Principal Chief Commissioner of GST and Central Excise Vs Deepa Traders (Madras High Court)
Summary: The Madras High Court dismissed the Revenue’s appeal against the order of the learned Single Judge permitting Deepa Traders to rectify inadvertent errors in its GSTR-1 returns for the financial year 2017-18. The Court also directed that there would be no order as to costs and disposed of the connected CMP. The applications seeking condonation of 86 days’ delay in filing the appeal and 540 days’ delay in payment of deficit Court fees had already been allowed.
The dispute arose from errors admittedly committed by Deepa Traders in returns for certain months during FY 2017-18. The errors included incorrect mention of recipients’ GSTIN/name, incorrect invoice numbers/dates, omission of certain invoice-wise details in GSTR-1 despite the supply details having been correctly reported in GSTR-3B and tax having been duly remitted, and inadvertent payment of IGST under the CGST and SGST heads. According to the petitioner, the errors resulted from inadvertent carelessness of a part-time accountant during the initial period of GST implementation, when the procedures and system were new.
The errors came to the petitioner’s notice in December 2019 after customers brought them to its attention. The petitioner stated that it immediately attempted to rectify the returns but found that there was no mechanism under the Act or on the GST portal for making the required corrections. It also stated that the tax liability had been fully discharged on the turnover reported and that the requested correction was intended to enable proper reconciliation of its returns and annexures with those of third parties. The Revenue did not dispute the sequence of events before the learned Single Judge.
The learned Single Judge had relied upon Sun Dye Chem Vs. Assistant Commissioner (ST) and Pentacle Plant Machineries Pvt. Ltd. Vs. Office of The GST Council And Ors. and permitted rectification, finding that there was no mala fide conduct attributed to the assessee and that the errors were inadvertent. The learned Single Judge further found that rectification would enable proper reporting of turnover and facilitate appropriate claims of input tax credit by the petitioner and connected assessees.
In the appeal, the Revenue primarily relied upon Section 37(3) of the Central Goods and Services Tax Act, 2017. The provision permits rectification of an error or omission in a return furnished under Section 37(1), subject to the limitation contained in its proviso. The Revenue submitted that, for FY 2017-18, the Central Goods and Services Tax (Second Removal of Difficulties) Order, 2018 dated 31.12.2018 extended the last date for amendment to the date on which the return for March 2019 became due. It was further submitted that the due date for the March 2019 return was extended to 23.04.2019 by notification dated 22.04.2019 and, consequently, the taxpayer could not amend returns pertaining to 2017-18 after that date.
While considering the appeal, the High Court took note of the Bombay High Court decision in Aberdare Technologies Pvt Ltd & Anr Vs. Central Board of Indirect Taxes & Customs & Ors., in which rectification of GSTR-1 had been permitted. The Supreme Court had subsequently dismissed the Revenue’s challenge on 21.03.2025. The Supreme Court observed that bona fide clerical or arithmetical errors should not be denied correction without good justification and that software limitations could not by themselves constitute a sufficient justification because software is intended to facilitate compliance and can be configured.
The Madras High Court adopted the principle expressed by the Supreme Court that human errors and mistakes are normal, including errors committed by the Revenue. It observed that the right to correct mistakes in the nature of clerical or arithmetical errors flows from the right to do business and should not be denied unless there is a good justification and reason for denying correction. The Court further noted that software limitation itself cannot constitute a good justification for denying correction.
On these considerations, the Madras High Court dismissed the Revenue’s appeal. The order of the learned Single Judge permitting rectification of the inadvertent GSTR-1 errors therefore remained undisturbed. There was no order as to costs, and CMP No.8685 of 2025 was disposed of.
Cases Discussed
- Sun Dye Chem Vs. Assistant Commissioner (ST), 2020 TIOL 1858 HC MAD.GST — relied upon by the learned Single Judge in permitting rectification of inadvertent GST return errors.
- Pentacle Plant Machineries Pvt. Ltd. Vs. Office of The GST Council And Ors., 2021 TIOL 604-HC-MAD-GST — relied upon by the learned Single Judge as supporting rectification of inadvertent GSTR-1 errors.
- Aberdare Technologies Pvt Ltd & Anr Vs. Central Board of Indirect Taxes & Customs & Ors. — the Madras High Court noted the Bombay High Court decision permitting rectification of GSTR-1, and the subsequent dismissal of the Revenue’s challenge by the Supreme Court.
- Central Board of Indirect Taxes And Customs Vs. Aberdare Technologies Private Limited & Ors. — the Supreme Court’s dismissal of the Revenue’s challenge was relied upon for the principle that bona fide clerical or arithmetical errors should not be denied correction without good justification and that software limitations cannot by themselves justify refusal of correction.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
WMP No.8682 of 2025 filed to condone the delay of 86 days in filing the appeal and WMP No.8684 of 2025 filed to condone the delay of 540 days in paying deficit Court fees stand allowed.
