The Delhi High Court has granted relief to Bharti Airtel by quashing the restriction of ‘same period’ GST returns. In other words, the assessee can correct his/her monthly return the same month and seek refund of the excess taxes paid.

Since it is an order pronounced by the High Court, it can become a precedent in similar matters. Accordingly, this ruling can be used to arrive at a decision when assessees are not allowed to rectify the mistakes in GST returns the same month for which return has been filed.

The GST law makes it mandatory for all taxpayers, except those registered under the composition scheme, to file GSTR-3B and pay tax on a monthly basis. This has to be filed by the 20th day of the following month. Now the problem is that assessees are not allowed to rectify the returns the very month to which the Form GSTR-3B relates.

Citing this problem, telecom operator Bharti Airtel had moved the High Court. Its grievance was that there is no rationale for not allowing rectification in the month for which the statutory return has been filed. This is also contrary to the statutory scheme of the CGST (Central Goods & Services) Act, which provides that the data filled by a registered person will be validated that month itself, and thereafter any unmatched details can be rectified in the month when they are noticed.

Rectification mechanism

The Court noted that the deficiency in reporting eligible input tax credit (ITC) in the form GSTR- 3B has resulted in excess payment of cash by the petitioner. It found that the I-T department is unreasonably harping on the petitioner's mistake for not utilising ITC on account of erroneous reporting.

“Petitioner has a substantive right to rectify/adjust the ITC for the period to which it relates. The rectification/adjustment mechanism for the months subsequent to when the errors are noticed is contrary to the scheme of the Act,” the Bench remarked. It found force in the petitioner’s contention that if the statutorily prescribed forms, that is, GSTR-2 & 3 had been operationalised by the Government, as was envisaged under the scheme of the Act, the petitioner would have known with reasonable certainty the correct ITC available to it in the relevant period, and could have discharged its liability through ITC, instead of cash.

The Bench opined that that refund of excess cash balance in terms of relevant section of law (Section 49 (6) related with Section 54) does not effectively redress the petitioner’s grievance and “the only remedy that can enable the petitioner to enjoy the benefit of the seamless ITC utilisation is by way of rectification of its return.” It emphasised that a correction mechanism is critical to sustaining successful implementation of GST and finally permitted the petitioner to rectify Form GSTR-3B for the period to which the error relates — July to September 2017.

Terming the ruling as excellent, Harpreet Singh, Partner at KPMG believes that this will have far-reaching ramifications. “To err is human and this is precisely what the Court appreciated while holding that correction mechanism is critical to sustaining successful implementation of GST,” he said, adding that with GST law being at a nascent stage, varied interpretations/views, errors, miscalculations etc. are bound to happen and thus not being able to rectify them only adds to the woes.

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