2024 (12) TMI 51 - HC - GST

Permission to rectify/ amend the GST number of the purchaser in GSTR-1 return with respect to the invoices dated 13.05.2021 (on account of human error) for the quarter ending 30.06.2021 after the limitation period is expired in terms of Section 37 (3) of the Central Goods and Services Tax Act, 2017 - HELD THAT - The process as submitted by learned counsel for the Revenue is complete in itself and each step precedes the earlier step. If one of the steps is erroneous and the same is not corrected or rectified within the timeline provided under the provisions, a cascading effect would occur to the subsequent process provided under the subsequent provisions. We are satisfied from the aforesaid provisions that if a person submits an erroneous GSTR-1, and does not correct it, the subsequent GSTR-2A and GSTR-3B would also reflect the erroneous information and the consequences thereof shall follow. The time limitation, as provided under Section 37 (1) and 37 (3) of the Act, is linked directly and proportionately to Section 16 (4) of the Act. In terms of the aforesaid provisions, input tax credit can be availed till the due date of furnishing the return under Section 39 of the Act for the month of September following the end of the financial year to which the invoice / debit note pertains or furnishing of the annual return, whichever is earlier. The correction in the corresponding GSTR-1 is permissible in terms of the timeline as specified in Section 16 (4) of the Act. The petitioner could not detect the error of mentioning the point of sale as Mumbai instead of Delhi and the mentioning of the GST number of purchaser of Mumbai instead of GST number of purchaser of Delhi which has resultant, as per his submissions, loss to the concerned purchaser, who could not avail the ITC. Last date of submission for rectification/ omission, admittedly falls on 30.11.2022 for the concerned petitioner. In Bharti Airtel s case 2021 (11) TMI 109 - SUPREME COURT , the Supreme Court was considering the question of similar nature. In the said case, the Bharti Airtel has erroneously deposited cash and submitted that if it was allowed to rectify Form GSTR-3B so as to avail ITC for the relevant period, amount paid by it in cash towards the OTL would get credited to its electronic cash ledger account. After considering the provisions of Section 39 of the Act, which relates to the final return being filed under Form GSTR-3B, it proceeded to set aside the order passed by the Delhi High Court observing ' 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 GSTR-1 and GSTR-3, but in the specified manner. It is a different dispensation provided than the one in pre-GST period, which did not have the provision of auto-populated records and entries.' As per Section 16 (4) of the Act, a registered person shall not be entitled to take input tax credit after the due date of furnishing of the return under Section 39 of the Act for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier. Thus, ITC can be availed till the due date of furnishing of the return. If there is a correction in the corresponding GSTR-1 within the timeline, ITC would be permissible in terms of the timeline specified in Section 64 of the Act, therefore, the petitioner cannot be permitted to rectify the return beyond the statutory time limit prescribed under the GST Act. The claim of the petitioner for correction of the return is rejected. The writ petition is found to be without any force and is accordingly dismissed.

Summary

Issues Involved:
1. Whether the petitioner can rectify/amend the GST number of the purchaser in GSTR-1 return after the expiration of the limitation period as prescribed by Section 37(3) of the Central Goods and Services Tax Act, 2017.

Issue-wise Detailed Analysis:

1. Rectification of GST Errors Post-Limitation Period:

The primary issue in this case was whether the petitioner could rectify the GST number of the purchaser in the GSTR-1 return after the limitation period had expired as per Section 37(3) of the Central Goods and Services Tax Act, 2017. The petitioner, a limited company dealing in enterprise mobility and supply chain solutions, made an inadvertent error by mentioning the wrong GST number and point of sale in its GSTR-1 return for the quarter ending June 2021. This error was discovered in April 2023 when the purchaser faced difficulties in availing GST input tax credit. The petitioner sought to amend the return, but the Revenue rejected this request due to the expiration of the rectification period.

The petitioner argued that the error was a result of human error and should not result in a significant business impact. They relied on various high court judgments, asserting that the rectification should be allowed to prevent undue hardship. However, the respondents contended that the Act provides ample time for rectification, and altering the timeline for a particular company would disrupt the GST system's integrity. They emphasized that rectification beyond the prescribed period would not automatically allow the recipient to claim input tax credit due to the time-barred nature of the claim under Section 16(4) of the Act.

The court examined the statutory provisions, particularly Sections 16(4), 37(1), 37(3), and 39 of the Act, which outline the timelines and conditions for rectifying errors in GST returns. The court noted that the process is designed to maintain a sequence of steps, and any error not corrected within the stipulated time would have a cascading effect on subsequent processes. The court found that the time limitation for rectification is directly linked to the timeline for claiming input tax credit, and any correction in GSTR-1 must occur within this timeline to be valid.

The court also considered the Supreme Court's judgment in Bharti Airtel's case, which underscored the importance of adhering to statutory timelines to prevent chaos and uncertainty in tax administration. The Supreme Court held that allowing unilateral rectification of returns beyond the prescribed period would disrupt the obligations and liabilities of other stakeholders in the GST system.

Ultimately, the court rejected the petitioner's claim for rectification, emphasizing that the law requires businesses to be aware of and comply with statutory provisions, including timeframes. The court declined to follow the Bombay High Court's interpretation in Star Engineers (I) Private Limited's case, which allowed for rectification in cases of bona fide errors, as it conflicted with the Supreme Court's stance in Bharti Airtel's case.

The writ petition was dismissed, and the court reiterated the importance of adhering to the statutory timelines established under the GST Act. All pending applications were disposed of, and no costs were awarded.