Are GST laws an example of tailoring the body to fit the coat?

Several instances with regard to the implementation of GST Laws through the GSTN raise the question as to whether the GST laws are framed like the shaping the body according to the coat.

The latest one is the hard-locking of GSTR 3B with effect from the tax period of July 2025. This move has been formalised by the GSTN vide the Press Release No. 606 dated 7th June 2025. By this move, the auto-populated liability getting reflected in the GSTR-3B has become non-editable.

The move is against the spirit of the provisions contained in the GST Laws and various Court judgments.
In this context, let us have a look at the provisions embedded in the GST Act and Rules regarding self-assessment, furnishing of Returns, availment of Input Tax Credit etc.

1) Sec. 59 of the GST Act reads thus:

“Every registered person shall self-assess the taxes payable under this Act and furnish a return for each tax period as specified under section 39.”

By this provision it comes to light that it is the responsibility of the Registered Person to self-assess the liability of tax payable by him and furnish returns as envisaged in Section 39 of the GST Act.

a) Section 39 (9) reads thus:

“Where any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or subsection (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this Act.”

The Registered Person is deprived of the option to correct any mistake that may arise while furnishing returns through such forms and manner as may be prescribed, by making the GSTR 3B non-editable.

2) Rule 61 reads thus:

(1) Every registered person other than a person referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) or an Input Service Distributor or a non-resident taxable person or a person paying tax under section 10 or section 51 or, as the case may be, under section 52 shall furnish a return in FORM GSTR-3B, electronically through the common portal either directly or through a Facilitation Centre notified by the Commissioner, as specified under –

(i)  sub-section (1) of section 39, for each month, or part thereof, on or before the twentieth day of the month succeeding such month:

(ii) proviso to sub-section (1) of section 39, for each quarter, or part thereof, for the class of registered persons mentioned in column (2) of the Table given below, on or before the date mentioned in the corresponding entry in column (3) of the said Table, namely:–

Table

By over-riding this Rule vide the new hard-locking system, in essence, the right of the Registered Person to file his return and remit the tax thereof is snatched away.

3) Section 37 reads thus:

(1) Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under the provisions of section 10 or section 51 or section 52, shall furnish, electronically, subject to such conditions and restrictions and] in such form and manner as may be prescribed, the details of outward supplies of goods or services or both effected during a tax period on or before the tenth day of the month succeeding the said tax period and such details[shall, subject to such conditions and restrictions, within such time and in such manner as may be prescribed, be communicated to the recipient of the said supplier:

Provided that the Commissioner may, for reasons to be recorded in writing, by notification, extend the time limit for furnishing such details for such class of taxable persons as may be specified therein:

Provided further that any extension of time limit notified by the Commissioner of State tax or Commissioner of Union territory tax shall be deemed to be notified by the Commissioner.

(3) Any registered person, who has furnished the details under sub-section (1) for any tax period, shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is a short payment of tax on account of such error or omission, in the return to be furnished for such tax period:

Provided that no rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after 6[the thirtieth day of November] following the end of the financial year to which such details pertain, or furnishing of the relevant annual return, whichever is earlier.

Provided further that the rectification of error or omission in respect of the details furnished under sub-section (1) shall be allowed after furnishing of the return under section 39 for the month of September, 2018 till the due date for furnishing the details under subsection (1) for the month of March, 2019 or for the quarter January, 2019 to March, 2019]

The Registered Person is deprived of the option to correct any mistake that may arise while furnishing returns through such forms and manner as may be prescribed, by making the GSTR 3B non-editable.

