GSTR-3B─SC Case on Rectification

[OmPrakash jain]

In UNION OF INDIA VERSUS BHARTI AIRTEL LTD. & ORS. [2021 (11) TMI 109 - SUPREME COURT], decided on 28.10.2021, while allowing the appeal of the Govt., the Hon’ble Supeme Court Set Aside the judgment and order of the High Court of Delhi in BHARTI AIRTEL LIMITED VERSUS UNION OF INDIA AND ORS. [2020 (5) TMI 169 - DELHI HIGH COURT],which allowed rectification of   GSTR-­3B in respect of the period in which the error had occurred and allowed Refund of ₹ 923 crore to  Bhatia Airtel Ltd. The Hon’ble Supeme Court held that;

i) The Circular No.26/26/2017­-GST dated 29.12.2017 & its para 4, is in tune with the provisions of the GST Act, 2017 and the Rules.

ii) Rectification of Return GSTR-3B from July, 2017 to Sept., 2017 is Permissible only as per laid down Mechanism u/s 39(9), CGST Act, 2017 read with Rule 61,CGST Rules, 2017.

iii) The registered person is not denied of the opportunity to rectify omission or incorrect particulars, which he could do in the return, per laid down Mechanism, to be furnished for the month or quarter in which such omission or incorrect particulars are noticed. Thus, it is not a case of denial of availment of ITC as such. 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.

iv)It is a different matter that despite the availability of funds in the electronic credit ledger, the registered person opts to discharge output tax liability by paying cash, which having been exercised, cannot be reversed unless the Act and the Rules permit such reversal or swapping of the entries.

iii) The assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in GSTR-­3B, which inevitably would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records. iv) The rectification in GSTR-­3B is only permissible as per Mechanism laid down in S.39(9), CGST Act, 2017 read with Rule 61,CGST Rules, 2017

2. It is a Landmark judgment of the Hon’ble Supeme Court, wherein the following important observation have also been laid down;

a) The High Court, however, did not enquire into the cardinal question as to whether the writ petitioner was required to be fully or wholly dependent on the auto generated information in the electronic common platform for discharging its obligation to pay output tax liability for the relevant period between July and Sept., 2017. The answer is an emphatic No. In that, the writ petitioner being a registered person, was under a legal obligation to maintain books of accounts and records as per the provisions of the CGST Act, 2017 and Chapter VII of the 2017 Rules regarding the transactions in respect of which the output tax liability would occur. Even in the past (till recently up to CGST Act, 2017 came into force), during the pre-GST regime, the writ petitioner (being registered person/assessee) had been maintaining such books of accounts and records and submitting returns on its own. No such auto ­populated electronic data was in vogue. It is the same pattern which had to be followed by the registered person in the post­-GST regime.

b).As per the scheme of the CGST Act, 2017, it is noticed that registered person is obliged to do self-­assessment of ITC, reckon its eligibility to ITC and of output tax liability including the balance amount lying in cash or credit ledger primarily on the basis of his office record and books of accounts required to be statutorily preserved and updated from time to time. That he could do even without the common electronic portal as was being done in the past till recently pre-­GST regime. As regards liability to pay output tax liability, that is on the basis of the transactions effected during the relevant period giving rise to taxable event. The supply of goods and services becomes taxable in respect of which the registered person is obliged to maintain agreement, invoices/challans and books of accounts, which can be maintained manually/electronically. The common portal is only a facilitator to feed or retrieve such information and need not be the primary source for doing self-­assessment. The primary source is in the form of agreements, invoices/challans, receipts of the goods and services and books of accounts which are maintained by the assessee manually/ electronically. These are not within the control of the tax authorities. This was the arrangement even in the pre­-GST regime whilst discharging the obligation under the concerned legislation(s). The position is no different in the post-­GST regime, both in the matter of doing self-­assessment and regarding dealing with eligibility to ITC and output tax liability. Indeed, that self-­assessment and declarations would be any way subject to verification by the tax authorities. The role of tax authorities would come at the time of verification of the declarations and returns submitted/filed by the registered person.

3. The Hon’ble Supreme Court also distinguished the ratio decidendi of the various case laws including AAP AND CO., CHARTERED ACCOUNTS THROU AUTHORISED PARTNER VERSUS UNION OF INDIA & 3 OTHER (S) [2019 (7) TMI 401 - GUJARAT HIGH COURT], as per para 41, 42, 43, 44, 45 of the judgment;

CA Om Prakash Jain s/o J.K.Jain, Jaipur

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