GST - 'Rectification Of Errors Permissible Only At Initial Stages': Supreme Court Dismisses Bharti Airtel's Plea For Refund Of Rs.923 Crore

The Supreme Court  set aside the Delhi High Court judgment that had allowed Bharti Airtel's plea for rectification and refund of excess GST worth Rupees 923 Crores paid by it during the period between July-September 2017.

"The law permits rectification of errors and omissions only at the initial stages of Forms GSTR­1 and GSTR­3, but in the specified manner. It is a different dispensation provided than the one in pre­-GST period, which did not have the provision of auto­populated records and entries.", the bench of Justices AM Khanwilkar and Dinesh Maheshwari observed.

The court said that assessee cannot be permitted to unilaterally carry out rectification of his returns submitted electronically in Form GSTR­3B, as this would affect the obligations and liabilities of other stakeholders, because of the cascading effect in their electronic records. The court also upheld the circular  issued by the Commissioner (GST) which had restricted the rectification of Form GSTR­3B in respect of the period in which the error had occurred. 

The Delhi High Court had allowed Airtel's plea to rectify Form GSTR­3B for the period in which error had occurred, i.e., from July to September 2017. Further, the High Court directed that on filing of the rectified Form GSTR­3B, they shall, within a period of two weeks, verify the claim set forth by Airtel and give effect to the same once verified. Airtel had contended that, due to non-­operability of Form GSTR­2A at the relevant time (July to September 2017), it had been denied of access to the information about its electronic credit ledger account and consequently, availing of ITC for the relevant period and instead to discharge the OTL by paying cash to its vendors.

In appeal, the Apex court took a view that Non-performance or non-­operability of Form GSTR­2A or for that matter, other forms, will be of no avail because the dispensation stipulated at the relevant time obliged the registered person to submit returns on the basis of such self­-assessment in Form GSTR­3B manually on electronic platform.

"The factum of non­operability of Form GSTR­2A, therefore, is flimsy plea taken by the writ petitioner/respondent No. 1. Indeed, if the stated form was operational, the same would have come handy to the writ petitioner for doing self­assessment regarding eligibility of ITC and availing thereof. But it is a feeble excuse given by the writ petitioner/respondent No. 1 to assail the condition specified in impugned Circular dated 29.12.2017 regarding the rectification of the return submitted manually in Form GSTR­3B for the relevant period (July to September 2017).", the court observed.

On the issue of reading down of the circular, the court said:

The express provision in the form of Section 39(9) clearly posits that omission or incorrect particulars furnished in the return in Form GSTR­3B can be corrected in the return to be furnished in the month or quarter during which such omission or incorrect particulars are noticed. This very position has been restated in the impugned Circular. It is, therefore, not contrary to the statutory dispensation specified in Section 39(9) of the Act.

Allowing the appeal, the bench observed:

49. As noted earlier, the matching and correction process happens on its own as per the mechanism specified in Sections 37 and 38, after which Form GSTR­3 is generated for the purposes of submission of returns; and once it is submitted, any changes thereto may have cascading effect. Therefore, the law permits rectification of errors and omissions only at the initial stages of Forms GSTR­1 and GSTR­3, but in the specified manner. It is a different dispensation provided than the one in pre-­GST period, which did not have the provision of auto­populated records and entries

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