GST law and subordinate legislation (Section 39(9) read with Rule 61), it was not open to the High Court to proceed on the assumption that the only remedy for the assessee to enjoy seamless utilisation of the input tax credit was by rectification of its return submitted in form GSTR3B for the period in which the error occurred.

It also said that any unilateral change in such return, as per the present dispensation, would have a cascading effect on the recipients and suppliers associated with the transactions. The bench agreed with the Tax Department, which said: “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.” Accordingly, the bench set aside the Delhi High Court order.

According to Rajat Mohan, Senior Partner with AMRG, this ruling would be a blow to a plethora of cases where taxpayers were in queue to claim time-barred input tax credit by rectifying the previous period’s GST returns. “Grant of relief by Delhi HC to Bharti Airtel is reserved by the Supreme Court of India, which would practically lead to a blow of over ₹923 crore,” he said.

Published on October 28, 2021

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