2. The appeal impugns an order dated 9 March 2023 passed by the learned Single Judge, in which paragraphs 2 to 6 read as under:
“2. The petitioner has, in respect of the returns for a few months during the period 2017~18, admittedly, committed certain errors. The errors are of following nature.
i) Recipients GSTIN/name has been wrongly mentioned.
ii) The invoice number/date have been wrongly mentioned.
iii) Supply details were correctly supplied in GSTR 3 and tax duly remitted. However, some of the invoice wise details have been omitted to be reported in Form GSTR 1.
iv) IGST was inadvertantly remitted under the heads SGST and CGST.
3. The aforesaid errors are attributed to inadvertent carelessness on the part of a part-time accountant then employed by the petitioner. The petitioner would also state that the errors had been occasioned during the initial months of implementation of Goods and Services Tax and thus it had also no knowledge of the conditions fully to meet the demands of the system. It was the unfamiliarity with the procedures and the newness in the system itself that had resulted in the commission of these errors.
4. It was only in December, 2019 that the petitioner states that these errors came to light on account of the customers bringing the same to its attention. Admittedly, no details of such reports by the customers have been placed on file, though the averment figures at paragraph Nos. 5 and 6 of the affidavit of the petitioner. At paragraph 7, the petitioner states that immediately on coming to know of the errors, an attempt was made to rectify the returns only to find that there was no mechanism set out under the Act or in the portal to enable the same.
5. To be noted, that the petitioner has averred that the tax liability has been met in full based on the turnover reported and it is only the correction of the errors that is sought, to enable proper reconciliation of the petitioner-s returns and annexures with those of the third parties.
6. Though a counter has been filed, the above contentions reproduced as per paragraphs 5 to 8 of the affidavit filed in support of the Writ Petition, have not really been disputed.
3. In paragraph 7, it is noted that learned Senior Standing Counsel did not raise any dispute on the sequence of events as narrated above, but submitted that there was no mechanism available as on that date to issue mandamus as sought, i.e., to direct respondents (appellants herein) to enable petitioner (respondent herein) to rectify the clerical errors in the details uploaded by petitioner (respondent herein) in its GSTR 1 forms for the year 2017-18 by amending the Forms.
4. Learned Single Judge relying on judgment of Sun Dye Chem V. Assistant Commissioner 1 and Pentacle Plant Machineries Pvt. Ltd. V. Office of the GST Council, New Delhi 2, permitted the benefit of rectification of errors as there was no mala fides attributed to the assessee. The Court found that the errors are clearly inadvertent and that the rectification would, in fact, enable proper reporting of the turnover and input tax credit to enable claims to be made in an appropriate fashion by the petitioner (respondent herein) and connected assessees.
5. In the appeal, the ground taken primarily is that Section 37(3) of the Central Goods and Services Tax Act, 2017, provides for rectification of error or any omission in a return filed under Section 37(1) of the Act and the proviso therein states that no rectification of error or omission shall be allowed after furnishing of the return under Section 39 of the Act in the month of September following the end of the financial year to which such details pertain, or the filing of the annual return, whichever is earlier.
6. Shri Srinivas submitted that for assessment year 2017-18, the Central Goods and Services Tax (Second Removal of Difficulties) Order, 2018 dated 31.12.2018 extended the last date for amendment to the date on which return for March 2019 falls due. He submitted that the last date for filing returns for March 2019 was extended to 23.04.2019 as per notification dated 22.04.2019 and, therefore, beyond that date, tax payer cannot amend the returns pertaining to the period 2017-18.
7. The Bombay High Court in the case of Aberdare Technologies Pvt. Ltd. and ors. vs. Central Board of Indirect Taxes & Cusoms and Ors. 3, had allowed the assessee to amend/rectify the form GSTR 1. Against that order, a special leave petition was referred by the Revenue, which came to be dismissed vide order dated 21 March 2025. While dismissing the SLP, the Apex Court was pleased to observe as under:
“The petitioner, Central Board of Indirect Taxes and Customs, must re-examine the provisions /time lines fixed for correcting the bonafide errors. Time lines should be realist as lapse/defect invariably is realized when input tax credit is denied to the purchaser when benefit of tax paid is denied. Purchaser is not at fault, having paid the tax amount. He suffers because he is denied benefit of tax paid by him. Consequently, he has to make double payment. Human errors and mistakes are normal, and errors are also made by the Revenue. Right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software are meant to ease compliance and can be configured. Therefore, we exercise our discretion and dismiss the special leave petition.
Decisions of the High Courts in Bar Code India Limited v. Union of India and others (2024) SCC Online P&H 13853 and Yokohama India Private Ltd vs. State of Telengana (2023 108 GSTR 115, prima facie, do not lay down good law in this regard. Ratio therein may be examined in another case.”
8. As held by the Apex Court, human errors and mistakes are normal, and errors are also made by the Revenue. The right to correct mistakes in the nature of clerical or arithmetical error is a right that flows from the right to do business and should not be denied unless there is a good justification and reason to deny benefit of correction. Software limitation itself cannot be a good justification, as software is meant to ease compliance and can be configured.
9. Therefore, appeal stands dismissed. There will be no order as to costs. Consequently, CMP No.8685 of 2025 stands disposed of.
