1. Dispute concerning the rectification of Form GSTR-3B returns under the CGST Act, 2017, specifically regarding whether errors can be corrected retrospectively for the period they occurred. (Para 1 , 12 , 13 , 16 )
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2021 Supreme(SC) 647
SUPREME COURT OF INDIA
A.M. KHANWILKAR, DINESH MAHESHWARI, JJ.
UNION OF INDIA - APPELLANT
VERSUS
BHARTI AIRTEL LTD. & ORS. - RESPONDENTS
CIVIL APPEAL NO. OF 2021(ARISING OUT OF S.L.P. (C) NO. 8654 OF 2020)
DECIDED ON : 28-10-2021
Advocates Appeared:
For the Petitioner(s):N. Venkataraman, ASG Mohd. Akhil, Zoheb Hussain, Kanu Agarwal, Mukesh Kumar Maroria, Advocates
For the Respondent(s):Harish N. Salve, Tarun Gulati, Anuradha Dutt, Tushar Jarwal, Rahul Sateeja, Deepak Thackur, Anurag Soan, Sparsh Bhargava, B. Vijayalakshmi Menon, Advocates
For the Petitioner(s):N. Venkataraman, ASG Mohd. Akhil, Zoheb Hussain, Kanu Agarwal, Mukesh Kumar Maroria, Advocates
For the Respondent(s):Harish N. Salve, Tarun Gulati, Anuradha Dutt, Tushar Jarwal, Rahul Sateeja, Deepak Thackur, Anurag Soan, Sparsh Bhargava, B. Vijayalakshmi Menon, Advocates
Important Points
Rectification of errors or omissions in Form GSTR-3B must be carried out in the return for the month or quarter in which such errors are noticed, pursuant to Section 39(9) of the CGST Act, 2017, rather than in the return for the period to which the error relates.
Subject
Tax Law - Goods and Services Tax (GST)
Act Referred
Headnote
Constitution of India,1950 – Articles 14, 19(1)(g), 265, 300A , 246A read with 279A - Central Goods and Services Tax Act, 2017 - Sections 164, 37 , 38 , 168 , 39(7) , 42 , 39(9) , 2(46) and 49(2) - Services Tax - Limit for furnishing of details in FORM GSTR - Lis is aftermath of enacting Central Goods and Services Tax Act, 2017 which came into force with Central Goods and Services Tax Rules, 2017 - Limit for furnishing of details in FORM GSTR-1 under section 37 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu may be furnished in such manner and subject to such conditions as may be notified by the Commissioner - Return in FORM GSTR-3 shall be electronically generated on the basis of information furnished through FORM GSTR-1, FORM GSTR-2 and based on other liabilities of preceding tax periods and PART B of said return shall be electronically generated on the basis of return in FORM GSTR-3B furnished in respect of the tax period – Held, Mechanism provided by Section 39(9) read with Rule 61, it was not open to the High Court to proceed on assumption that only remedy that can enable assessee to enjoy the benefit of seamless utilization of input tax credit is by way of rectification of its return submitted in Form GSTR-3B for the relevant period in which error had occurred. Any unilateral change in such return as per the present dispensation, would have cascading effect on the recipients and suppliers associated with concerned transactions - We agree with submission of appellant that any indulgence shown contrary to statutory mandate would not only be an illegality but in reality, would simply lead to chaotic situation and collapse of tax administration of Union, States and Union Territories - Matching and correction process happens on its own as per mechanism specified in Sections 37 and 38, after which Form GSTR-3 is generated for the purposes of submission of returns; and once it is submitted, any changes thereto may have cascading effect - Law permits rectification of errors and omissions only at the initial stages of Forms GSTR-1 and GSTR-3, but in the specified manner - There is no necessity of reading down paragraph 4 of the impugned Circular as has been done by High Court vide impugned judgment direction issued by High Court being in the nature of issuing writ of mandamus to allow writ petitioner to rectify Form GSTR-3B for the period July to September 2017, in the teeth of express statutory dispensation, cannot be sustained - Appeal is allowed.
Legal Category Hierarchy
Table of Contents
2. Taxpayer argues portal glitches necessitated retrospective rectification to utilize ITC; Revenue contends Section 39(9) mandates rectification only in the month the error is noticed. (Para 18 , 19 , 20 , 22 , 23 , 24 , 25 , 27 , 28 )
3. Self-assessment relies on statutory books of accounts, not the electronic portal; GSTR-3B is a return under Section 39; retrospective rectification would disrupt tax administration. (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 46 , 47 , 48 , 49 )
4. Rectification of omissions or incorrect particulars in returns under Section 39(9) must be effected in the return for the period when the error is noticed. (Para 37 , 44 , 48 )
5. Appeal allowed; High Court judgment set aside; writ petition dismissed. (Para 50 , 52 )
6. When can a registered person rectify omissions or incorrect particulars in a return filed in Form GSTR-3B?
Under Section 39(9) of the CGST Act, such rectifications must be made in the return furnished for the month or quarter during which the omission or incorrect particulars are noticed, not in the return for the period to which the error relates. (Para 22 , 37 , 44 )
7. Is a taxpayer's obligation for self-assessment of tax liability and ITC dependent on the functionality of the common electronic portal?
