GSTR-1 can be rectified post due-date of furnishing details of outward supplies under Section 37(1) of the CGST Act

Introduction: In a significant development, the Hon’ble Bombay High Court, through its judgment in Star Engineers (I) Pvt. Ltd. v. UOI & Ors. [Writ Petition No. 15368 of 2023 dated December 14, 2023], has granted permission for the rectification of Form GSTR-1 even after the due date for furnishing details of outward supplies under Section 37(1) of the Central Goods and Services Tax Act, 2017 (CGST Act). The case, involving Star Engineers (I) Pvt. Ltd., sets a precedent, emphasizing the importance of allowing taxpayers to correct inadvertent errors and ensuring accurate GST return filings.

Bombay High Court allowed rectification of Form GSTR-1, post due-date of furnishing details of outward supplies under Section 37(1) of Central Goods and Services Tax Act, 2017 ( CGST Act), thereby holding that, Section 37(3) of the CGST Act, cannot be interpreted in a manner that would prevent the Assessee from placing the correct position and accurate details with respect to all the details in GST Returns being filed by the Assessee.

Facts:

Star Engineers India (I) Pvt. Ltd. (“the Petitioner”) is engaged in the designing, developing, manufacturing and supplying electronic components for industrial purposes. The Petitioner supplied goods to Bajaj Auto Limited (“the Recipient”) as per the delivery terms specified in the purchase order received from the Recipient.

The Petitioner during the Financial Year (“FY”) 2021-2022, supplied goods to various third-party vendors and generated invoices “Bill-to-Ship-to-Model” as per the instructions received from the Recipient. The Petitioner during the said period, correctly issued the required invoices and credit notes in favour of the Recipient, appropriately citing GST Identification Number (“GSTIN”). However, at the time of filing Form GSTR-1, for the period of July 2021, November, 2021 and January 2022 (“the Impugned Period”), GSTIN of third parties to whom shipment was delivered, was reported instead of declaring the GSTIN of the Recipient.

Due to aforementioned situation, the invoices submitted by the Petitioner, could not appear in the Recipient Form GSTR-2B but appeared inadvertently in third-party vendors Form GSTR-2B, leading to inability of the Recipient to claim Input Tax Credit (“ITC”) for the invoices. The Recipient, at the time of processing the payment of the Petitioner for the Impugned Period, reduced the amount which was equivalent to the GST amount paid, interalia, stating that, the Recipient has not claimed the said invoices for availing ITC as the details of the said invoices are not appearing in Form GSTR-2B as GSTIN of third party was given, thereby debiting mismatched amount to the Petitioner account.

Thereafter, the Petitioner approached the Revenue Department (“the Respondent”) vide letter dated September 11, 2023 for granting permission to rectify Form GSTR-1, interalia, stating that, the Petitioner has fulfilled the tax obligation, in relation to the supplies made to the Recipient during the Impugned Period and all the required taxes pertaining to transactions with the Recipient, have been duly paid by the Petitioner to the government, thus, complying with all the GST regulations. However, the Petitioner request was rejected vide Communication dated September 27, 2023 (“the Impugned Communication”) issued by the Respondent.

Aggrieved by the Impugned Communication, the Petitioner filed a writ petition before the Hon’ble Bombay High Court.

Issue:

Whether Form GSTR-1 can be rectified post due-date of furnishing details of outward supplies under Section 37(1) of the CGST Act?

Held:

The Hon’ble Bombay High Court in the case of Writ Petition No. 15368 of 2023 held as under:

  • Observed that, the provisions of Sections 37,38, and 39 of the CGST Act, would be applicable with respect to filing of GST Returns. Section 37 provides for furnishing details of outward supplies, Section 38 provides for furnishing details of outward supplies. Section 38 provides for furnishing details of inward supplies. Section 39 provides for furnishing of returns.
  • Further Observed that, Section 37(3) of the CGST Act, provides that any registered person, who has furnished returns under sub-section (1), shall upon discovery of any error or omission, rectify such error or omission and pay tax and interest, if any, in case, there is short payment of tax on account of such error or omission. In return to be furnished for such tax period. The Proviso to Section 37(3) CGST Act stipulates that no rectification of error or omission pertaining to details furnished under Section 37(1) of the CGST Act shall be allowed after furnishing of return under Section 39 for the month of September [as of now 30th 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
  • Noted that, Section 37(3) of the CGST Act, cannot be interpreted in a manner that would prevent the Assessee from placing the correct position and accurate details with respect to all the details in GST Returns being filed by the Assessee and leaving no scope for any bonafide and inadvertent rectification/correction. Any technicality preventing the rectification, could not defeat the provision of sub-section (3) of Section 37 of the CGST Act read with sub-section (9) of Section 39 of the CGST Act.
  • Opined that, the Respondent Officer should have granted the Petitioner an opportunity to rectify/amend Form GSTR-1 for the Impugned Period, either through online or manual means.
  • Held that, the writ petition is allowed.
  • Directed that, the Petitioner be permitted to amend/rectify Form GSTR-1 for the Impugned Period, either through online or manual means.

Conclusion: The judgment in Star Engineers (I) Pvt. Ltd. v. UOI & Ors. marks a progressive stance by the Bombay High Court in recognizing the practical challenges faced by taxpayers. It reinforces the principle that while adherence to statutory timelines is crucial, mechanisms should exist to rectify inadvertent errors, promoting fair and accurate GST compliance. This ruling is poised to have implications on future cases and contributes to the evolving jurisprudence surrounding GST matters.

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(Author can be reached at info@a2ztaxcorp.com)

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