2024 (12) TMI 578 - HC - GST

Rectification of error in the returns in Form GSTR-3B filed for the months of January and March 2023 - refund of the excess payment of tax that the petitioner was forced to pay - reverse charge mechanism - HELD THAT - On perusal of the Form GSTR-3B and the returns for the month of January and March 2023 it is apparent that the petitioner has in order to rectify the error committed while filing the return in Form GSTR-3B for the month of January 2023 by not reflecting the reverse charge liability and clubbing the same in the output tax liability rectified in the return filed for the month of March 2023 by payment of excess amount of Rs. 53, 08, 494/- through electronic cash ledger. The inward supply liable to reverse charge for both the months i.e. January and March 2023 would be Rs. 19, 36, 06, 13, 825/- 10, 88, 46, 615.50 8, 47, 59, 522.75 . The petitioner has therefore paid the tax on the inward supplies of Rs. 19, 36, 06, 13, 825/- amounting to Rs.96, 80, 310/- through electronic cash ledger in the month of March 2023. The petitioner has already paid the tax on outward supplies for month of January 2023 amount of Rs.55, 36, 134/-which included the inward supply liable to reverse charge which was not shown separately. In fact the petitioner was liable to pay Rs. 54, 42, 332.88 on inward supply liable to reverse charge in the month of January 2023 - the petitioner is entitled to refund of Rs. 53, 08, 494/- which was paid in excess along with return in Form GSTR-3B for the month of March 2023. As the respondent-authority has not given any reason while rejecting the refund claimed by holding that there is excess payment on going through the facts which are placed on record and it would be a futile exercise to remand the matter back to the respondent-authorities as it is apparent from the facts of the case and in view of the Circular No. 26/2017 that the petitioner is entitled to the refund claimed - Petition allowed by way of remand.

Summary

Issues Involved:

1. Rectification of error in GST returns under Section 39(9) of the GST Act.
2. Entitlement to a refund of excess tax payment due to non-availability of rectification functionality.
3. Validity of the impugned order rejecting the refund claim.
4. Availability of alternative remedy under Section 107 of the GST Act.

Issue-wise Detailed Analysis:

1. Rectification of Error in GST Returns:

The petitioner, a proprietary concern engaged in trading cotton, filed GST returns for January 2023 with an error. The consultant erroneously showed the GST payment on sales instead of bifurcating it between reverse charge liability on purchases from agriculturists and output tax liability. The petitioner realized the mistake in March 2023 but could not rectify the January return due to the lack of a rectification mechanism. Consequently, the petitioner adjusted the reverse charge liability in the March 2023 return, resulting in an excess tax payment of Rs. 53,08,494/-.

2. Entitlement to Refund of Excess Tax Payment:

The petitioner filed a refund application for the excess payment made in March 2023. The respondent issued a deficiency memo, arguing that the March payment could not be considered excess. Despite raising a grievance with the GST helpdesk, the petitioner was informed that rectification in Form GSTR-3B was not possible, and adjustments could only be made in subsequent returns. The petitioner filed another refund application, which was rejected by the respondent, stating no excess payment was made.

3. Validity of the Impugned Order:

The petitioner challenged the order dated 05.12.2023, rejecting the refund claim. The petitioner argued that the respondent did not provide any reason for the rejection and failed to consider the details provided in the refund application. The petitioner relied on Circular No. 26/2017-GST, which allows for a refund if adjustment is not feasible in Form GSTR-3B. The court found that the petitioner had indeed made an excess payment and was entitled to a refund.

4. Availability of Alternative Remedy:

The respondent argued that the petitioner had an alternative remedy under Section 107 of the GST Act by appealing the impugned order. However, the court entertained the petition, noting that the respondent-authority did not provide reasons for rejecting the refund. The court determined that remanding the matter would be futile, as the facts clearly showed the petitioner's entitlement to the refund.

Conclusion:

The court concluded that the petitioner was entitled to a refund of Rs. 53,08,494/- for the excess tax payment made in March 2023. The court directed Respondent No. 3 to process the refund within twelve weeks. The petition was allowed, and the rule was made absolute to the extent of granting the refund.