A landmark judgement pronounced in the Delhi High Court on 05th May 2020 in the case of Bharti Airtel Ltd Vs. Union of India & Ors in Appeal W.P.(C) 6345/2018, CM APPL. 45505/2019. High Court allowed petitioner to rectify Form GSTR 3B for the period July 2017 to September 2017.
Issue Covered:
Rule 61(5), Form GSTR 3B and Circular No 26/26/2017-GST dated 29.12.2017 ULTRA VIRES the provisions of CGST Act 2017 and are contrary to Articles 14,19 and 265 of the Constitution of India
Issue Involved:
Petitioner is being prevented from correcting is monthly GST returns and was not able to seek refund of the excess tax paid.
Constraints faced by the petitioner:
Petitioner had to take 50 registrations across India under GST instead of a centralized GST registration. GSTR 2,3 were not operationalized and Form GSTR 3B was introduced in rush and gush and half bakedly.
Practical Inadvertent Errors made by Petitioner in Form GSTR 3B:
- Few invoices were not taken into account,
- credit notes related to invoices of the previous regime were missed accidentally,
- stock transfer within the same state was inadvertently shown as supply,
- output tax was wrongly calculated and
- NIL Form GSTR 3B was filed instead of Return with Tax Details
for the period July 2017 to September 2017 whereas there was output tax liability pertaining in the final outcome.
No Visibility of Input Tax Credit:
Due to late introduction of GSTR 2A, the exact Input tax credit was known as late in October 2018. The precise details were calculated then and it came to the conclusion that relevant input tax credit was under reported and excess tax payment of around Rs.923 crores was made.
Checks or System Triggers Not Available:
Since GSTR 2A, 2, 3 were not operationalized, there were no system related checks which could have forwarned the impending mistake. Now there is no statutory procedure to correct the returns.
Grievance Involved:
There is no rationale for not allowing rectification in the month for which the statutory return has been filed. This is also totally contrary to the statutory scheme of the CGST Act- which provides that the data filled by a registered person will be validated in that month itself and thereafter, any unmatched details be rectified in the month in which it is noticed. The Company impugns Rule 61(5), Form Gst 3B and Circular No.26/26/2017 dated 29.12.2017 as ultra vires the CGST provisions to the extent that they do not provide for the modification of the information to be filled in the return of the tax period to which such information relates.
Submissions of the Company:
The Petitioner Company has a statutory right to fill all the necessary details, when the aforesaid provisions of the Act become enforceable. The inability of the Respondents to run their IT system as per the structure provided under the CGST Act cannot prejudice the rights of a registered person.
The delay in operationalizing GSTR 2A cannot defeat the rights of the petitioner company to take and use the credit in the month it was due.
Since the statutory scheme could not be implemented and a summary scheme has been adopted, the Government should allow the assesses to exercise their rights available under the provisions of the Act.
Reliance was placed on the judgement of
Gujarat High Court in the case of APP & Company Chartered Accountants V Union of India 2019 TIOL-1422-HC-AHM-GST
Punjab & Haryana HC in the case of Adfert Technologies P Ltd V Union of India 2019-VIL-537-P&H
Lease Plan India P Ltd V Govt of NCT & Ors order dated 13.09.2019- W.P.(C) 3309/2019
Blue Bird Pure P Ltd V Union of India & Ors order dated 22.07.2019- W.P.(c) 3798/2019
Analysis:
There is no dispute that Form GST 3B has been brought into operation instead of Form GST 2 and GST 3. The Form Gst 3B as introduced by Rule 61(5) being at variance with the other statutory provisions does not permit the data validation before it is uploaded.
Form Gst 3B which has been brought into operation by virtue of Section 168 of the CGST Act, in comparison with Form Gst 3B is a truncated version.
The form originally contemplated got fundamentally altered.
As a result, the checks and balances which were prescribed in the original forms got effaced and it cannot be ruled out that this possibly caused inaccuracies to creep in the data that is required to be filled in.
Para 4 of the Circular No. 26/26/2017-GST dated 29.12.2017 is not in consonance with the provisions of CGST Act, 2017.
The impugned circular expressly states that the time period for filing of Form GSTR 2 and GSTR 3 for the months of July 2017 to March 2018 would be worked by a committee, as a system based reconciliation can only be operationalized after the relevant notification is issued.
Thus , the impugned circular, in unequivocal terms, recognizes the concept of system based reconciliation of ITC and output liability for the same tax period as per the statutory provisions.
There is no reasoning behind the logic for restricting rectification only in the period in which the error is noticed and corrected, and not in the period to which it relates.
There is no provision in the Act that has been brought to our notice which would restrict such rectification.
The constraint introduced by Para 4 of the impugned circular, is arbitrary and contrary to the provisions of the Act.
It is trite proposition of law that circular issued by the Board cannot be contrary to the Act and the Government cannot impose conditions which go against the scheme of the statutory provisions contained in the Act.
Thus, the rectification of the return for that very month to which it relates is imperative and accordingly, the para 4 of the impugned circular no. 26/26/2017-GST dated 29.12.2017 is read down to the extent that it restricts the rectification of Gst 3B in respect of the period in which the error has occurred.
Accordingly, the petition is allowed and petitioner is allowed to rectify Form GSTR 3B for the period July 2017 to September 2017.
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