No. Self-assessment is a legal obligation based on the taxpayer's own statutory books of accounts and records; the electronic portal is merely a facilitator and not the primary source for determining liability or credit eligibility. (Para 32 , 33 , 36 )
8. Does Form GSTR-3B, introduced as a stopgap arrangement, qualify as a return under Section 39 of the CGST Act?
Yes. Form GSTR-3B is considered a return for all purposes. Subsequent amendments to Rule 61(5) clarify that persons furnishing GSTR-3B are not required to furnish Form GSTR-3 later. (Para 39 , 40 , 41 )
9. Can a taxpayer swap a cash payment used to discharge output tax liability with Input Tax Credit (ITC) via retrospective return rectification?
No. Choosing to pay by cash or ITC is an option exercised by the taxpayer. There is no express provision in the Act or Rules permitting the swapping of entries between the electronic cash and credit ledgers. (Para 37 , 47 )
JUDGMENT :
A.M. KHANWILKAR, J.
1. This appeal emanates from the judgment and order dated 05.05.2020 passed by the High Court of Delhi in W.P. (C) No.6345 of 2018, whereby the High Court allowed the writ petition filed by respondent No.1 herein and read down paragraph 4 of the Circular No. 26/26/2017-GST dated 29.12.20171[for short, “impugned Circular”] issued by the Commissioner (GST), Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, GST Policy Wing2[ for short, “Commissioner (GST)”], to the extent it restricted the rectification of Form GSTR-3B in respect of the period in which the error had occurred. The High Court also allowed respondent No.1 to rectify Form GSTR-3B for the period in which error had occurred, i.e., from July to September 2017. Further, the High Court directed the appellant that on filing of the rectified Form GSTR-3B, they shall, within a period of two weeks, verify the claim set forth by respondent No.1 and give effect to the same once verified.
2. This lis is aftermath of enacting the Central Goods and Services Tax Act, 20173[for short, “2017 Act”, which came into force with effect from 01.07.2017. Vide Notification No.10/2017 dated 01.07.2017, Rules 59, 60 and 61 of the Central Goods and Services Tax Rules, 20174[for short, “2017 Rules”] were brought into force along with Forms GSTR-1, GSTR-2, GSTR-2A, GSTR-3 and GSTR-3B.
3. In the context of the matter in issue, it may be apposite to take note of the Notification No.17/2017-Central Tax dated 27.07.2017 issued for amending Rule 61 by altering the wording of Rule 61 (5) and introducing Rule 61 (6). Rule 61 (5), as it stood earlier when it came into force, read thus:
“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, return in FORM GSTR-3B, in lieu of FORM GSTR-3, may be furnished in such manner and subject to such conditions as may be notified by the Commissioner”
4. This provision was not only substituted, but sub-Rule (6) was also inserted in Rule 61 by the said amendment vide Notification No.17/2017-Central Tax. The amended provision reads thus:
“Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Notification No. 17/2017 - Central Tax
New Delhi, the 27th July, 2017
G.S.R. ( )E.:In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely:
(1) …..
…..
2. In the Central Goods and Services Tax Rules, 2017,
…..
(v) in rule 61, with effect from 1st July, 2017, for sub-rule (5), the following sub-rules shall be substituted, namely:
“(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 and in FORM GSTR-2 under section 38 has been extended and the circumstances so warrant, the Commissioner may, by notification, specify that return shall be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
(6) Where a return in FORM GSTR-3B has been furnished, after the due date for furnishing of details in FORM GSTR-2-
(a) Part A of the return in FORM GSTR-3 shall be electronically generated on the basis of information furnished through FORM GSTR-1, FORM GSTR-2 and based on other liabilities of preceding tax periods and PART B of the said return shall be electronically generated on the basis of the return in FORM GSTR-3B furnished in respect of the tax period;
(b) the registered person shall modify Part B of the return in FORM GSTR-3 based on the discrepancies, if any, between the return in FORM GSTR-3B and the return in FORM GSTR-3 and discharge his tax and other liabilities, if any;
(c) where the amount of input tax credit in FORM GSTR-3 exceeds the amount of input tax cr