4) Denying ITC to the recipient for the fault of the supplier:

a) In the case of M/s. Suncraft Energy Pvt. Ltd. v. Assistant Commissioner, Calcutta High Court (2023) held that a buyer should not be denied ITC if they have fulfilled all statutory conditions like possession of invoice, payment of tax, and filing of returns. It stated that the buyer cannot be penalized for the seller’s failure to deposit tax to the government. The ruling reaffirmed the principle that tax liability is between supplier and government, and credit cannot be denied if buyer acted in good faith.

b) In the case ofM/s. Bharti Airtel Ltd. v. Union of India, the Hon’ble Supreme Court of India held that GSTR-3B rectifications from July to September 2017 are permitted as per the procedure given under CGST Section 39(9) read with CGST Rule 61. and that the taxpayer need not depend on the auto-generated data available via GSTR-2A on the GST portal for discharging the liability between July 2017 and September 2017. Even under the CGST Act, the taxpayer must self-assess the ITC available, check its eligibility, and balance the electronic cash/credit ledgers. They must not depend on the GST portal as the go-to data source.

c) In  the case of M/s B Braun Medical India Pvt. Ltd. v. Union of India & Ors., the Hon’ble Delhi High Court that the tax authorities must focus on the substance and authenticity of transactions, not mere technicalities. The Court did not go into the constitutionality of Sec. 16(2)(aa), since the appellant did not press for the same, having permitted to avail the Input Tax Credit.

d) In the case of Central Board of Indirect Taxes and Customs vs M/s Aberdare Technologies Private Limited and Ors., the Hon’ble Supreme Court of India held that the respondent company be allowed to correct any bona fide/genuine mistakes to avoid denying input tax credit claims and that the right to rectify errors that are clerical or arithmetical in nature is a right that flows from the right to do business. It must not be denied unless there is a reasonable justification and reason to deny the benefit of correction.

By introducing the hard-blocking of GSTR 3B, the portal has denied the legitimate right of the Registered Taxpayer, in spite of the Judgments of the various High Courts and the Hon’ble Supreme Court.

5) Hard-locking of GSTR 3B:

a) Till June 2025, the recipient was given the option of editing his ITC, based on the Tax Invoices he has in his possession and receipt of the goods / services by him. But From July 2025, this option is done away with. This is against the various provisions of the GST Act and judgements of various High Courts and the Hon’ble Supreme Court of India.

b) Let us imagine a scenario where a Tax Invoice has not been uploaded by the supplier in his GSTR-1 for the month of July 2025. The Recipient, even after having the prescribed Tax Invoice in his possession, having received the goods / services and having paid the Tax as per the Tax Invoice, is denied his legitimate ITC, since that transaction has not got reflected in his GSTR 2B, because of the fault on the part of the supplier. This denial is against natural justice, the provisions of the GST Act and the several of judgments of the Courts.

c) The Invoice Management System put in operation gives the facility to the recipient only to accept, reject or keep pending such Tax Invoices, Credit Notes, Debit Notes that have been uploaded by the supplier, but not the ones that have not been uploaded by the Supplier.

d) GST being a pan India taxation system, the poor recipient is forced to monitor the GSTR 2B every day from 14th of the ensuing month, bring to the note of the supplier the omission of Tax Invoice that might have occurred while the supplier had filed his GSTR-1, follow up with the supplier to include the same in his GSTR-1A. If the supplier, for any reason, fails to do so, the recipient is denied his legitimate Input Tax Credit during that month creating unnecessary block of funds for him.

e) By the time the recipient comes to note of the omission and alerts the supplier and the supplier has filed his GSTR 3B, the poor recipient is again denied his legitimate Input Tax Credit for no fault of his, causing block of funds.

6) Extension of time to file returns

a) For several reasons, the last dates for filing Returns may be extended for a State of Region. Accordingly the Returns may be filed by the Suppliers on the extended date. But by that time, the filing date of GSTR 3B by the recipient could have lapsed. Again the Recipient shall be at the receiving end.
In effect, the GSTN is not designed as per the provisions of the GST Act or Rules, but the provisions of the GST Act and Rules are to be modified according to the GST Portal. It is also pertinent to note that in the guise of facilitating the Registered Taxpayer to file his Returns properly, many of the privileges embedded in the GST Act and Rules, are made beyond the reach of the tax payer.

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Author: P. Venkitarama Iyer, GST Advisor & State President, CAIT Kerala | Email: avpswami@gmail.com, venkitaraman4@gmail.com